2.11 Provisions, contingent liabilities and contingent assets
a) Provisions are recognized only when there is a present obligation, as a result of past events and when
a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are
reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are
discounted to their present values, where the time value of money is material.
b) Contingent liability is disclosed for possible obligations which will be confirmed only by future events
not wholly within the control of the Company or present obligations arising from past events where it
is not probable that an outflow of resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot be made.
c) Contingent assets are neither recognized nor disclosed except when realisation of income is virtually
certain, related asset is disclosed.
d) Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.
2.12 Employee benefits
a) Short-term employee benefits
Short-term employee benefits in respect of salaries and wages, including non-monetary benefits are
recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in
which the related service is rendered.
b) Defined contribution plans
Company's Contributions to Provident are charged to the Statement of Profit and Loss in the year when
the contributions to the respective funds are due.
c) Defined benefit plans
Gratuity is in the nature of a defined benefit plan. The cost of providing benefits under the defined
benefit obligation is calculated on the basis of actuarial valuations carried out at reporting date by
independent actuary using the projected unit credit method. Service costs and net interest expense or
income is reflected in the Statement of Profit and Loss. Gain or Loss on account of re-measurements are
recognised immediately through other comprehensive income in the period in which they occur.
d) Other employee benefits
The employees of the Company are entitled to compensated leave which is recognised as an expense in
the statement of profit and loss account as and when they accrue. The liability is calculated based on
actuarial valuation using projected unit credit method. These benefits are unfunded.
2.13 Investments in equity instruments of subsidiaries, joint ventures and associates
Investment in subsidiaries, associates and joint ventures are carried at cost as at the transition date i.e,
1st April, 2016.
2.14 Financial instruments, Financial assets, Financial liabilities and Equity instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual
provisions of the relevant instrument and 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 measured at fair value through profit or loss) are added to or deducted from
the fair value on initial recognition of financial assets or financial liabilities.
i) Financial Assets
(a) Recognition
Financial assets are initially recognised at transaction price when the Company becomes party
to contractual obligations. The transaction price includes transaction costs unless the asset is
being fair valued through the Statement of Profit and Loss.
(b) Classification
Management determines the classification of an asset at initial recognition depending on the
purpose for which the assets were acquired. The subsequent measurement of financial assets
depends on such classification.
Financial assets are classified as those measured at:
1) amortised cost, where the financial assets are held solely for collection of cash flows
arising from payments of principal and/ or interest.
2) fair value through other comprehensive income (FVTOCI), where the financial assets are
held not only for collection of cash flows arising from payments of principal and interest
but also from the sale of such assets. Such assets are subsequently measured at fair
value, with unrealised gains and losses arising from changes in the fair value being
recognised in other comprehensive income.
3) fair value through profit or loss (FVTPL), where the assets does not meet the criteria for
categorization as at amortized cost or as FVTOCI. Such assets are subsequently measured
at fair value, with unrealised gains and losses arising from changes in the fair value
being recognised in the Statement of Profit and Loss in the period in which they arise.
However, in respect of particular investments in equity instruments that would otherwise be
measured at fair value through profit or loss, an irrevocable election at initial recognition may
be made to present subsequent changes in fair value through other comprehensive income.
(c) Impairment
The Company assesses at each reporting date whether a financial asset (or a group of financial
assets) held at amortised cost and financial assets that are measured at fair value through
other comprehensive income are tested for impairment based on evidence or information that is
available without undue cost or effort. Expected credit losses are assessed and loss allowances
recognised if the credit quality of the financial asset has deteriorated significantly since initial
recognition.
(d) De-recognition
Financial assets are derecognised when the right to receive cash flows from the assets has
expired, or has been transferred, and the Company has transferred substantially all of the risks
and rewards of ownership. If the asset is one that is measured at:
(i) amortised cost, the gain or loss is recognised in the Statement of Profit and Loss;
(ii) fair value through other comprehensive income, the cumulative fair value adjustments
previously taken to reserves are reclassified to the Statement of Profit and Loss unless
the asset represents an equity investment in which case the cumulative fair value
adjustments previously taken to reserves is reclassified within equity.
ii) Financial liabilities
Borrowings, trade payables and other financial liabilities are initially recognised at the value of the
respective contractual obligations. They are subsequently measured at amortised cost.
Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual
obligation is discharged, cancelled and on expiry.
iii) Equity instruments
Equity instruments are recognised at the value of the proceeds, net of direct costs of the capital
issue.
iv) Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount is included in the Balance Sheet where
there is a legally enforceable right to offset the recognised amounts and there is an intention to settle
on a net basis or realise the asset and settle the liability simultaneously.
v) Dividend distribution
Dividends paid (including income tax thereon) is recognised in the period in which the interim dividends
are approved by the Board of Directors, or in respect of the final dividend when approved by
shareholders.
vi) Fair value measurement
Fair value is a market-based measurement, not an entity-specific measurement. Under Ind AS, fair
valuation of financial instruments is guided by Ind AS 113 "Fair Value Measurement" (Ind AS - 113).
For some assets and liabilities, observable market transactions or market information might be
available. For other assets and liabilities, observable market transactions and market information
might not be available. However, the objective of a fair value measurement in both cases is the same—
to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would
take place between market participants at the measurement date under current market conditions.
In determining the fair value of financial instruments, the Company uses a variety of methods and
assumptions that are based on market conditions and risks existing at each balance sheet date.
The Company uses the following hierarchy for determining and disclosing the fair value of financial
instruments by valuation technique:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3: Inputs for the assets or liabilities that are not based on observable market data
(unobservable inputs).
2.15 Tax expense
Income tax expense comprises of current and deferred tax. It is recognised in the Statement of Profit and Loss
except to the extent that it relates to an item recognised directly in equity or in other comprehensive income.
Current tax in the Statement of Profit and Loss is provided as the amount of tax payable in respect of taxable
income for the period using tax rates and tax laws enacted during the period, together with any adjustment to
tax payable in respect of previous years.
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.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities
and the amounts used for taxation purposes (tax base), at the tax rates and tax laws enacted or substantively
enacted by the end of the reporting period.
Deferred tax assets are recognized for deductible temporary differences, the carry forward of unused tax
credits and any unused tax losses to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax credits and unused tax
losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax assets to be utilised.
2.16 Earnings per Share
a) Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to
equity shareholders (after deducting attributable taxes) by the weighted-average number of equity
shares outstanding during the period.
b) For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable
to equity shareholders and the weighted-average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares. The number of equity shares and potential
dilutive equity shares are adjusted retrospectively for all periods presented for any share split and
bonus shares issues including for changes effected prior to the approval of the financial statements by
the Board of Directors.
2.17 Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision-Maker (CODM).
The chief operating decision-maker, who is responsible for allocating resources and assessing performance
of the operating segments, has been identified as the Managing Director.
The accounting policies adopted for segment reporting are in line with the accounting policies adopted for
preparing and presenting the Financial Statements of the Company as a whole. In addition, the following
specific accounting policies have been followed for segment reporting:
a) Segment revenue includes sales and other income directly identifiable with/allocable to the segment
including inter segment transfers.
b) Revenue, expenses, assets and liabilities are identified to segments on the basis of their relationship to
the operating activities of the segment. Segment results represent profits before finance charges,
unallocated corporate expenses and taxes. Revenue, expenses, assets and liabilities which relate to
the Company as a whole and are not allocable to segments on direct and/or on a reasonable basis,
have been disclosed as "Unallocable".
2.18 Foreign Currency Transactions
The functional and presentation currency of the Company is Indian Rupee.
Transactions in foreign currency are accounted for at the exchange rate prevailing on the transaction date.
Gains/ losses arising on settlement as also on translation of monetary items are recognised in the Statement
of Profit and Loss.
2.19 Leases
Where the Company is lessee
Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to
ownership of the leased asset, are capitalized at the lower of the fair value and present value of the minimum
lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are
apportioned between the finance charges and reduction of the lease liability based on the implicit rate of
return. Finance charges are recognized as finance costs in the statement of profit and loss.
Right of use asset is depreciated on a straight-line basis over the lower of the lease term or the estimated
useful life of the asset unless there is reasonable certainty that the Company will obtain ownership, wherein
such assets are depreciated over the estimated useful life of the asset.
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased
term, 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.
Where the Company is the lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of
the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified
as a finance lease. All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease
separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset
arising from the head lease.
For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
2.20 Cash and cash equivalents
Cash and cash equivalents in the Balance sheet comprise cash on hand, cheques on hand, balance with banks
on current accounts and short term, highly liquid investments with an original maturity of three months or
less and which carry insignificant risk of changes in value.
For the purpose of the Cash Flow Statement, Cash and cash equivalents consist of Cash and cash equivalents,
as defined above and net of outstanding book overdrafts as they are considered an integral part of the
Company's cash management.
2.21 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit/loss before tax is adjusted for the effects of
transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or
payments and item of income or expenses associated with investing or financing flows. The cash flows from
operating, investing and financing activities of the Company are segregated.
3. Significant accounting judgements, estimates and assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial statements and the results of operations during
the reporting period end. Although these estimates are based upon management's best knowledge of current events
and actions, actual results could differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the
end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year.
i) Revenue recognition from construction contracts
Revenue is recognised using the percentage of completion method as construction progresses in respect of
construction contracts. The percentage of completion is estimated by reference to the stage of the projects
determined based on the proportion of costs incurred to date and the total estimated costs to complete.
ii) Revenue recognition from development contracts
The Company recognizes revenue using the completed contract method. This requires forecasts to be made of
total budgeted cost with the outcomes of underlying construction and service contracts, which require
assessments and judgements to be made on changes in work scopes, claims (compensation, rebates etc.) and
other payments to the extent they are probable and they are capable of being reliably measured. For the
purpose of making estimates for claims, the Company used the available contractual and historical information.
iii) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the
Company's future taxable income against which the deferred tax assets can be utilized.
(iv) Estimation of Defined benefit obligations
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation 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
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
financial year end.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for
plans, the actuary considers the interest rates of government bonds.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only
at interval in response to demographic changes. Future salary increases and gratuity increases are based on
expected future inflation rates.
(v) Fair value measurements and valuation processes:
The fair values of financial instruments that are not traded in an active market and cannot be measured based
on quoted prices in active markets is determined using valuation techniques. The Group uses its judgement to
select a variety of method/methods and make assumptions that are mainly based on market conditions
existing at the end of each financial year.
The inputs to these models are taken from observable markets where possible, but where this is not feasible,
a degree of judgement is required in establishing fair values. Judgements include considerations of inputs
such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the
reported fair value of financial instruments.
(vi) Provisions and contingent liabilities
The Company has ongoing litigations with various regulatory authorities and third parties. Where an outflow
of funds is believed to be probable and are liable estimate of the outcome of the dispute can be made based
on management's assessment of specific circumstances of each dispute and relevant external advice,
management provides for its best estimate of the liability. Such accruals are by nature complex and can take
number of years to resolve and can involve estimation uncertainty. Information about such litigations is
provided in notes to the financial statements.
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