1.2 Principles of Consolidation
a) The Consolidated Financial Statements of Rail Vikas Nigam Limited and subsidiary have been consolidated line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions in accordance with Accounting Standard (AS)21 - “Consolidated Financial Statements” b) The Company’s Interest in Joint Ventures is consolidated by using the proportionate consolidation method as per the method given by Accounting Standard (AS) 27 - “Financial Reporting of Interest in Joint Ventures”. c).  As far as possible, the consolidated financial statements are brpared using uniform accounting policies for like transactions and other events in similar circumstances and are brsented in the same manner as the Company’s (RVNL) separate financial statements. d) Investments other than in subsidiaries and associates have been accounted as per Accounting Standard (AS) 13 on Accounting for Investments”.
1.3  Use of Estimates
Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
1.4. Cash Flow Statement
The Cash Flow Statement is brpared by the indirect method set out in Accounting Standard "3" on  "Cash Flow Statements " and brsents the cash flows by operating, investing and financing activities. Cash and bank balance that have insignificant risk of change in value, which have durations up to three months, are included in cash and cash equivalents in the cash flow statement.
1.5  Extraordinary and Exceptional Items
Income or Expenses that arise from events or transactions, that are clearly distinct from the ordinary activities, are classified as Extraordinary items. Specific disclosure of such events/transactions is made in the financial statements. Similarly, any external event beyond the control, significantly impacting income or expense, is also treated as an extraordinary item and disclosed as such.
On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities, is such that its disclosure improves an understanding of the performance. Such income or expense is classified as an exceptional item and accordingly disclosed in the Notes to Accounts.
1.6  Tangible Fixed Assets
Tangible Fixed Assets are stated at cost less accumulated debrciation and accumulated impairment in value. Such cost includes acquisition cost inclusive of inward freight, duties and taxes and incidental expenses related to acquisition. The expenses also include borrowing cost attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use.
1.7  Intangible Assets
Intangible assets comprise of license fees, other implementation costs for system software and other application software acquired for in-house use. The costs are capitalized in the year in which the relevant software is implemented for use. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes, and any directly attributable expenditure on making the asset ready for its intended use.
1.8 Capital Project Work in Progress:
a) Expenditure which can be directly identified with the Project undertaken by the JVs (Angul Sukinda Railway Co. Ltd., Krishnapatanam Railway Co. Ltd.) are debited to "Capital Project Work in Progress". The following amounts are reduced from the Capital Work in Progress: (i) Interest earned on the Mobilization Advances given in respect of the project execution (ii) Amount received on sale of tender
b) Project under which assets are not ready for their intented use and other capital work in progress are carried at cost comprising direct cost, related incidental expenses and attributable interest. (Haridaspur Paradip Railway Co. Ltd.)
1.9  Debrciation
Debrciation on individual assets acquired for ` 5000/- or less is debrciated at the rate of 100% taking in to consideration the commercial life in the year of purchase itself. Debrciation is provided on pro-rata basis on straight-line method over the estimated useful lives of the assets determined as follows:
Furniture and Fixture			4 Years
Computers			3 Years
Office Equipments (Excluding Mobile Phones)			5 Years
Mobile Phones			2 Years
Station Building			30 Years
P-Way			15 Years
Formation			15 Years
Plant & Machinery (Project)			15 Years
Bridges			30 Years
Vehicles			8 Years
Leasehold improvements are amortized ‘over the period of lease’ from the year in which such improvements are capitalized or ‘over useful life’ as computed under schedule II, whichever is less. Capitalized software costs are amortized @ 33.33% on pro-rata basis except where the estimated useful life is less than three years. Capitalized cost of Logo and website are amortized over a period of five years on prorata basis
Debrciation on SLM method is in consonance with the useful life specified in Schedule II of the Companies Act, 2013, except in the case of Furniture & Fixtures and Mobiles Phones & Tablets. In both the categories of these assets, Management has estimated the useful life after taking into consideration the economic benefits embodied in these assets and other factors such as technical obsolescence and wear and tear etc.
“In accordance with the provisions of the Companies Act 2013, effective from 1st April, 2014, the Company has reassessed the remaining useful lives of its fixed assets. As a consequence of such reassessment, the rate of charge for debrciation for the period is equal to the brviously applied rate of charges and additional impact is NIL.”
Angul Sukinda Railway Co. Ltd. (ASRL) and Krishnapatanam Railway Co. Ltd. (KPRCL) are following WDV method while charging debrciation in their stand alone Balance Sheet, however for the purpose of consolidation debrciation of above mentioned JVs have been recomputed as per Straight Line Method (SLM) and adjustments have been done accordingly.
1.10  Impairment of Assets
All assets other than inventories, investments other than interest in Jointly Controlled Entities (JCEs) are reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets, whose carrying amount value exceeds their recoverable amount, are written down to the recoverable amount.
1.11  Inventories
(a) Project Work-in-Progress is valued at the contract rates and construction material at site is stated at cost. Payments made to Zonal Railways for acquiring land included in project Work-in-Progress is stated at cost.
(b) Projects completed and handed over to Railways for operations are being transferred from Project Work in Progress to the Railways. IRFC funded projects are shown as "Lease Receivable" under the heads Non-current/ Current assets in Compliance with AS 19. Projects are treated as completed where at least 95% of the latest anticipated cost has been incurred till the end of year.
1.12  Revenue Recognition
Revenue is recognized based on the nature of activity, when consideration can be reasonably measured and there exists reasonable certainty of its recovery. Revenue from construction/project related activity is recognized as follows:
(a)     Projects executed for Ministry of Railways (MOR): Revenue from project execution is determined by adding aggregate cost plus margin agreed with MOR and any subsequent clarifications received in this respect.
(b)    Deposit works (cost plus contract) related to JCEs (Jointly Controlled Entities) in the form of Special Purpose Vehicles and others):  Contract revenue is determined by adding the aggregate cost plus proportionate margin (Direction & General Charges) based on fixed percentage as agreed with the customer.
(c ) In case of IRFC funded projects, interest component on installments received from railways in netted against the interest payable on IRFC borrowings.
(d)    Claims are accounted as income in the year of acceptance by client or evidence of acceptance received.
(e)    Interest on investment is accounted on accrual basis, inclusive of related tax deducted at source.
(f)    Other items of income are accounted as and when the right to receive arises.
(g)   The operating income of the JVs are recognized on accrual basis upon the information as and when received from Railways for the share of revenue due to the company for the operations. The period for which revenue is not intimated by Railway, same is recognized and accounted for on pro-rata estimated  basis.
1.13 Cost Recognition
Operating revenue and Operation & Maintenance Cost are recognised as per provisional figures advised by Zonal Railways. (KPRCL, BDRCL and Kutch Railway Co. Ltd.)
1.14 Employee Benefits
a)    Short Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, and short- term compensated absences, etc. are recognized in the period in which the employee renders the related service.
b)    Long Term Employee Benefits
The obligation for long-term employee benefits such as long-term compensated absences, is recognized in the same manner as in the case of defined benefit plans as mentioned in (c)  (ii) below
c)     Post Employment Benefits
i.     Defined contribution plans: The Company makes defined contribution to the Regional Provident Fund Commissioner in respect of provident fund scheme, CGIS and employee state insurance scheme. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
ii.     Defined contribution plans: The Company makes defined contribution to the RVNL Medical and Welfare Trust in  respect of RVNL Medical and Welfare Scheme. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
ii.    Defined benefit plans: Gratuity is a post employment defined benefit plan. The liability recognized in the balance sheet is the brsent value of the defined benefit obligation at the balance sheet date less fair value of plan assets. The defined benefit obligation is calculated by an independent actuary using projected unit credit (PUC) method. Actuarial gains and losses are recognised immediately in the Profit & Loss Account.
d)    Retirement benefits of the ‘staff on deputation’ have been accounted for on the basis of the guidelines of the Ministry of Railways.
1.15 Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange rate brvailing on the date of transactions. Gains / Losses arising out of settlement are charged / credited to the profit and loss account.
1.16 Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.
1.17 Taxes on Income
Tax on income for the current year is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961, and based on the expected outcome of the assessment/appeals.
Minimum Alternative Tax is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the company.
Deferred tax is recognized annually on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws substantially enacted as on the balance sheet date. Deferred tax assets in respect of unabsorbed debrciation/brought forward losses are recognized to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
1.18 Lease Rentals
Lease rental in respect of operating lease is charged to project work in progress under Statement of the Profit and Loss.
1.19 Financial Lease
In case of financial lease substantially all the risks and rewards incidental to legal ownership are transferred and assets given on finance lease are capitalised at the normal sale price/contracted price and treated as sales.
1.20 Provisions and Contingencies
The Company creates a provision when there is a brsent 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 obligation. A disclosure of a contingent liability is made where there is a possible obligation that probably will not require an outflow of resources or where a reliable estimate of the obligation cannot be made. Contingent assets are not recognised. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
1.21  Liquidated Damages and Penalties
"Credit items arising on account of Liquidated Damages and Penalties during execution of contract or due to termination of contract etc. are carried as " Retention Money" under " other Current Liabilities" until the final Closure of the Project. Thereafter,i.e. on financial closure of the Project, such leftover balances of liquidity Damages and Penalties are credited to the total cost of the concerned project."
1.22 Stale Cheques
Cheques which have not been  cleared within the validity period of 3 months are credited to the stale cheque account. Items which are more than 3 yrs old and could not be cleared in stale cheque account are credited to the head which was earlier debited while making payments except deductions made from salary of staff which are credited to misc income.

1. Summary of Significant Consolidated Accounting Policies

1.1  Basis of Preparation

The Consolidated Financial Statements of Rail Vikas Nigam Limited (RVNL)  have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounts) Rules, 2014 (as amended) and the relevant provisions of the Companies Act, 2013. These financial statements have been drawn up in accordance with the going-concern principle, on accrual basis and on a historical cost basis. However, certain escalation and other claims by customers, which are not ascertainable / acknowledged, are not taken into account. The significant accounting policies adopted by are given below.

1.2 Principles of Consolidation
a) The Consolidated Financial Statements of Rail Vikas Nigam Limited and subsidiary have been consolidated line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions in accordance with Accounting Standard (AS)21 - “Consolidated Financial Statements” b) The Company’s Interest in Joint Ventures is consolidated by using the proportionate consolidation method as per the method given by Accounting Standard (AS) 27 - “Financial Reporting of Interest in Joint Ventures”. c).  As far as possible, the consolidated financial statements are brpared using uniform accounting policies for like transactions and other events in similar circumstances and are brsented in the same manner as the Company’s (RVNL) separate financial statements. d) Investments other than in subsidiaries and associates have been accounted as per Accounting Standard (AS) 13 on Accounting for Investments”.
1.3  Use of Estimates
Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
1.4. Cash Flow Statement
The Cash Flow Statement is brpared by the indirect method set out in Accounting Standard "3" on  "Cash Flow Statements " and brsents the cash flows by operating, investing and financing activities. Cash and bank balance that have insignificant risk of change in value, which have durations up to three months, are included in cash and cash equivalents in the cash flow statement.
1.5  Extraordinary and Exceptional Items
Income or Expenses that arise from events or transactions, that are clearly distinct from the ordinary activities, are classified as Extraordinary items. Specific disclosure of such events/transactions is made in the financial statements. Similarly, any external event beyond the control, significantly impacting income or expense, is also treated as an extraordinary item and disclosed as such.
On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities, is such that its disclosure improves an understanding of the performance. Such income or expense is classified as an exceptional item and accordingly disclosed in the Notes to Accounts.
1.6  Tangible Fixed Assets
Tangible Fixed Assets are stated at cost less accumulated debrciation and accumulated impairment in value. Such cost includes acquisition cost inclusive of inward freight, duties and taxes and incidental expenses related to acquisition. The expenses also include borrowing cost attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use.
1.7  Intangible Assets
Intangible assets comprise of license fees, other implementation costs for system software and other application software acquired for in-house use. The costs are capitalized in the year in which the relevant software is implemented for use. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes, and any directly attributable expenditure on making the asset ready for its intended use.
1.8 Capital Project Work in Progress:
a) Expenditure which can be directly identified with the Project undertaken by the JVs (Angul Sukinda Railway Co. Ltd., Krishnapatanam Railway Co. Ltd.) are debited to "Capital Project Work in Progress". The following amounts are reduced from the Capital Work in Progress: (i) Interest earned on the Mobilization Advances given in respect of the project execution (ii) Amount received on sale of tender
b) Project under which assets are not ready for their intented use and other capital work in progress are carried at cost comprising direct cost, related incidental expenses and attributable interest. (Haridaspur Paradip Railway Co. Ltd.)
1.9  Debrciation
Debrciation on individual assets acquired for ` 5000/- or less is debrciated at the rate of 100% taking in to consideration the commercial life in the year of purchase itself. Debrciation is provided on pro-rata basis on straight-line method over the estimated useful lives of the assets determined as follows:
Furniture and Fixture			4 Years
Computers			3 Years
Office Equipments (Excluding Mobile Phones)			5 Years
Mobile Phones			2 Years
Station Building			30 Years
P-Way			15 Years
Formation			15 Years
Plant & Machinery (Project)			15 Years
Bridges			30 Years
Vehicles			8 Years
Leasehold improvements are amortized ‘over the period of lease’ from the year in which such improvements are capitalized or ‘over useful life’ as computed under schedule II, whichever is less. Capitalized software costs are amortized @ 33.33% on pro-rata basis except where the estimated useful life is less than three years. Capitalized cost of Logo and website are amortized over a period of five years on prorata basis
Debrciation on SLM method is in consonance with the useful life specified in Schedule II of the Companies Act, 2013, except in the case of Furniture & Fixtures and Mobiles Phones & Tablets. In both the categories of these assets, Management has estimated the useful life after taking into consideration the economic benefits embodied in these assets and other factors such as technical obsolescence and wear and tear etc.
“In accordance with the provisions of the Companies Act 2013, effective from 1st April, 2014, the Company has reassessed the remaining useful lives of its fixed assets. As a consequence of such reassessment, the rate of charge for debrciation for the period is equal to the brviously applied rate of charges and additional impact is NIL.”
Angul Sukinda Railway Co. Ltd. (ASRL) and Krishnapatanam Railway Co. Ltd. (KPRCL) are following WDV method while charging debrciation in their stand alone Balance Sheet, however for the purpose of consolidation debrciation of above mentioned JVs have been recomputed as per Straight Line Method (SLM) and adjustments have been done accordingly.
1.10  Impairment of Assets
All assets other than inventories, investments other than interest in Jointly Controlled Entities (JCEs) are reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets, whose carrying amount value exceeds their recoverable amount, are written down to the recoverable amount.
1.11  Inventories
(a) Project Work-in-Progress is valued at the contract rates and construction material at site is stated at cost. Payments made to Zonal Railways for acquiring land included in project Work-in-Progress is stated at cost.
(b) Projects completed and handed over to Railways for operations are being transferred from Project Work in Progress to the Railways. IRFC funded projects are shown as "Lease Receivable" under the heads Non-current/ Current assets in Compliance with AS 19. Projects are treated as completed where at least 95% of the latest anticipated cost has been incurred till the end of year.
1.12  Revenue Recognition
Revenue is recognized based on the nature of activity, when consideration can be reasonably measured and there exists reasonable certainty of its recovery. Revenue from construction/project related activity is recognized as follows:
(a)     Projects executed for Ministry of Railways (MOR): Revenue from project execution is determined by adding aggregate cost plus margin agreed with MOR and any subsequent clarifications received in this respect.
(b)    Deposit works (cost plus contract) related to JCEs (Jointly Controlled Entities) in the form of Special Purpose Vehicles and others):  Contract revenue is determined by adding the aggregate cost plus proportionate margin (Direction & General Charges) based on fixed percentage as agreed with the customer.
(c ) In case of IRFC funded projects, interest component on installments received from railways in netted against the interest payable on IRFC borrowings.
(d)    Claims are accounted as income in the year of acceptance by client or evidence of acceptance received.
(e)    Interest on investment is accounted on accrual basis, inclusive of related tax deducted at source.
(f)    Other items of income are accounted as and when the right to receive arises.
(g)   The operating income of the JVs are recognized on accrual basis upon the information as and when received from Railways for the share of revenue due to the company for the operations. The period for which revenue is not intimated by Railway, same is recognized and accounted for on pro-rata estimated  basis.
1.13 Cost Recognition
Operating revenue and Operation & Maintenance Cost are recognised as per provisional figures advised by Zonal Railways. (KPRCL, BDRCL and Kutch Railway Co. Ltd.)
1.14 Employee Benefits
a)    Short Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, and short- term compensated absences, etc. are recognized in the period in which the employee renders the related service.
b)    Long Term Employee Benefits
The obligation for long-term employee benefits such as long-term compensated absences, is recognized in the same manner as in the case of defined benefit plans as mentioned in (c)  (ii) below
c)     Post Employment Benefits
i.     Defined contribution plans: The Company makes defined contribution to the Regional Provident Fund Commissioner in respect of provident fund scheme, CGIS and employee state insurance scheme. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
ii.     Defined contribution plans: The Company makes defined contribution to the RVNL Medical and Welfare Trust in  respect of RVNL Medical and Welfare Scheme. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
ii.    Defined benefit plans: Gratuity is a post employment defined benefit plan. The liability recognized in the balance sheet is the brsent value of the defined benefit obligation at the balance sheet date less fair value of plan assets. The defined benefit obligation is calculated by an independent actuary using projected unit credit (PUC) method. Actuarial gains and losses are recognised immediately in the Profit & Loss Account.
d)    Retirement benefits of the ‘staff on deputation’ have been accounted for on the basis of the guidelines of the Ministry of Railways.
1.15 Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange rate brvailing on the date of transactions. Gains / Losses arising out of settlement are charged / credited to the profit and loss account.
1.16 Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.
1.17 Taxes on Income
Tax on income for the current year is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961, and based on the expected outcome of the assessment/appeals.
Minimum Alternative Tax is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the company.
Deferred tax is recognized annually on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws substantially enacted as on the balance sheet date. Deferred tax assets in respect of unabsorbed debrciation/brought forward losses are recognized to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
1.18 Lease Rentals
Lease rental in respect of operating lease is charged to project work in progress under Statement of the Profit and Loss.
1.19 Financial Lease
In case of financial lease substantially all the risks and rewards incidental to legal ownership are transferred and assets given on finance lease are capitalised at the normal sale price/contracted price and treated as sales.
1.20 Provisions and Contingencies
The Company creates a provision when there is a brsent 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 obligation. A disclosure of a contingent liability is made where there is a possible obligation that probably will not require an outflow of resources or where a reliable estimate of the obligation cannot be made. Contingent assets are not recognised. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
1.21  Liquidated Damages and Penalties
"Credit items arising on account of Liquidated Damages and Penalties during execution of contract or due to termination of contract etc. are carried as " Retention Money" under " other Current Liabilities" until the final Closure of the Project. Thereafter,i.e. on financial closure of the Project, such leftover balances of liquidity Damages and Penalties are credited to the total cost of the concerned project."
1.22 Stale Cheques
Cheques which have not been  cleared within the validity period of 3 months are credited to the stale cheque account. Items which are more than 3 yrs old and could not be cleared in stale cheque account are credited to the head which was earlier debited while making payments except deductions made from salary of staff which are credited to misc income.

1.14 Employee Benefits

a)    Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, and short- term compensated absences, LTC etc. are recognized in the period in which the employee renders the related service.

b)    Long Term Employee Benefits

The obligation for long-term employee benefits such as long-term compensated absences and half Pay Leave, is recognized in the same manner as in the case of defined benefit plans as mentioned in (c)  (ii) below

c)     Post Employment Benefits

i.     Defined contribution plans: The Company makes defined contribution to the Regional Provident Fund Commissioner in respect of provident fund scheme, CGIS and employee state insurance scheme. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.

ii.     Defined contribution plans: The Company makes defined contribution to the RVNL Medical and Welfare Trust in  respect of RVNL Medical and Welfare Scheme. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.

iii.    Defined benefit plans: Gratuity is a post employment defined benefit plan. The liability recognized in the balance sheet is the brsent value of the defined benefit obligation at the balance sheet date less fair value of plan assets. The defined benefit obligation is calculated by an independent actuary using projected unit credit (PUC) method. Actuarial gains and losses are recognised immediately in the Profit & Loss Account.

d)    Retirement benefits of the ‘staff on deputation’ have been accounted for on the basis of the guidelines of the Ministry of Railways.