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Accounting Policies of Ramky Infrastructure Ltd. Company
Mar 31, 2025
2. Material accounting policies
(a) Financial instruments
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
Initial recognition and measurement
Financial assets and liabilities are recognised when the
Company becomes a party to the contractual provisions
of the instrument. Financial assets (unless it is a trade
receivable without a significant financing component)
and liabilities are initially measured at fair value. Trade
receivables are initially measured at transaction value.
Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added
to or deducted from the fair value measured on initial
recognition of financial asset or financial liability.
Financial Assets
Classification and subsequent measurement
On initial recognition, a financial asset is classified as
subsequently measured at:
(i) amortised cost.
(ii) fair value through other comprehensive income
(FVOCI) - equity investment; or
(iii) fair value through profit or loss (FVTPL).
Financial assets are not reclassified subsequent to their
initial recognition unless the Company changes its
business model for managing financial assets, in which
case all affected financial assets are reclassified on the
first day of the first reporting period following the change
in the business model.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised
cost if these financial assets are held within a business
whose objective is to hold these assets in order to collect
contractual cash flows and the contractual terms of the
financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets are measured at fair value through profit
or loss unless it is measured at amortised cost or at fair
value through other comprehensive income on initial
recognition. The transaction costs directly attributable
to the acquisition of financial assets and liabilities at fair
value through profit or loss are immediately recognised
in profit or loss.
De-recognition of Financial Assets
The Company de-recognises a financial asset only when
the contractual rights to the cash flows from the financial
asset expire, or it transfers the financial asset and
substantially all risks and rewards of ownership of the
financial asset to another entity. If the Company neither
transfers nor retains substantially all the risks and rewards
of ownership and continues to control the transferred
asset, the Company recognizes its retained interest in
the assets and an associated liability for amounts it may
have to pay. If the Company retains substantially all the
risks and rewards of ownership of a transferred financial
asset, the Company continues to recognise the financial
asset and also recognises a collateralised borrowing for
the proceeds received.
Financial liabilities
Financial liabilities are measured at amortised cost using
the effective interest method.
De-recognition of Financial Liabilities
Financial liabilities are de-recognised when the obligation
specified in the contract is discharged, 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 financial liability are
substantially modified, such an exchange or modification
is treated as de-recognition of the original financial
liability and recognition of a new financial liability.
The difference in the respective carrying amounts is
recognised in the Statement of Profit and Loss.
Equity instruments
An equity instrument is a contract that evidences residual
interest in the assets of the Company after deducting all
of its liabilities. Equity instruments recognised by the
Company are measured at the proceeds received net of
direct issue cost.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and
the net amount is reported in financial statements if
there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle
them on a net basis, to realise the assets and settle the
liabilities simultaneously.
b) Measurement of fair values
A number of the Company''s accounting policies and
disclosures require the measurement of fair values, for
both financial and non-financial assets and liabilities.
Fair values are categorised into different levels in a fair
value hierarchy based on the inputs used in the valuation
techniques as follows:
- 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 (i.e., as prices) or
indirectly (i.e., derived from prices).
- Level 3: inputs for the asset or liability that
are not based on observable market data
(Unobservable inputs).
When measuring the fair value of an asset or a liability,
the Company uses observable market data as far as
possible. If the inputs used to measure the fair value
of an asset or a liability fall into different levels of the
fair value hierarchy, then the fair value measurement
is categorised in its entirety in the same level of the
fair value hierarchy as the lowest level input that is
significant to the entire measurement.
The Company recognises transfers between levels of the
fair value hierarchy at the end of the reporting period
during which the change has occurred.
(c) Property, plant and equipment
(i) Recognition, measurement and de-recognition
Items of property, plant and equipment are
measured at cost less accumulated depreciation
and accumulated impairment losses, if any. Freehold
land is carried at cost and is not depreciated.
Cost of an item of property, plant and equipment
comprises its purchase price, including import
duties and non-refundable purchase taxes, after
deducting trade discounts and rebates, any directly
attributable cost of bringing the item to its working
condition for its intended use and estimated costs
of dismantling and removing the item and restoring
the site on which it is located.
When parts of an item of property, plant and
equipment have different useful lives, they
are accounted for as separate items (major
components) of property, plant and equipment.
Items such as spare parts, stand-by equipment and
servicing equipment that meet the definition of
property, plant and equipment are capitalized at
cost and depreciated over their useful life. Costs in
nature of repairs and maintenance are recognized
in the Statement of Profit and Loss as and when
incurred.
Items of property, plant and equipment are
derecognized from the Standalone Financial
Statements, either on disposal or when no economic
benefits are expected from its use or disposal. Gains
and losses on disposal of an item of property, plant
and equipment are determined by comparing the
proceeds from disposal with the carrying amount of
property, plant and equipment, and are recognised
net within other income in the statement of profit
and loss.
The assets residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of
each reporting period. An asset''s carrying amount is
written down immediately to its recoverable amount
if the asset''s carrying amount is greater than its
estimated recoverable amount.
Capital work-in-progress comprises the cost of
property, plant and equipment that are not ready
to use at the balance sheet date and are stated at
historical cost and impairment, if any.
(ii) Subsequent expenditure
The cost of replacing a part of an item of property,
plant and equipment is recognised in the carrying
amount of the item if it is probable that the future
economic benefits embodied within the part will
flow to the Company, and its cost can be measured
reliably. The carrying amount of the replaced part is
derecognised. The costs of the day-to-day servicing
of property, plant and equipment are recognised in
the statement of profit and loss as incurred.
The Company provides depreciation on the straight¬
line method. The Company believes that straight
line method reflects the pattern in which the
asset''s future economic benefits are expected to
be consumed by the Company.
The estimated useful lives of items of property, plant
and equipment for the current and comparative
periods are as follows:
Project specific assets are depreciated over life of the
project or useful life as per Schedule II of Companies
Act, 2013 whichever is lower.
Depreciation is calculated on a pro-rata basis from/uptc
the date the assets are purchased/sold. Useful life ol
assets and residual values are reviewed at each financia
year end and adjusted if appropriate.
(d) Intangible assets and amortisation
(i) Computer software
Computer software is recorded at the consideration
paid for acquisition. Computer software is amortisec
over their estimated useful lives on a straight-line
basis, commencing from the date the asset is
available to the Company for its use.
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only when il
increases the future economic benefits embodied
in the specific asset to which it relates. All othei
expenditure, including expenditure on internally
generated brands, is recognized in statement ol
profit and loss as incurred.
(iii) Amortisation
Amortisation is calculated to write off the cost
of intangible assets less their estimated residua
values over their estimated useful lives using the
straight-line method and is included in depreciation
and amortisation in statement of profit and loss
Computer software is amortised over their estimated
useful lives not exceeding 3 years.
(i) Revenue from construction contracts
The Company applies Ind AS 115 using cumulative
catch-up transition method. Revenue from contract
with customers is recognised when the Company
satisfies performance obligation by transferring
promised goods or services to the customer in an
amount that reflects the transaction price to which
the company expects to be entitled in exchange
for those goods or services. In determining
the transaction price, the promised amount of
consideration is adjusted for the effects of the time
value of money if the timing of payments agreed in
the contract provides the customer or the company
with significant benefit of financing the transfer of
goods or services to the customer.
With respect to the satisfaction of a performance
obligation, the Company has chosen output method
to measure the value of goods or services for
which control is transferred to the customer over
time based on the performance / measured unit
of work completed to date. Accordingly, revenue
is recognised corresponding to the units of work
performed and on the basis of the price allocated
thereto.
In cases where the work performed till the reporting
date has not reached the milestone specified in the
contract, the Company recognises revenue only
to the extent that it is highly probable that the
customer will acknowledge the same. This method
is applied as the progress of the work performed
can be measured during its performance on the
basis of the contract. Under this method, on a
regular basis, the work completed under each
contract is measured and the corresponding output
is recognised as revenue.
(ii) Other income
⢠Dividend Income
Dividend income from Investments is
recognised when the shareholder''s right to
receive payment has been established.
⢠Interest income
Interest income from a financial asset is
recognised when it is probable that the
economic benefits will flow to the company
and the amount of income can be measured
reliably. Interest income is accrued on a
time basis, by reference to the principal
outstanding and at the effective interest
rate applicable, which is the rate that exactly
discounts estimated future cash receipts
through the expected life of the financial
asset to that asset''s net carrying amount on
initial recognition.
⢠Rental income
Rental income from short term leases/ low
value assets are generally recognised over the
term of the relevant lease.
⢠Insurance claims
Insurance claims are accounted for on the
basis of claims admitted and to the extent
that there is no uncertainty in receiving the
claims.
⢠Sub-contractor recoveries
The supply of goods or rendering of services
by the Company to its sub-contractors at
project sites are recognised as sub-contractor
recoveries.
(f) Inventories
Inventories (Raw material and consumables) are valued
at the lower of cost and net realisable value. Cost of
inventory is determined on the weighted average basis.
Scrap is valued at net realisable value. The comparison
of cost and net realisable value is made on item-by-item
basis.
Cost of inventories comprises of all costs of purchase,
cost of conversion and other costs incurred in bringing
the inventories to their present location and condition.
Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of
completion and selling expenses.
(g) Impairment
(i) Impairment of financial instruments
Financial assets (other than at fair value)
The Company assesses on a forward-looking basis
the expected credit losses associated with its
assets carried at amortised cost and FVTOCI debt
instruments. The impairment methodology applied
depends on whether there has been a significant
increase in credit risk.
For trade receivables only, the Company applies
the simplified approach permitted by Ind AS 109
Financial Instruments, which requires expected
lifetime losses to be recognised from initial
recognition of the receivables.
Presentation of allowance for expected credit
losses in the balance sheet
Loss allowances for financial assets measured at
amortised cost are deducted from the gross carrying
amount of the assets.
Write-off
The gross carrying amount of a financial asset is
written off (either partially or in full) to the extent
that there is no realistic prospect of recovery. This
is generally the case when the Company determines
that the debtor does not have assets or sources of
income that could generate sufficient cash flows
to repay the amounts subject to the write off.
However, trade receivables that are written off
could still be subject to enforcement activities in
order to comply with the Company''s procedures for
recovery of amounts due.
(ii) Impairment of non-financial assets
The carrying value of assets / cash generating units
(CGU) at each Balance Sheet date are reviewed
for impairment. If, any such indication exists, the
Company estimates their recoverable amount and
impairment is recognised if, the carrying amount
of these assets/cash generating units exceeds their
recoverable amount. The recoverable amount is the
greater of the net selling price and their value in
use. When there is indication that an impairment
loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased,
such reversal of impairment loss is recognised in
the Statement of Profit & Loss.
The Company''s corporate assets (e.g., central
office building for providing support to various
CGUs) do not generate independent cash inflows.
To determine impairment of a corporate asset,
recoverable amount is determined for the CGUs to
which the corporate asset belongs.
(h) Employee benefits
(i) Short-term employee benefits
Short-term employee benefit obligations are
measured on an undiscounted basis and are
expensed as the related service is provided. A
liability is recognised for the amount expected
to be paid e.g., under short-term cash bonus, if
the Company has a present legal or constructive
obligation to pay this amount as a result of past
service provided by the employee, and the amount
of obligation can be estimated reliably.
(ii) Defined contribution plans
A defined contribution plan is a post-employment
benefit plan under which an entity pays fixed
contributions into a separate entity and will have
no legal or constructive obligation to pay further
amounts. The Company makes specified monthly
contributions towards Government administered
provident fund, employee insurance scheme,
superannuation fund and National pension
scheme. Obligations for contributions to defined
contribution plans are recognised as an employee
benefit expense in the statement of profit and loss
in the periods during which the related services are
rendered by employees.
Prepaid contributions are recognised as an asset
to the extent that a cash refund or a reduction in
future payments is available.
In accordance with the Payment of Gratuity
Act 1972, applicable for Indian companies, the
Company provides for a lump sum payment to
eligible employees, at retirement or termination
of employment based on the last drawn salary
and years of employment with the Company. The
Company''s obligation in respect of the gratuity
plan, which is a Defined Benefit Plan, is provided
for based on actuarial valuation using the Projected
Unit Credit Method. The Company recognizes
actuarial gains and losses immediately in other
comprehensive income, net of taxes. Provision
for other retirement / long term compensated
absences (Leave Encashment) is made on the basis
of actuarial valuation.
Mar 31, 2024
2. Material accounting policies
(a) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Recognition and initial measurement
Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets (unless it is a trade receivable without a significant financing component) and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.
Classification and subsequent measurement
On initial recognition, a financial asset is classified as measured at:
(i) amortised cost.
(ii) Fair value through other comprehensive income (FVOCI) - equity investment; or
(iii) Financial assets at fair value through profit or loss (FVTPL).
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair
value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in profit or loss.
De-recognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities
Financial liabilities are measured at amortised cost using the effective interest method.
De-recognition of Financial Liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, 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 de-recognition of the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Equity instruments
An equity instrument is a contract that evidences residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments recognised by the Company are measured at the proceeds received net of direct issue cost.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in financial statements 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.
(b) Measurement of fair values
A number of the Company''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
- 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 (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that
are not based on observable market data (Unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
(c) Property, plant and equipment
(i) Recognition, measurement and de-recognition
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Items such as spare parts, stand-by equipment and servicing equipment that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life. Costs in nature of repairs and maintenance are recognized in the Statement of Profit and Loss as and when incurred.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in the statement of profit and loss.
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount.
(ii) Subsequent expenditure
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the statement of profit and loss as incurred.
(iii) Depreciation
The Company provides depreciation on the straightline method. The Company believes that straight line method reflects the pattern in which the asset''s future economic benefits are expected to be consumed by the Company.
The estimated useful lives of items of property, plant and equipment for the current and comparative periods are as follows:
Project specific assets are depreciated over life of the project or useful life as per Schedule II of Companies Act, 2013 whichever is lower.
Depreciation is calculated on a pro-rata basis from/upto the date the assets are purchased/sold. Useful life of assets and residual values are reviewed at each financial year end and adjusted if appropriate.
(d) Intangible assets and amortisation
(i) Computer software
Computer software is recorded at the consideration paid for acquisition. Computer software is amortised over their estimated useful lives on a straight-line
basis, commencing from the date the asset is available to the Company for its use.
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated brands, is recognized in statement of profit and loss as incurred.
(iii) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives using the straight-line method and is included in depreciation and amortisation in statement of profit and loss. Computer software is amortised over their estimated useful lives not exceeding 3 years.
(e) Revenue recognition
(i) Revenue from construction contracts
The Company applies Ind AS 115 using cumulative catch-up transition method. Revenue from contract with customers is recognised when the Company satisfies performance obligation by transferring promised goods or services to the customer in an amount that reflects the transaction price to which the company expects to be entitled in exchange for those goods or services. In determining the transaction price, the promised amount of consideration is adjusted for the effects of the time value of money if the timing of payments agreed in the contract provides the customer or the company with significant benefit of financing the transfer of goods or services to the customer.
With respect to the satisfaction of a performance obligation, the Company has chosen output method to measure the value of goods or services for which control is transferred to the customer over time based on the performance / measured unit of work completed to date. Accordingly, revenue is recognised corresponding to the units of work performed and on the basis of the price allocated thereto.
In cases where the work performed till the reporting date has not reached the milestone specified in the contract, the Company recognises revenue only to the extent that it is highly probable that the customer will acknowledge the same. This method is applied as the progress of the work performed can be measured during its performance on the basis of the contract. Under this method, on a regular basis, the work completed under each contract is measured and the corresponding output is recognised as revenue.
(ii) Other income
⢠Dividend Income
Dividend income from Investments is recognised when the shareholder''s right to receive payment has been established.
⢠Interest income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
⢠Rental income
Rental income from short term leases/ low value assets are generally recognised over the term of the relevant lease.
⢠Insurance claims
Insurance claims are accounted for on the basis of claims admitted and to the extent that there is no uncertainty in receiving the claims.
⢠Sub-contractor recoveries
The supply of goods or rendering of services by the Company to its sub-contractors at project sites are recognised as sub-contractor recoveries.
(f) Inventories
(i) Raw materials and components are carried at a weighted average method.
(ii) Inventories other than Raw materials and components are carried at the lower of cost or net realisable value.
(iii) Cost of inventories comprises of all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. The method of determination of cost is as follows:
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
The comparison of cost and net realisable value is made on inventory-by-inventory basis.
(g) Impairment
(i) Impairment of financial instruments Financial assets (other than at fair value)
The Company assesses on a forward-looking basis the expected credit losses associated with its assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write off. However, trade receivables that are written off could still be subject to enforcement activities in order to comply with the Company''s procedures for recovery of amounts due.
(ii) Impairment of non-financial assets
The carrying value of assets/cash generating units (CGU) at each Balance Sheet date are reviewed for impairment. If, any such indication exists, the Company estimates their recoverable amount and impairment is recognised if, the carrying amount of these assets/cash generating units exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit & Loss.
The Company''s corporate assets (e.g., central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.
(h) Employee benefits
(i) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
(ii) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards Government administered provident fund, employee insurance scheme, superannuation fund and National pension scheme. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in the statement of profit and loss in the periods during which the related services are rendered by employees.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(iii) Defined benefit plans
In accordance with the Payment of Gratuity Act 1972, applicable for Indian companies, the Company provides for a lump sum payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the Company. The Company''s obligation in respect of the gratuity plan, which is a Defined Benefit Plan, is provided for based on actuarial valuation using the Projected Unit Credit Method. The Company recognizes actuarial gains and losses immediately in other comprehensive income, net of taxes. Provision for other retirement / long term compensated absences (Leave Encashment) is made on the basis of actuarial valuation.
Mar 31, 2023
1. Reporting entity
Ramky Infrastructure Limited ("the Company") is an integrated construction, infrastructure development and management Company headquartered in Hyderabad, India. The Company undertakes a range of construction and infrastructure projects in various sectors such as water and waste water, transportation, irrigation, industrial construction and parks (including SEZs), power transmission and distribution, and residential, commercial and retail property. A majority of the development projects of the Company are based on Public-Private Partnerships (PPP) and are operated by separate Special Purpose Vehicles (SPV) promoted by the Company, joint venture partners and respective Governments. The Company is a public limited company domiciled and incorporated in India under the Indian Companies Act, 1956. The Company''s registered office is located at Ramky Grandiose, 15th Floor, Sy. No. 136/2 & 4, Gachibowli, Hyderabad - 500 032, Telangana. The Company is listed on BSE Limited and National Stock Exchange of India Limited.
(a) Statement of compliance
These standalone financial statements have been prepared in accordance with Indian Accounting Standards ("Ind AS") as per the Companies (Indian Accounting Standards) Rules, 2015, as amended, notified under Section 133 of the Companies Act, 2013, (the Act) and other relevant amendment rules issued there-after.
These standalone financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting except for certain financial assets and financial liabilities that are measured at fair values at the end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been applied consistently over all the periods presented in these financial statements.
The standalone financial statements were authorised for issue by the Board of Directors on 30th May 2023.
(b) Functional and presentation currency
These standalone financial statements are presented in Indian Rupees (''), which is also the Company''s functional currency. Amounts have been rounded off to nearest million.
(c) Basis of measurement
These standalone financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting except for certain financial assets and financial liabilities that are measured at fair values at the end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been applied consistently over all the periods presented in these financial statements.
The financial statements have been prepared on the historical cost basis except for the following items:
|
Items |
Measurement basis |
|
Certain financial assets and liabilities |
Fair value |
|
Net defined benefit |
Present value of defined |
|
(asset)/ liability |
benefit obligations |
(d) Current and non-current classification
All the assets and liabilities have been classified as current or non-current, wherever applicable, as per the operating cycle of the Company as per the guidance set out in Schedule III to the Act. Operating cycle for the business activities of the Company covers the duration of the project/contract/ service including the defect liability period, wherever applicable, and extends up to the realisation of receivables (including retention monies) within the credit period normally applicable to the respective project. Other than project related assets and liabilities, 12 months period is considered as normal operating cycle.
(e) Use of estimates and judgements
In preparing these standalone financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.
(i) Deferred tax assets
In assessing the realisability of deferred income tax assets, management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management believes that the Company will realize the benefits of those deductible differences. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.
The cost and present value of the gratuity obligation and compensated absences are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition rate and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
(iii) Useful lives of depreciable assets
Management reviews the useful lives of depreciable assets at each reporting period. The management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year.
(iv) Impairment of investment in equity instruments of subsidiary and associate companies
The Company assessed the investment in equity instrument of subsidiary and associate companies carried at cost for impairment testing. Detailed analysis is carried out on the future projections and wherever required, necessary impairment is made.
3. Significant accounting policies
(a) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) Financial Assets
⢠Initial Recognition
In the case of financial assets, not recorded at fair value through profit or loss (FVTPL), financial assets are recognised initially at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
⢠Subsequent Measurement
For the purposes of subsequent measurement, financial assets are classified in following categories:
Financial Assets at Amortised Cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model with an objective to hold
these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income from these financial assets is included in finance income using the effective interest rate ("EIR") method. Impairment gains or losses arising on these assets are recognised in the Statement of Profit and Loss.
Financial Assets Measured at Fair Value
Financial assets are measured at fair value through Other Comprehensive Income (''OCI'') if these financial assets are held within a business model with an objective to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss. In respect of equity investments (other than for investment in subsidiaries and associates) which are not held for trading, the Company has made an irrevocable election to present subsequent changes in the fair value of such instruments in OCI. Such an election is made by the Company on an instrument by instrument basis at the time of transition for existing equity instruments/ initial recognition for new equity instruments. Financial asset not measured at amortised cost or at fair value through OCI is carried at FVTPL.
⢠De-recognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
(ii) Equity Instruments and Financial Liabilities
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments which are issued for cash are recorded at the proceeds received, net of direct issue costs. Equity instruments which are issued for consideration other than cash are recorded at fair value of the equity instrument.
⢠Initial Recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and borrowings and payables as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
⢠Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss. Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation. Amortisation is recognised as finance income in the Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the Statement of Profit and Loss. 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. Where the Company issues optionally convertible debenture, the fair value of the liability portion of such debentures is determined using a market interest rate for an equivalent non-convertible debenture. This value is recorded as a liability on an amortised cost basis until extinguished on conversion or redemption of the debentures. The remainder of the proceeds is attributable to the equity portion of the instrument. This is recognised and included in shareholders'' equity (net of income tax) and are not subsequently re-measured. Where the terms of a financial liability is re-negotiated and the Company issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in the Statement of Profit and Loss; measured as a difference between the carrying amount of the financial liability and the fair value of equity instrument issued.
⢠De-recognition of Financial Liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, 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 derecognition of the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
(iii) Offsetting 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.
(b) Measurement of fair values
A number of the Company''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
- 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 (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that
are not based on observable market data (Unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
(c) Property, plant and equipment
(i) Recognition, measurement and de-recognition
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Items such as spare parts, stand-by equipment and servicing equipme nt that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life. Costs in nature of repairs and maintenance are recognized in the Statement of Profit and Loss as and when incurred.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in the statement of profit and loss.
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.
(ii) Subsequent expenditure
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the statement of profit and loss as incurred.
The Company provides depreciation on the straight line method. The Company believes that straight line method reflects the pattern in which the asset''s future economic benefits are expected to be consumed by the Company.
The estimated useful lives of items of property, plant and equipment for the current and comparative periods are as follows:
|
Asset Category |
Management estimate of useful life |
Useful life as per Schedule II |
|
Office equipment |
5 years |
5 years |
|
Furniture and fixtures |
10 years |
10 years |
|
Vibrator & Needles |
5 years |
5 years |
|
Vehicles - Cars |
8 years |
8 years |
|
Buildings |
30 years |
30 years |
|
Computer equipment |
3 years |
3 years |
|
Lab equipment |
10 years |
10 years |
|
Shuttering materials |
5 years |
5 years |
|
Vehicles - two wheelers |
10 years |
10 years |
|
Pump Sets |
5 years |
5 years |
Project specific assets are depreciated over life of the project or useful life as per Schedule II of Companies Act, 2013 whichever is lower.
Depreciation is calculated on a pro-rata basis from/ upto the date the assets are purchased/sold. Leasehold improvements are amortised over the primary period of the lease or estimated useful life of the assets, whichever is lower. Useful life of assets and residual values are reviewed at each financial year end and adjusted if appropriate.
(d) Intangible assets and amortisation
(i) Computer software
Computer software are recorded at the consideration paid for acquisition. Computer software is amortised over their estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use.
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated brands, is recognized in statement of profit and loss as incurred.
(iii) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives using the straight-line method, and is included in depreciation and amortisation in statement of profit and loss. Computer software is amortised over their estimated useful lives not exceeding 3 years.
(i) Revenue from construction contracts
The Company applies Ind AS 115 using cumulative catch-up transition method. Revenue from contract with customers is recognised when the Company satisfies performance obligation by transferring promised goods or services to the customer in an amount that reflects the transaction price to which the company expects to be entitled in exchange for those goods or services. In determining the transaction price, the promised amount of consideration is adjusted for the effects of the time value of money if the timing of payments agreed in the contract provides the customer or the company with significant benefit of financing the transfer of goods or services to the customer.
With respect to the satisfaction of a performance obligation, the Company has chosen output method to measure the value of goods or services for which control is transferred to the customer over time based on the performance / measured unit of work completed to date. Accordingly, revenue is recognised corresponding to the units of work performed and on the basis of the price allocated thereto.
In cases where the work performed till the reporting date has not reached the milestone specified in the contract, the Company recognises revenue only to the extent that it is highly probable that the customer will acknowledge the same. This method is applied as the progress of the work performed can be measured during its performance on the basis of the contract. Under this method, on a regular basis, the work completed under each contract is measured and the corresponding output is recognised as revenue.
(ii) Other income
Dividend income from Investments is recognised when the shareholder''s right to receive payment has been established.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Rental income from short term leases/ low value assets are generally recognised over the term of the relevant lease.
Insurance claims are accounted for on the basis of claims admitted and to the extent that there is no uncertainty in receiving the claims.
The supply of goods or rendering of services by the Company to its sub-contractors at project sites are recognised as sub-contractor recoveries.
(f) Inventories
(i) Inventories are carried at the lower of cost or net realisable value.
(ii) Cost of inventories comprises of all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. The method of determination of cost is as follows:
Raw materials and components: on a weighted average method.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
The comparison of cost and net realisable value is made on inventory-by-inventory basis.
(g) Impairment
(i) Impairment of financial instruments
Financial assets (other than at fair value)
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVTOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This
is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write off. However, trade receivables that are written off could still be subject to enforcement activities in order to comply with the Company''s procedures for recovery of amounts due.
(ii) Impairment of non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a nonfinancial asset or a group of non-financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, 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 CGU (or the asset).
The Company''s corporate assets (e.g., central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.
In respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(h) Employee benefits
(i) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
(ii) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards Government administered provident fund and employee insurance scheme. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in the statement of profit or loss in the periods during which the related services are rendered by employees.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(iii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan (''the asset ceiling''). In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in the statement of profit and loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (''past service cost'' or ''past service gain'') or the gain or loss on curtailment is recognised immediately in the statement of profit and loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
(i) Provisions, Contingent liabilities and assets
A provision is recognised 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 determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. Expected future operating losses are not provided for.
(i) Onerous contracts
A contract is considered to be onerous when the expected economic benefits to be derived by the Company from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before such a provision is made, the Company recognizes any impairment loss on the assets associated with that contract.
(ii) Contingencies
Provision in respect of loss contingencies relating to claims, litigations, assessments, fines and penalties are recognised when it is probable that a liability has been incurred and the amount can be estimated reliably.
(j) Leases
As a lessee
The Company''s lease assets either consists of office premises, guest houses, machineries and equipments which are of short term leases with the term of twelve months or less or low value leases. For these short term and low value leases, the Company has recognized the lease payments as an expense in the Statement of Profit and Loss on a straight line basis over the term of lease.
(k) Income-taxes
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred taxes are recognised in the statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current
tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred tax is not recognised for:
⢠temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction;
⢠temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
⢠taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
(l) Segment reporting
(i) Business Segment
Operating segments are identified in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The services rendered by the Company primarily consists of execution of civil contracts on turnkey basis. The Company is managed organizationally as a unified entity and not along product lines and accordingly, there is only one business segment.
(ii) Geographical Segment
During the year under report, the Company has engaged in its business primarily within India. The conditions prevailing in India being uniform, no separate geographical disclosure is considered necessary.
(m) Earnings per share
The basic Earnings Per Share ("EPS") for the year is computed by dividing the net profit/ (loss) after tax for the year attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS is computed by dividing the net profit/ (loss) for the year attributable to the equity shareholders of the Company and weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
(n) Borrowing costs
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalized as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
(o) Foreign Currency Translation Initial recognition
On initial recognition, transactions in foreign currencies entered into by the company are recorded in the functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange rate between the functional currency and the foreign currency at the date of transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the statement of profit and loss.
Measurement of foreign currency items at reporting date
Foreign currency monetary items of the company are translated at the closing exchange rates. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of transaction. Non-monetary items that are measured at fair value in a foreign currency, are translated using the exchange rate at the date when the fair value is measured.
Exchange differences arising out of these transactions are recognized in the statement of profit and loss.
(p) Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement comprise of cash and cheques in hand, bank balances, demand deposits with banks where original maturity period is three months or less and other short term highly liquid investments.
(q) Events after reporting date/subsequent events
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 are adjusted within the financial statements. Otherwise, events after the balance sheet date of material size or nature are only disclosed.
There were no significant events that occurred after the balance sheet date for the current reporting period.
4. Recent Accounting Pronouncements
The amendments are extensive and the Company will evaluate the same to give effect to them as required by law.
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 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 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 12: Income Taxes - 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.
Mar 31, 2018
1. Significant accounting policies
(a) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) Financial Assets
- Initial Recognition
In the case of financial assets, not recorded at fair value through profit or loss (FVTPL), financial assets are recognised initially at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
- Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
Financial Assets at Amortised Cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model with an objective to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income from these financial assets is included in finance income using the effective interest rate (âEIRâ) method. Impairment gains or losses arising on these assets are recognised in the Statement of Profit and Loss.
Financial Assets Measured at Fair Value
Financial assets are measured at fair value through Other Comprehensive Income (âOCIâ) if these financial assets are held within a business model with an objective to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss. In respect of equity investments (other than for investment in subsidiaries and associates) which are not held for trading, the Company has made an irrevocable election to present subsequent changes in the fair value of such instruments in OCI. Such an election is made by the Company on an instrument by instrument basis at the time of transition for existing equity instruments/ initial recognition for new equity instruments. Financial asset not measured at amortised cost or at fair value through OCI is carried at FVTPL.
- De-recognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
(ii) Equity Instruments and Financial Liabilities
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments which are issued for cash are recorded at the proceeds received, net of direct issue costs. Equity instruments which are issued for consideration other than cash are recorded at fair value of the equity instrument
Financial Liabilities
- Initial Recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and borrowings and payables as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
- Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss. Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation. Amortisation is recognised as finance income in the Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the Statement of Profit and Loss. 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. Where the Company issues optionally convertible debenture, the fair value of the liability portion of such debentures is determined using a market interest rate for an equivalent non-convertible debenture. This value is recorded as a liability on an amortised cost basis until extinguished on conversion or redemption of the debentures. The remainder of the proceeds is attributable to the equity portion of the instrument. This is recognised and included in shareholdersâ equity (net of income tax) and are not subsequently re-measured. Where the terms of a financial liability is re-negotiated and the Company issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in the Statement of Profit and Loss; measured as a difference between the carrying amount of the financial liability and the fair value of equity instrument issued.
- De-recognition of Financial Liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, 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 de-recognition of the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
(iii) Offsetting 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.
(b) Property, plant and equipment
(i) Recognition, measurement and de-recognition
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in the statement of profit and loss.
The assetsâ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount.
(ii) Subsequent expenditure
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the statement of profit and loss as incurred.
(iii) Depreciation
The estimated useful lives of items of property, plant and equipment for the current and comparative periods are as follows:
Depreciation is calculated on a pro-rata basis from/upto the date the assets are purchased/sold. Leasehold improvements are amortised over the primary period of the lease or estimated useful life of the assets, whichever is lower. Useful life of assets and residual values are reviewed at each financial year end and adjusted if appropriate.
(c) Intangible assets and amortisation
(i) Computer software
Computer software are recorded at the consideration paid for acquisition. Computer software is amortised over their estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use.
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated brands, is recognized in statement of profit and loss as incurred.
(iii) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives using the straight-line method, and is included in depreciation and amortisation in statement of profit and loss. Computer software is amortised over their estimated useful lives not exceeding 3 years.
(d) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Companyâs activities as described below. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
(i) Revenue from construction contracts
Revenue from long term construction contracts is recognized on the percentage of completion method as mentioned in Indian Accounting Standard (Ind AS) 11 âConstruction contractsâ notified by the Companies Accounting Standards Rules, 2014. Percentage of completion is determined on the basis of physical proportion of work completed and measured at the balance sheet date as compared to the overall work to be performed on the projects as in the opinion of the management, this method measures the work performed reliably. However, profit is not recognized unless there is reasonable progress on the contract.
Where the probable total cost of a contract is expected to exceed the corresponding contract revenue, such expected loss is provided for.
Provision for estimated losses on incomplete contract is recorded in the year in which such losses become probable based on the current contracts estimates.
(ii) Other income
- Dividend Income
Dividend income from Investments is recognised when the shareholderâs right to receive payment has been established.
- Interest income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
- Rental income
Rental income from operating leases is generally recognised over the term of the relevant lease.
(e) Inventories
(i) Inventories are carried at the lower of cost or net realisable value.
(ii) Cost of inventories comprises of all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. The method of determination of cost is as follows:
- Materials and supplies: on a weighted average method.
- Contract work-in-progress: Work-in-progress for projects under execution as at balance sheet date are valued at cost less provision, if any, for estimated losses. Provision for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on current estimates.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimate costs of completion and selling expenses.
The comparison of cost and net realisable value is made on inventory-by- inventory basis.
(f) Impairment
(i) Impairment of financial instruments
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the trade receivables.
Debts are measured at amortised cost e.g., loans, debt securities, deposits, and bank balance.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables which do not contain a significant financing component.
The application of simplified approach does not require the company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
Measurement of expected credit losses
Expected credit losses are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expect to receive).
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write off. However, trade receivables that are written off could still be subject to enforcement activities in order to comply with the Companyâs procedures for recovery of amounts due.
(ii) Impairment of non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, 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 CGU (or the asset).
The Companyâs corporate assets (e.g., central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.
In respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(g) Employee benefits
(i) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
(ii) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards Government administered provident fund and employee insurance scheme. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which the related services are rendered by employees.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(iii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Companyâs net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan (âthe asset ceilingâ). In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (âpast service costâ or âpast service gainâ) or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
(h) Provisions, Contingent liabilities and assets
A provision is recognised 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 determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. Expected future operating losses are not provided for.
(i) Onerous contracts
A contract is considered to be onerous when the expected economic benefits to be derived by the Company from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before such a provision is made, the Company recognizes any impairment loss on the assets associated with that contract.
(ii) Contingencies
Provision in respect of loss contingencies relating to claims, litigations, assessments, fines and penalties are recognised when it is probable that a liability has been incurred and the amount can be estimated reliably.
(i) Leases
As a lessee
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
(j) Income-taxes
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination or to an item recognised directly in equity or in other comprehensive income.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred tax is not recognised for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction;
- temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
(iii) Minimum Alternate Tax (MAT) Credit entitlement
Minimum Alternative Tax (âMATâ) under the provisions of the Income Tax Act, 1961 is recognised as current tax in the statement of profit and loss. The credit available under the Act in respect of MAT paid is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognised as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.
(k) Segment reporting
a) Business Segment:
Operating segments are identified in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). The services rendered by the Company primarily consist of execution of civil contracts on turnkey basis. The Company is managed organizationally as a unified entity and not along product lines and accordingly, there is only one business segment.
b) Geographical Segment:
During the year under report, the Company has engaged in its business primarily within India. The conditions prevailing in India being uniform, no separate geographical disclosure is considered necessary.
(l) Earnings per share
The basic earnings per share (âEPSâ) for the year is computed by dividing the net profit/ (loss) after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the net profit or loss for the period attributable to the equity shareholders of the Company and weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
(m) Borrowing cost
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalize as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
(n) Foreign Currency Translation Initial recognition:
On initial recognition, transactions in foreign currencies entered into by the company are recorded in the functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange rate between the functional currency and the foreign currency at the date of transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the statement of profit and loss.
Measurement of foreign currency items at reporting date:
Foreign currency monetary items of the company are translated at the closing exchange rates. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of transaction Non-monetary items that are measured at fair value in a foreign currency, are translated using the exchange rate at the date when the fair value is measured.
(o) Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement comprise of cash and cheques in hand, bank balances, demand deposits with banks where original maturity period is three months or less and other short term highly liquid investments.
(p) Events after reporting date/subsequent events
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 are adjusted within the financial statements. Otherwise, events after the balance sheet date of material size or nature are only disclosed.
There were no significant events that occurred after the balance sheet date for the current reporting period.
Mar 31, 2017
(a) Financial instruments Non-derivative financial instruments
All financial instruments are recognized initially at fair value. Transaction costs that are attributable to the acquisition of the financial asset (other than financial assets recorded at fair value through profit or loss) are included in the fair value of the financial assets. Purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trade) are recognized on trade date. While, loans and borrowings and payable are recognized net of directly attributable transactions costs.
For the purpose of subsequent measurement, financial instruments of the Company are classified in the following categories: non-derivative financial assets at amortised cost; non derivative financial liabilities at amortised cost.
The classification of financial instruments depends on the objective of the business model for which it is held. Management determines the classification of its financial instruments at initial recognition
Non- derivative financial assets
Financial assets are initially measured at fair value plus transaction costs and subsequently carried at amortised cost using the effective interest method, less any impairment loss.
The companyâs financial assets include security deposits, cash and cash equivalents, employee and other advances, trade receivables and eligible current and non-current assets.
Non-derivative financial liabilities
Financial liabilities at amortised cost are initially recognized at fair value, and subsequently carried at amortised cost using the effective interest method.
The company has the following financial liabilities: loans and borrowings, trade and other payables including deposits collected from various parties.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
(b) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in the statement of profit and loss.
The assetsâ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount.
(ii) Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2015, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment.
(iii) Subsequent expenditure
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the statement of profit and loss as incurred.
(iv) Depreciation
The estimated useful lives of items of property, plant and equipment for the current and comparative periods are as follows:
Depreciation is calculated on a pro-rata basis from/upto the date the assets are purchased/sold. Leasehold improvements are amortised over the primary period of the lease or estimated useful life of the assets, whichever is lower. Useful life of assets and residual values are reviewed at each financial year end and adjusted if appropriate.
(c) Intangible assets and amortisation
(i) Computer software
Computer software are recorded at the consideration paid for acquisition. Computer software is amortised over their estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use.
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated brands, is recognized in profit or loss as incurred.
(iii) Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at 1 April 2015, measured as per the previous GAAP, and use that carrying value as the deemed cost of such intangible assets.
(iv) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives using the straight-line method, and is included in depreciation and amortisation in Statement of Profit and Loss. Computer software is amortised over their estimated useful lives not exceeding 3 years.
(d) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Companyâs activities as described below. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Revenue from construction contracts
Revenue from long term construction contracts is recognized on the percentage of completion method as mentioned in Indian Accounting Standard (Ind AS) 11 âConstruction contractsâ notified by the Companies Accounting Standards Rules, 2014. Percentage of completion is determined on the basis of physical proportion of work completed and measured at the balance sheet date as compared to the overall work to be performed on the projects as in the opinion of the management, this method measures the work performed reliably. However, profit is not recognized unless there is reasonable progress on the contract.
Where the probable total cost of a contract is expected to exceed the corresponding contract revenue, such expected loss is provided for.
Provision for estimated losses on incomplete contract is recorded in the year in which such losses become probable based on the current contracts estimates.
(e) Inventories
(i) Inventories are carried at the lower of cost or net realisable value.
(ii) Cost of inventories comprises of all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. The method of determination of cost is as follows:
- Materials and supplies: on a weighted average method.
- Contract work-in-progress: Work-in-progress for projects under execution as at balance sheet date are valued at cost less provision, if any, for estimated losses. Provision for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on current estimates.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimate costs of completion and selling expenses.
The comparison of cost and net realisable value is made on inventory-by- inventory basis.
(f) Impairment
(i) Impairment of financial instruments
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
- Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, and bank balance.
- Trade receivables.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables which do not contain a significant financing component.
The application of simplified approach does not require the company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
Measurement of expected credit losses
Expected credit losses are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expect to receive).
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Companyâs procedures for recovery of amounts due.
(ii) Impairment of non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, 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 CGU (or the asset).
The Companyâs corporate assets (e.g., central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.
In respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(g) Employee benefits
(i) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
(ii) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards Government administered provident fund scheme. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which the related services are rendered by employees.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(iii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Companyâs net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan (âthe asset ceilingâ). In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (âpast service costâ or âpast service gainâ) or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
(h) Provisions
A provision is recognised 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 determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. Expected future operating losses are not provided for.
(i) Onerous contracts
A contract is considered to be onerous when the expected economic benefits to be derived by the Company from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before such a provision is made, the Company recognizes any impairment loss on the assets associated with that contract.
(ii) Contingencies
Provision in respect of loss contingencies relating to claims, litigations, assessments, fines and penalties are recognised when it is probable that a liability has been incurred and the amount can be estimated reliably.
(i) Leases As a lessee
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
(j) Income-tax
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination or to an item recognised directly in equity or in other comprehensive income.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred tax is not recognised for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction;
- temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Minimum Alternate Tax (MAT) Credit entitlement
Minimum Alternative Tax (âMATâ) under the provisions of the Income Tax Act, 1961 is recognised as current tax in the statement of profit and loss. The credit available under the Act in respect of MAT paid is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognised as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.
(k) Segment reporting
(i) Business Segment:
Operating segments are identified in a manner consistent with the internal reporting provided to the chief executive officer (CEO). The services rendered by the Company primarily consist of execution of civil contracts on turnkey basis. The Company is managed organizationally as a unified entity and not along product lines and accordingly, there is only one business segment.
(ii) Geographical Segment:
During the year under report, the Company has engaged in its business primarily within India. The conditions prevailing in India being uniform, no separate geographical disclosure is considered necessary.
(l) Earnings per share
The basic earnings per share (âEPSâ) for the year is computed by dividing the net profit/ (loss) after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The Company has no potentially dilutive equity shares.
(m) Borrowing cost
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalize as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
Mar 31, 2015
1.1 Basis of preparation of financial statements
The financial statements are prepared under historical cost convention
in accordance with the generally accepted accounting principles in
India ("Indian GAAP") and comply in all material respects with the
Accounting Standards specified under Section 133 of the Companies Act
2013 ("the Act"), read with Rule 7 of the Companies (Accounts) Rules,
2014 and other pronouncements of the Institute of Chartered Accountants
of India ("ICAI"). The accounting policies applied by the Company are
consistent with those used in the previous year, unless otherwise
stated.
All the assets and liabilities have been classified as current or
non-current, wherever applicable, as per the operating cycle of the
Company and as per the guidance as set out in the Schedule III to the
Companies Act, 2013.
Operating cycle for the business activities of the Company covers the
duration of the specific project/contract/project line/service
including defect liability period, wherever applicable and extends up
to the realizations of receivables (including retention money) within
the agreed credit period normally applicable to the respective project.
1.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect
the balances of assets and liabilities and disclosures relating to
contingent liabilities as at the reporting date of the financial
statements and amounts of income and expenses during the period of
account. Examples of such estimates include contract costs expected to
be incurred to complete construction contracts, provision for doubtful
debts, provision for foreseeable losses, income taxes and future
obligations under employee retirement benefit plans. Contingencies are
recorded when it is probable that a liability will be incurred, and the
amount can be reasonably estimated. Actual results could differ from
those estimates.Any revision to accounting estimates is recognised
prospectively in the current and future periods.
1.3 Inventories
(i) Inventories are carried at the lower of cost and net realisable
value.
(ii) Cost of inventories comprises of all costs of purchase, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition. The method of determination of
cost is as follows:
(a) Materials and supplies: on a weighted average method.
(b) Contract work-in-progress: Work-in-progress for projects under
execution as at balance sheet date are valued at cost less provision,
if any, for estimated losses. The costs of projects in respect of which
revenue is recognised under the Company's revenue recognition policies
but have not been billed are adjusted for the proportionate profit
recognised. The cost comprises of expenditure incurred in relation to
execution of the project. Provision for estimated losses, if any, on
uncompleted contracts are recorded in the period in which such losses
become probable based on current estimates.
1.4 Cash flow statement
Cash flows are reported using the indirect method, whereby net profit/
(loss) before tax is adjusted for the effects of transactions of a
non-cash nature and any deferrals or accruals of past or future cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from regular revenue
generating, investing and financing activities of the company are
segregated.
1.5 Cash and cash equivalents
Cash and cash equivalents comprise cash and cash on deposit with banks.
The Company considers all highly liquid investments with a remaining
maturity at the date of purchase of three months or less and that are
readily convertible to known amounts of cash to be cash equivalents.
1.6 Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and revenue can be reliably
measured.
Revenue from long term construction contracts is recognised on the
percentage of completion method as mentioned in Accounting Standard
(AS) 7 "Construction contracts" notified by the Companies Accounting
Standards Rules, 2006. Percentage of completion is determined on the
basis of physical proportion of work completed and measured at the
balance sheet date as compared to the overall work to be performed on
the projects as in the opinion of the management, this method measures
the work performed reliably. However, profit is not recognised unless
there is reasonable progress on the contract. Where the probable total
cost of a contract is expected to exceed the corresponding contract
revenue, such expected loss is provided for.
Dividend income is recognised when the unconditional right to receive
the payment is established. Interest income is recognised on the time
proportionate method taking into account the amount outstanding and the
rate applicable.
1.7 Fixed assets and depreciation
Fixed assets are carried at cost of acquisition or construction less
accumulated depreciation. The cost of fixed assets includes purchase
price, non-refundable taxes, duties, freight and other incidental
expenses related to the acquisition or installation of the respective
assets. Borrowing costs directly attributable to acquisition or
construction of those fixed assets which necessarily take a substantial
period of time to get ready for their intended use are capitalised.
Depreciation on fixed assets is provided based on the useful life of
the assets as estimated by the management which coincides with rates
prescribed in Schedule II to the Companies Act, 2013 except the
following which are depreciated based on useful life determined by the
Company.
1.8 Foreign exchange transactions
Foreign currency transactions are recorded using the exchange rates
prevailing on the date of the respective transactions. Exchange
differences arising on foreign currency transactions settled during the
year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date, not covered by forward exchange contracts, are
translated at year-end rates. The resultant exchange differences are
recognised in the statement of profit and loss. Non-monetary assets are
recorded at the rates prevailing on the date of the transaction.
1.9 Derivative instruments and hedge accounting
The Company uses foreign exchange forward contracts to mitigate its
risk of changes in foreign currency exchange rates and does not use
them for trading or speculative purposes.
The premium or discount on foreign exchange forward contracts is
amortized as income or expense over the life of the contract. The
exchange difference is calculated and recorded in accordance with AS-11
(revised). The exchange difference on such a forward exchange contract
is calculated as the difference of the foreign currency amount of the
contract translated at the exchange rate at the reporting date, or the
settlement date where the transaction is settled during the reporting
period and the corresponding foreign currency amount translated at the
later of the date of inception of the forward exchange contract and the
last reporting date. Such exchange differences are recognised in the
statement of profit and loss in the reporting period in which the
exchange rates change.
1.10 Government Grants
Government grants are recognised only when it is reasonably certain
that the related entity will comply with the attached conditions and
the ultimate collection is not in doubt.
Where the government grants are of the nature of promoter's
contribution and no repayment is ordinarily expected in respect
thereof, the grants are treated as capital reserve which can be neither
distributed as dividend nor considered as deferred income.
Where the government grants relates to specific fixed assets are
treated as deferred government grants, which is recognised in the
statement of profit and loss in proportion to the depreciation charge
over the useful life of the related asset.
1.11 Investments
Long-term investments are carried at cost less any other than temporary
diminution in value, determined separately for each individual
investment.
Current investments are carried at the lower of cost and fair value.
The comparison of cost and fair value is done separately in respect of
each category of investment.
1.12 Employee benefits
Contributions payable to the recognised provident fund, which is a
defined contribution scheme, are charged to the statement of profit and
loss on accrual basis.Contributions to superannuation fund, which is a
defined contribution scheme, are made at pre-determined rates to the
Life Insurance Corporation of India on a monthly basis.Employee
gratuity and long term compensated absences, which are defined benefit
schemes, are accrued based on actuarial valuation at the balance sheet
date, carried out by an independent actuary and are charged to the
statement of profit and loss. All actuarial gains and losses arising
during the year are recognised in the statement of profit and loss.
1.13 Borrowing costs
Borrowing costs directly attributable to the acquisition/ construction
of the qualifying asset are capitalised as part of the cost of that
asset. Other borrowing costs are recognised as an expense in the period
in which they are incurred.
1.14 Leases
Leases where the lessor effectively retains substantially all the risks
and rewards of ownership of the leased asset are classified as
operating leases. Operating lease payments are recognised as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
1.15 Earnings per share
The basic and diluted earnings per share are computed by dividing the
net profit attributable to equity shareholders for the year by the
weighted average number of equity shares outstanding during the year.
1.16 Taxation
Income tax expense comprises current tax, deferred tax and Minimum
Alternative Tax. The current charge for income taxes is calculated in
accordance with the relevant tax regulations applicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing
differences between accounting income and taxable income for the year.
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognised using the tax rates that have been
enacted or substantially enacted by the balance sheet date. Deferred
tax assets are recognised only to the extent there is reasonable
certainty that the assets can be realized in future; however, where
there is unabsorbed depreciation or carry forward of losses, deferred
tax assets are recognised only if there is a virtual certainty of
realization of such assets. Deferred tax assets are reviewed at each
balance sheet date and is written-down or written up to reflect the
amount that is reasonably/virtually certain (as the case may be) to be
realized.
Minimum Alternate Tax (MAT) Credit entitlement
Minimum Alternative Tax ('MAT') under the provisions of the Income Tax
Act, 1961 is recognised as current tax in the statement of profit and
loss. The credit available under the Act in respect of MAT paid is
recognised as an asset only when and to the extent there is convincing
evidence that the company will pay normal income tax during the period
for which the MAT credit can be carried forward for set-off against the
normal tax liability. MAT credit recognised as an asset is reviewed at
each balance sheet date and written down to the extent the aforesaid
convincing evidence no longer exists.
1.17 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognised in the statement of profit and loss. If at the balance
sheet date there is an indication that if a previously assessed
impairment loss no longer exists, the recoverable amount is reassessed
and the asset is reflected at the recoverable amount subject to a
maximum of amortised historical cost.
1.18 Accounting for interest in joint ventures
In respect of work sharing joint venture arrangements revenues,
expenses, assets, liabilities and contingent liabilities are accounted
for in the Company's books to the extent work is executed by the
Company.
In respect of jointly controlled entities, the share of profits or
losses is accounted as and when dividend/share of profit or loss is
declared by the entities.
1.19 Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. Where there is possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Provisions for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognised
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
Mar 31, 2013
1.1 Basis of preparation of financial statements
The financial statements of Ramky Infrastructure Limited ("RIL" or "the
Company") have been prepared and presented under the historical cost
convention on the accrual basis of accounting and comply with the
Accounting Standards (AS) prescribed by Companies (Accounting
Standards) Rules, 2006, other pronouncements of the Institute of
Chartered Accountants of India (ICAI), guidelines issued by Securities
and Exchange Board of India and the relevant provisions of the
Companies Act, 1956, (the ''Act'') to the extent applicable. The
financial statements are presented in Indian rupees (Rs. ) crores, unless
otherwise stated.
1.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires Management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent liabilities on the date of the financial statements and
reported amounts of revenues and expenses for the year. Actual results
could differ from these estimates. Any revision to accounting estimates
is recognised prospectively in the current and future periods.
1.3 Current-non-current classification
All assets and liabilities are classified into current and non-current.
Assets:
i. An asset is classified as current when it satisfies any of the
following criteria:
a) it is expected to be realised in, or is intended for sale or
consumption in, the Company''s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting
date; or
d) it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
ii. Current assets include the current portion of non-current financial
assets. All other assets are classified as non- current.
Liabilities:
i. A liability is classified as current when it satisfies any of the
following criteria:
a) it is expected to be settled in the Company''s normal operating
cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date;
or
d) the Company does not have an unconditional right to defer settlement
of the liability for at least 12 months after the reporting date. Terms
of a liability that could, at the option of the counterparty, result in
its settlement by the issue of equity instruments do not affect its
classification.
ii. Current liabilities include current portion of non-current
financial liabilities. All other liabilities are classified as
non-current.
Operating cycle:
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents.
1.4 Inventories
(i) Inventories are carried at the lower of cost and net realisable
value.
(ii) Cost of inventories comprises of all costs of purchase, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition. The method of determination of
cost is as follows:
(a) Materials and supplies: on a weighted average method.
(b) Contract work-in-progress: Work-in-progress for projects under
execution as at balance sheet date are valued at cost less provision,
if any, for estimated losses. The costs of projects in respect of which
revenue is recognised under the Company''s revenue recognition policies
but have not been billed are adjusted for the proportionate profit
recognised. The cost comprises of expenditure incurred in relation to
execution of the project. Provision for estimated losses, if any, on
uncompleted contracts are recorded in the period in which such losses
become probable based on current estimates.
1.5 Cash flow statement
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future cash receipts or
payments and item of income or expenses associated with investing or
financing cash flows. The cash flows from regular revenue generating,
investing and financing activities of the company are segregated.
1.6 Cash and cash equivalents
Cash and cash equivalents comprise cash and cash on deposit with banks.
The Company considers all highly liquid investments with a remaining
maturity at the date of purchase of three months or less and that are
readily convertible to known amounts of cash to be cash equivalents.
1.7 Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and revenue can be reliably
measured.
Revenue from long term construction contracts is recognised on the
percentage of completion method as mentioned in Accounting Standard
(AS) 7 "Construction contracts" notified by the Companies Accounting
Standards Rules, 2006. Percentage of completion is determined on the
basis of physical proportion of work completed and measured at the
balance sheet date as compared to the overall work to be performed on
the projects as in the opinion of the management, this method measures
the work performed reliably. However, profit is not recognised unless
there is reasonable progress on the contract. Where the probable total
cost of a contract is expected to exceed the corresponding contract
revenue, such expected loss is provided for.
The Company builds infrastructure facilities (roads) under
public-to-private Service Concession Arrangements (SCAs) which it
operates and maintains for periods specified in the SCAs. These
projects that are in the nature of ''Build Operate and Transfer'' (BOT)
meet the characteristics of a public-to- private service concession
arrangement. The Company recognises and measures revenue in accordance
with Accounting Standard (AS) 7 ''Construction Contracts'' and Accounting
Standard (AS) 9 ''Revenue Recognition'' for the construction or upgrade
and operating and maintenance services it performs under the contract
or arrangement as prescribed in the Exposure Draft Guidance note on
Accounting for Service Concession Arrangements.
The financial asset model applies when the operator has an
unconditional right to receive cash or another financial asset from the
grantor. The Company recognises a financial asset to the extent that it
has an unconditional contractual right to receive cash or another
financial asset from the grantor for the construction and operation and
maintenance services. Such financial assets are classified as
"Receivables under Service Concession Arrangements". Interest incomes
arising on account of the Receivables under Service Concession
Arrangements are recognised in the statement of profit and loss using
the effective interest rate method.
The intangible asset model applies where the operator is paid by the
users or where the concession grantor has not provided a contractual
guarantee in respect of the recoverable amount. The Company recognises
intangible asset to the extent that it has an unconditional contractual
right to receive toll charges from the users of the facilities
developed by the Company. Such intangible assets are classified as
"Concession intangible assets" and shown under the head fixed assets.
Dividend income is recognised when the unconditional right to receive
the payment is established. Interest income is recognised on the time
proportionate method taking into account the amount outstanding and the
rate applicable.
1.8 Fixed assets and depreciation
Fixed assets are carried at cost of acquisition or construction less
accumulated depreciation. The cost of fixed assets includes purchase
price, non-refundable taxes, duties, freight and other incidental
expenses related to the acquisition or installation of the respective
assets. Borrowing costs directly attributable to acquisition or
construction of those fixed assets which necessarily take a substantial
period of time to get ready for their intended use are capitalised.
Depreciation on fixed assets is provided using the straight- line
method at the rates specified in Schedule XIV to the
Companies Act, 1956, except for construction accessories included in
plant and equipment are depreciated at rates given below based on
useful life determined by the Management. In the opinion of the
Management, the rates specified in Schedule XIV reflect the economic
useful lives of all the other assets. Intangible assets are amortised
on straight-line basis over their estimated useful lives not exceeding
ten years from the date when the assets are available for use.
Name of the asset Estimated useful life
Shuttering materials 5 years
Pump sets 5 years
Vibrators and needles 5 years
Depreciation is calculated on a pro-rata basis from/upto the date the
assets are purchased/sold. Individual assets costing less than Rs. 5,000
are depreciated in full in the year of acquisition.
1.9 Foreign exchange transactions
Foreign currency transactions are recorded using the exchange rates
prevailing on the date of the respective transactions. Exchange
differences arising on foreign currency transactions settled during the
year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date, not covered by forward exchange contracts, are
translated at year-end rates. The resultant exchange differences are
recognised in the statement of profit and loss. Non-monetary assets are
recorded at the rates prevailing on the date of the transaction.
1.10 Derivative instruments and hedge accounting
The Company uses foreign exchange forward contracts to mitigate its
risk of changes in foreign currency exchange rates and does not use
them for trading or speculative purposes.
The premium or discount on foreign exchange forward contracts is
amortized as income or expense over the life of the contract. The
exchange difference is calculated and recorded in accordance with AS-11
(revised). The exchange difference on such a forward exchange contract
is calculated as the difference of the foreign currency amount of the
contract translated at the exchange rate at the reporting date, or the
settlement date where the transaction is settled during the reporting
period and the corresponding foreign currency amount translated at the
later of the date of inception of the forward exchange contract and the
last reporting date. Such exchange differences are recognised in the
statement of profit and loss in the reporting period in which the
exchange rates change.
1.11 Government grants
Government grants are recognised only when it is reasonably certain
that the related entity will comply with the attached conditions and
the ultimate collection is not in doubt.
Where the government grants are of the nature of promoter''s
contribution and no repayment is ordinarily expected in respect
thereof, the grants are treated as capital reserve which can be neither
distributed as dividend nor considered as deferred income.
Where the government grants relates to specific fixed assets are
treated as deferred government grants, which is recognised in the
statement of profit and loss in proportion to the depreciation charge
over the useful life of the related asset.
1.12 Investments
Long-term investments are carried at cost less any other than temporary
diminution in value, determined separately for each individual
investment.
Current investments are carried at the lower of cost and fair value.
The comparison of cost and fair value is done separately in respect of
each category of investment.
1.13 Employee benefits
Contributions payable to the recognised provident fund, which is a
defined contribution scheme, are charged to the statement of profit and
loss on accrual basis.
Contributions to superannuation fund, which is a defined contribution
scheme, are made at pre-determined rates to the Life Insurance
Corporation of India on a monthly basis.
Employee gratuity and long term compensated absences, which are defined
benefit schemes, are accrued based on actuarial valuation at the
balance sheet date, carried out by an independent actuary and are
charged to statement of profit and loss. All actuarial gains and losses
arising during the year are recognised in the statement of profit and
loss.
1.14 Borrowing costs
Borrowing costs directly attributable to the acquisition/ construction
of the qualifying asset are capitalised as part of the cost of that
asset. Other borrowing costs are recognised as an expense in the period
in which they are incurred.
1.15 Leases
Leases where the lessor effectively retains substantially all the risks
and rewards of ownership of the leased asset are classified as
operating leases. Operating lease payments are recognised as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
1.16 Earnings per share
The basic and diluted earnings per share are computed by dividing the
net profit attributable to equity shareholders for the year by the
weighted average number of equity shares outstanding during the year.
1.17 Taxation
Income tax expense comprises current tax, deferred tax and Minimum
Alternative Tax.
Current tax
The current charge for Income Tax is calculated in accordance with the
relevant tax regulations applicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing
differences between accounting income and taxable income for the year.
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognised using the tax rates that have been
enacted or substantially enacted by the balance sheet date. Deferred
tax assets are recognised only to the extent there is reasonable
certainty that the assets can be realized in future; however, where
there is unabsorbed depreciation or carry forward of losses, deferred
tax assets are recognised only if there is a virtual certainty of
realization of such assets. Deferred tax assets are reviewed at each
balance sheet date and is written-down or written up to reflect the
amount that is reasonably/virtually certain (as the case may be) to be
realized.
Minimum Alternate Tax (MAT) credit entitlement
Minimum Alternative Tax (''MAT'') under the provisions of the Income Tax
Act, 1961 is recognised as current tax in the statement of profit and
loss. The credit available under the Act in respect of MAT paid is
recognised as an asset only when and to the extent there is convincing
evidence that the company will pay normal income tax during the period
for which the MAT credit can be carried forward for set-off against the
normal tax liability. MAT credit recognised as an asset is reviewed at
each balance sheet date and written down to the extent the aforesaid
convincing evidence no longer exists.
1.18 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognised in the statement of profit and loss. If at the balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount subject to a maximum of
amortized historical cost.
1.19 Accounting for interest in joint ventures
In respect of work sharing joint venture arrangements revenues,
expenses, assets, liabilities and contingent liabilities are accounted
for in the Company''s books to the extent work is executed by the
Company.
In respect of jointly controlled entities, the share of profits or
losses is accounted as and when dividend/share of profit or loss is
declared by the entities.
1.20 Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. Where there is possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Provisions for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognised
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
Mar 31, 2012
1.1 Basis of preparation of financial statements
The financial statements of Ramky Infrastructure Limited ("RIL" or "the
Company") have been prepared and presented in accordance with Indian
Generally Accepted Accounting Principles (GAAP) under the historical
cost convention on the accrual basis. GAAP comprises mandatory
accounting standards as prescribed by the Companies (Accounting
Standards) Rules, 2006, as amended, the provisions of Companies Act,
1956, other pronouncements of Institute of Chartered Accountants of
India (ICAI) and guidelines issued by Securities and Exchange Board of
India. The financial statements are presented in Indian rupees crores,
unless otherwise stated.
1.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires Management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent liabilities on the date of the financial statements and
reported amounts of revenues and expenses for the year. Actual results
could differ from these estimates. Any revision to accounting estimates
is recognized prospectively in the current and future periods.
1.3 Inventories
(i) Inventories are carried at the lower of cost and net realizable
value.
(ii) Cost of inventories comprises all costs of purchase, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition. The method of determination of
cost is as follows:
(a) Materials and supplies: on a weighted average method.
(b) Contract work-in-progress: Work-in-progress for projects under
execution as at balance sheet date are valued at cost less provision,
if any, for estimated losses. The costs of projects in respect of which
revenue is recognized under the Company's revenue recognition policies
but have not been billed are adjusted for the proportionate profit
recognized. The cost comprises of expenditure incurred in relation to
execution of the project. Provision for estimated losses, in any, on
uncompleted contracts are recorded in the period in which such losses
become probable based on current estimates.
1.4 Cash flow statement
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future cash receipts or
payments and item of income or expenses associated with investing or
financing cash flows. The cash flows from regular revenue generating,
investing and financing activities of the company are segregated.
1.5 Cash and cash equivalents
Cash and cash equivalents comprise cash and cash on deposit with banks.
The Company considers all highly liquid investments with a remaining
maturity at the date of purchase of three months or less and that are
readily convertible to known amounts of cash to be cash equivalents.
1.6 Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and revenue can be reliably
measured.
Revenue from long term construction contracts is recognized on the
percentage of completion method as mentioned in Accounting Standard
(AS) 7 "Construction contracts" notified by the Companies Accounting
Standards Rules, 2006. Percentage of completion is determined on the
basis of physical proportion of work completed and measured at the
balance sheet date as compared to the overall work to be performed on
the projects as in the opinion of the management, this method measures
the work performed reliably. However, profit is not recognized unless
there is reasonable progress on the contract. Where the probable total
cost of a contract is expected to exceed the corresponding contract
revenue, such expected loss is provided for.
The Company builds infrastructure facilities (roads) under
public-to-private Service Concession Arrangements (SCAs) which it
operates and maintains for periods specified in the SCAs. These
projects that are in the nature of 'Build Operate and Transfer' (BOT)
meet the characteristics of a public-to- private service concession
arrangement. The Company recognizes and measures revenue in accordance
with Accounting Standard (AS) 7 'Construction Contracts' and Accounting
Standard (AS) 9 'Revenue Recognition' for the construction or upgrade
and operating and maintenance services it performs under the contract
or arrangement as prescribed in the Exposure Draft Guidance note on
Accounting for Service Concession Arrangements.
The financial asset model applies when the operator has an
unconditional right to receive cash or another financial asset from the
grantor. The Company recognizes a financial asset to the extent that it
has an unconditional contractual right to receive cash or another
financial asset from the grantor for the construction and operation and
maintenance services. Such financial assets are classified as
"Receivables under Service Concession Arrangements". Interest incomes
arising on account of the Receivables under Service Concession
Arrangements are recognized in the statement of profit and loss using
the effective interest rate method.
The intangible asset model applies where the operator is paid by the
users or where the concession grantor has not provided a contractual
guarantee in respect of the recoverable amount. The Company recognizes
intangible asset to the extent that it has an unconditional contractual
right to receive toll charges from the users of the facilities
developed by the Company. Such intangible assets are classified as
"Concession intangible assets" and shown under the head fixed assets.
Dividend income is recognised when the unconditional right to receive
the payment is established. Interest income is recognized on the time
proportionate method taking into account the amount outstanding and the
rate applicable.
1.7 Fixed assets and depreciation
Fixed assets are carried at cost of acquisition or construction less
accumulated depreciation. The cost of fixed assets includes purchase
price, non-refundable taxes, duties, freight and other incidental
expenses related to the acquisition or installation of the respective
assets. Borrowing costs directly attributable to acquisition or
construction of those fixed assets which necessarily take a substantial
period of time to get ready for their intended use are capitalized.
Depreciation on fixed assets is provided using the straight- line
method at the rates specified in Schedule XIV to the Companies Act,
1956. In the opinion of the Management, the rates specified in Schedule
XIV reflect the economic useful lives of these assets. Intangible
assets are amortized on straight-line basis over their estimated useful
lives not exceeding ten years from the date when the assets is
available for use.
Depreciation is calculated on a pro-rata basis from/upto the date the
assets are purchased/sold. Individual assets costing less than Rs 5,000
are depreciated in full in the year of acquisition.
1.8 Foreign exchange transactions
Foreign currency transactions are recorded using the exchange rates
prevailing on the date of the respective transactions. Exchange
differences arising on foreign currency transactions settled during the
year are recognized in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date, not covered by forward exchange contracts, are
translated at year-end rates. The resultant exchange differences are
recognized in the statement of profit and loss. Non-monetary assets are
recorded at the rates prevailing on the date of the transaction.
1.9 Derivative instruments and hedge accounting
The Company uses foreign exchange forward contracts to mitigate its
risk of changes in foreign currency exchange rates and does not use
them for trading or speculative purposes.
The premium or discount on foreign exchange forward contracts is
amortized as income or expense over the life of the contract. The
exchange difference is calculated and recorded in accordance with AS-11
(revised). The exchange difference on such a forward exchange contract
is calculated as the difference of the foreign currency amount of the
contract translated at the exchange rate at the reporting date, or the
settlement date where the transaction is settled during the reporting
period and the corresponding foreign currency amount translated at the
later of the date of inception of the forward exchange contract and the
last reporting date. Such exchange differences are recognized in the
statement of profit and loss in the reporting period in which the
exchange rates change.
1.10 Investments
Long-term investments are carried at cost less any other than temporary
diminution in value, determined separately for each individual
investment.
Current investments are carried at the lower of cost and fair value.
The comparison of cost and fair value is done separately in respect of
each category of investment.
1.11 Employee benefits
Contributions payable to the recognized provident fund, which is a
defined contribution scheme, are charged to the statement of profit and
loss on accrual basis.
Contributions to superannuation fund, which is a defined contribution
scheme, are made at pre-determined rates to the Life Insurance
Corporation of India on a monthly basis.
Employee gratuity and long term compensated absences, which are defined
benefit schemes, are accrued based on actuarial valuation at the
balance sheet date, carried out by an independent actuary and are
charged to statement of profit and loss. All actuarial gains and
losses arising during the year are recognized in the statement of
profit and loss.
1.12 Borrowing costs
Borrowing costs directly attributable to the acquisition/ construction
of the qualifying asset are capitalized as part of the cost of that
asset. Other borrowing costs are recognized as an expense in the period
in which they are incurred.
1.13 Leases
Leases where the lessor effectively retains substantially all the risks
and rewards of ownership of the leased asset are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
1.14 Earnings per share
The basic and diluted earnings per share are computed by dividing the
net profit attributable to equity shareholders for the year by the
weighted average number of equity shares outstanding during the year.
1.15 Taxation
Income tax expense comprises current tax, deferred tax and Minimum
Alternative Tax.
Current tax
The current charge for income taxes is calculated in accordance with
the relevant tax regulations applicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing
differences between accounting income and taxable income for the year.
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognized using the tax rates that have been
enacted or substantially enacted by the balance sheet date. Deferred
tax assets are recognized only to the extent there is reasonable
certainty that the assets can be realized in future; however, where
there is unabsorbed depreciation or carry forward of losses, deferred
tax assets are recognized only if there is a virtual certainty of
realization of such assets. Deferred tax assets are reviewed at each
balance sheet date and is written-down or written up to reflect the
amount that is reasonably/virtually certain (as the case may be) to be
realized.
Minimum Alternate Tax (MAT) Credit entitlement
Minimum Alternative Tax ('MAT') under the provisions of the Income Tax
Act, 1961 is recognized as current tax in the statement of profit and
loss. The credit available under the Act in respect of MAT paid is
recognized as an asset only when and to the extent there is convincing
evidence that the company will pay normal income tax during the period
for which the MAT credit can be carried forward for set-off against the
normal tax liability. MAT credit recognized as an asset is reviewed at
each balance sheet date and written down to the extent the aforesaid
convincing evidence no longer exists.
1.16 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the statement of profit and loss. If at the balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount subject to a maximum of
amortized historical cost.
1.17 Accounting for interest in joint ventures
In respect of work sharing joint venture arrangements revenues,
expenses, assets, liabilities and contingent liabilities are accounted
for in the Company's books to the extent work is executed by the
Company.
In respect of jointly controlled entities, the share of profits or
losses is accounted as and when dividend/share of profit or loss is
declared by the entities.
1.18 Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. Where there is possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Provisions for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognized
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
Mar 31, 2011
1.1 Company overview
Ramky Infrastructure Limited (RIL) is an integrated construction,
infrastructure development and management company headquartered in
Hyderabad, India. The Company diversified in a range of construction
and infrastructure projects in various sectors such as water and waste
water, transportation, irrigation, industrial construction & parks
(including SEZs), power transmission and distribution, and residential,
commercial & retail property. RIL operates in two principal business
segments: The construction business operated directly by the Company;
and the developer business operated through its subsidiaries, jointly
controlled entities and associates. A majority of the development
projects are based on public private partnerships and are operated by
separate special purpose vehicles promoted by RIL, JV partners and
respective governments.
1.2 Basis of preparation of financial statements
The financial statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting and
comply with the Accounting Standards (AS) prescribed by Companies
(Accounting Standards) Rules, 2006, other pronouncements of the
Institute of Chartered Accountants of India (ICAI) and the relevant
provisions of the Companies Act, 1956, (the Act) to the extent
applicable. The financial statements are presented in Indian rupees
crore, unless otherwise stated.
1.3 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent liabilities on the date of the financial statements and
reported amounts of revenues and expenses for the year. Actual results
could differ from these estimates. Any revision to accounting estimates
is recognised prospectively in the current and future periods.
1.4 Inventories
i. Inventories are carried at the lower of cost and net realisable
value.
ii. Cost of inventories comprises all costs of purchase, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition. The method of determination of
cost is as follows:
a. Materials and supplies: on a weighted average method.
b. Contract work in progress: Work in progress for projects under
execution as at balance sheet date are valued at cost less provision,
if any, for estimated losses. The costs of projects in respect of which
revenue is recognised under the Companys revenue recognition policies
but have not been billed are adjusted for the proportionate profit
recognised. The cost comprises of expenditure incurred in relation to
execution of the project. Provision for estimated losses, in any, on
uncompleted contracts are recorded in the period in which such losses
become probable based on current estimates.
1.5 Cash Flow Statement
Cash flows are reported using the indirect method, whereby net
profit/(loss) before tax is adjusted for the effects of transactions of
a non-cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash flows from regular revenue generating,
investing and financing activities of the Company are segregated.
1.6 Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash in
hand and balance in bank in current accounts, deposit accounts and in
margin money deposits.
1.7 Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and revenue can be reliably
measured.
Revenue from long term construction contracts is recognized on the
percentage of completion method as mentioned in Accounting Standard
(AS) 7 Construction contracts notified by the Companies Accounting
Standards Rules, 2006. Percentage of completion is determined on the
basis of physical proportion of work completed and measured at the
balance sheet date as compared to the overall work to be performed on
the projects as in the opinion of the management, this method measures
the work performed reliably. However, profit is not recognized unless
there is reasonable progress on the contract. Where the probable total
cost of a contract is expected to exceed the corresponding contract
revenue, such expected loss is provided for.
The Company builds infrastructure facilities (roads) under
public-to-private Service Concession Arrangements (SCAs) which it
operates and maintains for periods specified in the SCAs. These
projects that are in the nature of Build Operate and Transfer (BOT)
meet the characteristics of a public-to- private service concession
arrangement. The Company recognises and measures revenue in accordance
with Accounting Standard (AS) 7 Construction Contracts and
Accounting Standard (AS) 9 Revenue Recognition for the construction
or upgrade and operating and maintenance services it performs under the
contract or arrangement as prescribed in the Exposure Draft Guidance
note on Accounting for Service Concession Arrangements.
The financial asset model applies when the operator has an
unconditional right to receive cash or another financial asset from the
grantor. The Company recognises a financial asset to the extent that it
has an unconditional contractual right to receive cash or another
financial asset from the grantor for the construction and operation and
maintenance services. Such financial assets are classified as
ÃReceivables under Service Concession Arrangements. Interest incomes
arising on account of the Receivables under Service Concession
Arrangements are recognized in the profit and loss account using the
effective interest rate method.
The intangible asset model applies where the operator is paid by the
users or where the concession grantor has not provided a contractual
guarantee in respect of the recoverable amount. The Company recognises
intangible asset to the extent that it has an unconditional contractual
right to receive toll charges from the users of the facilities
developed by the Company. Such intangible assets are classified as
Concession intangible assets under shown under the head fixed assets.
Dividend income is recognised when the unconditional right to receive
the income is established. Income from interest on deposits and
interest bearing securities is recognised on the time proportionate
method taking into account the amount outstanding and the rate
applicable.
1.8 Fixed assets and depreciation
Fixed assets are carried at cost of acquisition or construction less
accumulated depreciation. The cost of fixed assets includes purchase
price, non-refundable taxes, duties, freight and other incidental
expenses related to the acquisition or installation of the respective
assets. Borrowing costs directly attributable to acquisition or
construction of those fixed assets which necessarily take a substantial
period of time to get ready for their intended use are capitalised.
Advances paid towards the acquisition of fixed assets outstanding at
each balance sheet date and the cost of fixed assets not ready for
their intended use before such date are disclosed under capital
work-in-progress.
Depreciation on fixed assets is provided using the straight- line
method at the rates specified in Schedule XIV to the Companies Act,
1956. In the opinion of the management, the rates specified in Schedule
XIV reflect the economic useful lives of these assets. Depreciation is
calculated on a pro-rata basis from/upto the date the assets are
purchased/ sold. Individual assets costing less than `5,000 are
depreciated in full in the year of acquisition.
1.9 Foreign exchange transactions
Foreign currency transactions are recorded using the exchange rates
prevailing on the date of the respective transactions. Exchange
differences arising on foreign currency transactions settled during the
year are recognised in the profit and loss account.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date, not covered by forward exchange contracts, are
translated at year-end rates. The resultant exchange differences are
recognised in the profit and loss account. Non-monetary assets are
recorded at the rates prevailing on the date of the transaction.
1.10 Investments
Long-term investments are carried at cost less any other-
than-temporary diminution in value, determined separately for each
individual investment.
Current investments are carried at the lower of cost and fair value.
The comparison of cost and fair value is done separately in respect of
each category of investment.
1.11 Employee benefits
Contributions payable to the recognized provident fund, which is a
defined contribution scheme, are charged to the profit and loss account
on accrual basis.
Contributions to superannuation fund, which is a defined contribution
scheme, are made at pre-determined rates to the Life Insurance
Corporation of India on a monthly basis.
Employee gratuity and long term compensated absences, which are defined
benefit schemes, are accrued based on actuarial valuation at the
balance sheet date, carried out by an independent actuary and are
charged to profit and loss account. All actuarial gains and losses
arising during the year are recognized in the profit and loss account.
1.12 Borrowing costs
Borrowing costs directly attributable to the acquisition/ construction
of the qualifying asset are capitalised as part of the cost of that
asset. Other borrowing costs are recognised as an expense in the period
in which they are incurred.
1.13 Leases
Leases where the lessor effectively retains substantially all the risks
and rewards of ownership of the leased asset are classified as
operating leases. Operating lease payments are recognised as an expense
in the profit and loss account on a straight-line basis over the lease
term.
1.14 Earnings per Share
The basic and diluted earnings per share are computed by dividing the
net profit attributable to equity shareholders for the year by the
weighted average number of equity shares outstanding during the year.
The Company does not have any potentially dilutive equity shares.
1.15 Taxation
Income tax expense comprises current tax, deferred tax and Minimum
Alternative Tax.
Current tax
The current charge for income taxes is calculated in accordance with
the relevant tax regulations applicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing
differences between accounting income and taxable income for the year.
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognized using the tax rates that have been
enacted or substantially enacted by the balance sheet date. Deferred
tax assets are recognized only to the extent there is reasonable
certainty that the assets can be realized in future; however, where
there is unabsorbed depreciation or carry forward of losses, deferred
tax assets are recognized only if there is a virtual certainty of
realization of such assets. Deferred tax assets are reviewed at each
balance sheet date and is written- down or written up to reflect the
amount that is reasonably/ virtually certain (as the case may be) to be
realized. The break-up of the major components of the deferred tax
assets and liabilities as at balance sheet date has been arrived at
after setting off deferred tax assets and liabilities where the Company
has a legally enforceable right to set-off assets against liabilities
and where such assets and liabilities relate to taxes on income levied
by the same governing taxation laws.
Minimum Alternate Tax (MAT) Credit entitlement
MAT credit entitlement represents amounts paid in a year under Section
115 JB of the Income Tax Act 1961 (IT Act), in excess of the tax
payable, computed on the basis of normal provisions of the IT Act.
Such excess amount can be carried forward for set off against future
tax payments for ten succeeding years in accordance with the relevant
provisions of the IT Act. Since such credit represents a resource
controlled by the Company as a result of past events and there is
evidence as at the reporting date that the Company will pay normal
income tax during the specified period, when such credit would be
adjusted, the same has been disclosed as MAT Credit entitlement under
Loans and Advances in balance sheet with a corresponding credit to
the profit and loss account, as a separate line item.
Such assets are reviewed as at each balance sheet date and written down
to reflect the amount that will not be available as a credit to be set
off in future, based on the applicable taxation law then in force.
1.16 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset (including goodwill) or a group of assets
comprising a cash generating unit may be impaired. If any such
indication exists, the Company estimates the recoverable amount of the
asset. For an asset or group of assets that does not generate largely
independent cash in flows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs. If such recoverable
amount of the asset or the recoverable amount of the cash generating
unit to which the asset belongs is less than its carrying amount, the
carrying amount is reduced to its recoverable amount. The reduction is
treated as an impairment loss and is recognised in the profit and loss
account. If at the balance sheet date there is an indication that if a
previously assessed impairment loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at the recoverable
amount subject to a maximum of depreciable historical cost. An
impairment loss is reversed only to the extent that the carrying amount
of asset does not exceed the net book value that would have been
determined, if no impairment loss had been recognised.
1.17 Accounting for interest in joint ventures
Jointly controlled assets involve the joint control and joint
ownership, by the venturers of one or more assets contributed to, or
acquired for the purpose of, the joint venture and dedicated to the
purposes of the joint venture. These assets are used to obtain economic
benefits for the venturers. The Company accounts for its share of
jointly controlled assets, liabilities, income and expenses under
respective heads in the financial statements by way of proportionate
consolidation as per AS-27.
1.18 Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. Where there is possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Provisions for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognized
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
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