2.12 PROVISIONS AND CONTINGENT LIABILITIES
Provisions are recognised when the Company has a present legal or constructive obligation as a result of a past
event and it is probable that an outflow of resources will be required to settle the obligation and the amount can be
reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management's best estimates of the expenditure required to settle
the present obligation at the end of the reporting period. The discount rate used to determine the present value is
pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the liability
is not considered. However, a disclosure for contingent liabilities is made when there is a possible obligation
arising from past event, the existence of which will be confirmed only by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the Company or a present obligation that arises
from past events where it is either not probable that an outflow of resources embodying economic benefits will be
required to settle or a reliable estimate of the amount cannot be made.
2.13 DIVIDEND
Dividend on equity shares is recorded as a liability on the date of approval by the shareholders and interim
dividend is recorded as a liability on the date of declaration by the Company's Board of Directors.
2.14 CASH AND CASH EQUIVALENTS
For the purpose of the Statement of cash flows, cash and cash equivalents consists of cash on hand and at bank,
deposits held at call with banks, other short-term highly liquid investment with original maturities of three months
or less that are readily convertible to a known amount of cash and which are subject to an insignificant risk of
changes in value.
2.15 EMPLOYEE BENEFITS
a. Short term employee benefits are recognised as an expense in the statement of profit and loss of the year in
which the related service are rendered.
b. Compensated absence is accounted for using the project unit credit method, on the basis of actuarial valuation
carried out by third party actuaries at each Balance Sheet date. Actuarial gains and losses arising from
experience adjustments and changes in actuarial assumptions are charged or credited to profit and loss in the
period in which they arise.
c. Contribution payable by the Company to the concerned government authorities in respect of provident fund,
family pension fund and employee state insurance are defined contribution plans. The contributions are
recognised as an expense in the Statement of Profit and Loss during the period in which the employee
renders the related service. The Company does not have any further obligation in this respect, beyond such
contribution.
d. Certain employees are participated in a defined contribution plan of superannuation. The Company has no
further obligation to plan beyond its monthly contribution which are periodically contributed to a trust fund, the
corpus of which is invested with the Life Insurance Corporation of India.
e. The cost of providing gratuity, a defined benefit plan is determined using the Projected Unit Credit Method,
on the basis of actuarial valuation carried out by third party actuaries at each Balance Sheet date. Actuarial
gains and losses arising from experience adjustments and changes in actuarial assumptions are charged
or credited to other comprehensive income in the period in which they arise. Other costs are accounted in
Statement of profit and loss.
The Company operates a defined benefit plan for gratuity, which requires contributions to be made to a
separately administered fund. The fund is managed by trust, the corpus of which is invested with the Life
Insurance Corporation of India.
2.16 INCOME TAX
Income tax expenses comprises current and deferred income tax. Income tax expenses are recognised in
the Statement of Profit and Loss except that it relates to items recognised directly in equity, in those case it is
recognised in ‘Other Comprehensive Income'. Current Income tax for current and prior periods is recognised at
the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have
been enacted or substantively enacted by the balance sheet date.
Deferred income tax assets and liabilities are recognised for all temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realized.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted
or substantively enacted by the balance sheet date and are expected to apply to taxable income in the year in
which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates
on deferred income tax assets and liabilities is recognised as income or expense in the period that includes the
enactment or the substantive enactment date. A deferred income tax asset is recognised to the extent that it is
probable that future profit will be available against which the deductible temporary differences and tax losses
can be utilized. Deferred income taxes are not provided on the undistributed earnings of subsidiary where it is
expected that earnings of the subsidiary will not be distributed in foreseeable future. The Company off sets current
tax assets and Current tax liabilities, where it has a legally enforceable right to set off the recognised amounts
and where it indents either to settle on a net basis, or to realize the assets and settle the liability simultaneously.
The income tax provision of the interim period is made based on the best estimate of the annual average tax rate
expected to be applicable for the full financial year.
2.17 FINANCIAL INSTRUMENTS
A financial instrument is any contract that give rise to a financial asset of one entity and financial liability or equity
instrument of another entity.
a. Financial Assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair
value through profit and loss, transaction costs that are attributable to the acquisition of the financial assets.
Subsequent measurement
Financial assets are subsequently measured at amortized cost or fair value through profit or loss depending on
its business model for managing those financial assets and the asset's contractual cash flow characteristics.
Derecognition
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the
asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the
asset to another entity.
Impairment of Financial Assets
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment
loss on the financial assets. If credit risk has not increased significantly 12 months eCl is used to provide
the impairment loss. If credit risk has increased significantly lifetime ECL is used. If, in a subsequent period,
credit quality of the instrument improves such that there is no longer a significant increase in credit risk since
initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12 month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the
contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the
original EIR.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/expenses
in the statement of profit & loss.
b. Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit and
loss, loans and borrowings or payable.
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.
The financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.
Subsequent measurement
The measurement of financial liabilities depends on their classification described below:
Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through profit or loss includes derivative financial instruments entered into by
the Company that are not designated as hedging instruments in hedge relationships. All change in the fair
value of such liability are recognised in the statement of profit and loss.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized costs
using EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognized as
well as through the EIR amortization process.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
2.18 SEGMENT REPORTING
Operating systems are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker (CODM). The Managing Director of the Company has been identified as CODM and he is
responsible for allocating the resources, assess the financial performance and position of the Company and make
strategic decision. Refer note 35 for segment information presented.
2.19 CRITICAL ESTIMATES AND JUDGEMENTS
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates,
judgement and assumptions which affect the reported amount of assets and liabilities as at the balance sheet
date, reported amount of revenue and expenses for the year and disclosure of contingent assets and liabilities as
at the balance sheet date.
The areas involving critical estimates or judgement are:
i Critical estimates
a. Measurement of defined benefit obligations - Note 41
b. Estimated useful life of intangible assets, property, plant and equipment - Note 2.5 and 2.6
c. Estimated fair value of financial instruments - Note 43
d. Recognition of revenue - Note 2.4
e. Provision for expected credit losses - Note 38
ii Significant Judgements
a. Designating financial asset/liability through fair value through profit or loss so as to reduce/eliminate
accounting mismatch.
b. Probability of an outflow of resources to settle an obligation resulting in recognition of provision.
The estimates, judgement and assumptions used in the financial statements are based upon
Management's evaluation of relevant facts and circumstances and as at the date of financial statements.
Accounting estimates could differ from period to period and accordingly appropriate changes in estimates
are made as the management becomes aware of the changes. Actual results could differ from the
estimates.
Note 34 : Disclosure required pursuant to Ind AS-36 “Impairment of Assets”
The Company has carried out impairment test on its fixed assets as on the date of Balance Sheet and the Management
is of the opinion that there is no asset for which provision for impairment is required to be made as per Ind AS - 36
Impairment of Assets.
Note 35 : Operating Segment Information
The Company's operations predominantly consist of construction activities. Hence there are no reportable segments
under Ind AS - 108 “ Operating Segment ” during the year under report, the Company has engaged in its business only
within India and not in any other country. The condition prevailing in India being uniform, no separate geographical
disclosures are considered necessary.
b. A claim of ' 3.78 crores filed by one of our sub-contractor, is pending disposal before Ld. Civil Court in respect
of which mangement, based on inputs from legal experts is confident that no liability is likely to devolve upon the
Company.
c. For the AY 2018-19, PCIT (Central), Delhi-1 under sec 263 has passed an order creating the disallowances of
'19.04 lakhs under sec 14A and 46.20 lakhs under sec 36(1)(va) against the original order of Ld. Assessing
officer under sec 143(3) and has directed the Jurisdictional Assessing Officer to recompute the demand. In the
Meantime, Company has filed an appeal before ITAT New Delhi on April 05, 2024. The matter is pending before
Honble ITAT, Delhi .
Note 37 : Capital Management
The Company's capital management objective is to maximize the total shareholder's return by optimizing cost of capital
through flexible capital structure that supports growth. Company ensures optimal credit risk profile to maintain/enhance
credit rating.
The Company determines the amount of capital requirement on the basis of annual operating plan and long-term
strategic plans. The funding requirements are met through internal accruals and long term/short term borrowings. The
Company monitors the capital structure on the basis of Net debts to equity ratio and maturity profile of the overall debt
portfolio of the Company.
For the purpose of Company's capital management, equity includes paid up equity share capital and reserves and
surplus and Debt comprises of long term borrowings including current maturities of these borrowings.
Note 38 : Financial Risk Management Objectives and Policies
The Company's business activities are exposed to a variety of financial risk viz., market risk, credit risk and liquidity
risk. The Company's focus is to foresee the unpredictability of financial risk and to address the issue to minimize the
potential adverse effects of its financial performance.
The Company's financial risk management is an integral part of how to plan and execute its business strategies. The
Company's financial risk management policy is set by the Company's management.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency
exchange rates, interest rates, credit, liquidity and other market changes.
Interest rate risk
Out of total borrowings, large portion represents short term borrowings and the interest rate primarily based on the
Company's credit rating and also the changes in the financial market. Company influence rating and also factors which
influence the determination of the interest rates by the banks to minimize the interest continuously monitoring over all
factors rate risks.
Credit risk
Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Company. Credit risk arises primarily from financial assets such as trade receivables, loans, investments and other
financial assets.
At each reporting date, the Company measures loss allowance for certain class of financial assets based on historical
trend, industry practices and the business environment in which the Company operates.
Credit risk with respect to trade receivables are limited, due to the Company's customer profiles are well balanced in
Government and Non-Government customers and diversified amongst in various geographies. All trade receivables
are reviewed and assessed on a quarterly basis.
Credit risk arising from investments and balances with banks is limited because the counter parties are banks and
recognised companies with high credit worthiness.
(i) Provision for expected credit losses:
The Company measures Expected Credit Loss (ECL) for financial instruments based on historical trend, industry
practices and the business environment in which the Company operates.
For financial assets, a credit loss is the difference between:
(a) the contractual cash flows that are due to an entity under the contract; and
(b) the cash flows that the entity expects to receive.
The Company recognizes in profit or loss, the amount of expected credit losses (or reversal) that is required to
adjust the loss allowance at the reporting date in accordance with Ind AS 109.
In determination of the allowances for credit losses on trade receivables, the Company has used a practical
expedience by computing the expected credit losses based on ageing matrix, which has taken into account
historical credit loss experience and adjusted for forward looking information.
Financial Instruments and Cash Deposits
The Company considers factors such as track record, size of the institution, market reputation and service standards to select
the banks with which balances and deposits are maintained. Investments of surplus funds are made only with approved
counterparties. The maximum exposure to credit risk for the components of the balance sheet is ' 858.37 lakhs as at
31.03.2024 and ' 974.59 lakhs as at 31.03.2023, which is the carrying amount of cash and cash equivalents, other bank
balances, investments, trade receivables, loans and other financial assets.
Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations
The Company provides for accumulated leave benefit for eligible employees payable at the time of retirement/
resignation from service as per the policy of the Company, actual number of days outstanding based on last drawn
salary. The liabilities with regard to leave encashment scheme are determined by actuarial valuation as set out in
Note 2.15.
d) Risk Exposure
Aforesaid post employment defined benefit plans typically expose the Company to actuarial risks, most significant
of which are discount rate risk, salary escalation risk and demographic risk.
Discount Risk
The Company is exposed to the risk of fall in discount rate. A fall in discount rate will eventually increase the
ultimate cost of providing the above benefit thereby increasing the value of liability.
Salary Escalation Risk
The present value of defined benefit plan liability is calculated by reference to the future salaries of plan participant.
An increase in the salary of plan participants will increase the plan liabilities.
Demographic Risk
In the valuation of liability certain demographic (mortality and attrition rates) assumptions are made. The Company
is exposed to this risk to the extent of actual experience eventually being worse compared to the assumption
thereby causing an increase in the plan liability.
Note 44 : New Accounting Pronouncements
a) Amendment to Ind AS 103 ‘Business Combinations’ - change in definition of Business
The amendments clarify that while businesses usually have outputs, outputs are not required for an integrated set
of activities and assets to qualify as a business. The amendments also introduce an optional concentration test
that permits a simplified assessment of whether an acquired set of activities and assets is not a business. This
amendment does not have material impact on the Company.
b) Amendment to Ind AS 107 and Ind AS 109 - interest rate benchmark reforms
The amendments provide temporary exception from applying specific hedge accounting requirement and allows
continuation of hedge accounting when a hedging relationship is directly affected by interest rate benchmark
reform only. The amendment also provides for additional disclosure for hedging relationship that is subject to
this exception. The Company has floating rate debt linked to LIBOR which has been designated as cash flow
hedges. However there is no interest rate benchmark reform happened which affect the hedge relationship. This
amendment does not have material impact on the Company.
c) Amendment to Ind AS 116 ‘Leases’ - COVID-19 related rent concessions
The amendment provides a practical expedient which permits a lease not to assess whether a COVID-19 related
rent concession is a lease modification. The Company had not applied the practical expedient. This amendment
does not have material impact on the Company.
d) Amendment to Ind AS 1 and Ind AS 8 - definition of ‘material’
The amendment is not intend to change the underlying ‘materiality' concept rather it provides broader guidance
and make it easy to understand the meaning of ‘material'. This amendment does not have material impact on the
Company.
e) Amendment to Ind AS 10 and Ind AS 37 - material non adjusting event
The amendment requires an entity to disclose the nature and estimate of financial effect of a material non¬
adjusting event after the reporting period. Ind AS 37 specifically requires such disclosure of a non-adjusting
material restructuring plan. This amendment does not have material impact on the Company.
Note 45 : Other Disclosure
1. The Company do not have any Benami property, where any proceeding has been initiated or pending against the
Company for holding any Benami property.
2. The Company do not have any transactions with companies struck off.
3. The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period.
4. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
5. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign
entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
6. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party)
with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
7. The Company do have not any such transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such
as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
Explanation to the ratios:
Current Ratio: Current assets (numerator) include trade receivables, short term investments, cash and cash
equivalents, and other current assets. Current liabilities (denominator) incudes trade payables, lease liability, other
financial liabilities, provisions and statutory dues.
Debt-Equity Ratio: Total liabilities (numerator) includes current liabilities as defined above, lease liability, equity share
capital and other equity. Total Equity (Denominator) includes Equity share capital and other equity.
Debt Service Coverage Ratio: Earning for debts services (numerator) includes Net profit after taxes Non- cash
operating expenses like depreciation and other amortizations Interest other adjustments. Debt service (denominator)
includes lease payments.
Return on Equity Ratio: Net income (numerator) is net profit earned after tax. Average shareholder's equity
(denominator) includes equity share capital.
Inventory Turnover Ratio: Net Sales (numerator). Average Inventory (denominator).
Trade Receivables Turnover ratio: Net Sales (numerator). Average Trade Receivables (denominator).
Trade payables Turnover ratio: Net Credit Purchase (numerator). Average Trade Payables (denominator).
Net capital Turnover ratio: Numerator contains net revenue. Net working capital (denominator) calculated by
subtracting current liabilities from current assets.
Net Profit Ratio: Numerator contains net profit. Denominator contains net sales.
Return on Capital Employed: Numerator contains earning before interest and taxes. Capital employed (denominator)
calculated by subtracting current liabilities from total assets.
Return on Investment: Numerator contains change in investment. Denominator contains cost of investment.
Note 47: Previous year's figures are reclassified, where necessary, to conform to the current year's classification.
For and on behalf of the Board of Directors
For B R Maheswari & Co LLP Surinder Paul Kanwar Dr. Sanjeev Kumar (DIN: 00364416)
Chartered Accountants Chairman and Managing Director Rajiv Chandra Rastogi (DIN: 00035460)
Firm's Registration No. (DIN: 00033524) Naresh Kumar Verma (DIN: 07087356)
001035N/N500050 Preeti Goel (DIN: 09561869)
Directors
Akshay Maheshwari Neha Patwal
Partner Chief Financial Officer and Company Secretary
Membership No. 504704 (PAN: ESRPP5275F)
Date: 30 May, 2024
|