1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements are prepared under historical cost convention
on accrual basis of accounting and in accordance with the provisions of
the Companies Act, 1956 and comply with the Accounting Standards and
Generally Accepted Accounting Principles (GAAP) in India.
For the financial statements as on 30th June''2012 , the revised
Schedule VI notified under the Companies Act, 1956 has become
applicable to the Company. The adoption of revised Schedule VI does not
impact recognition and measurement principles followed for preparation
of financial statements. However, it has significant impact on
presentation and disclosures made in the financial statements.
The Company has also reclassified the previous year figure in
accordance with the requirements applicable in the current year.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP
requires that the management of the Company makes estimates and
assumptions that affect the reported amounts of income and expenses of
the period, the reported balances of assets and liabilities and the
disclosures relating to contingent liabilities as of the date of the
financial statements. Actual results could differ from these
estimates, difference between the actual results and estimates are
recognised in the period in which the results are known/materialised.
3. FIXED ASSETS AND CAPITAL-WORK-IN-PROGRESS
Fixed assets are stated at cost, lessaccumulated depreciationup to the
date of the balance sheet.
Cost includes duties & taxes,inwards freight & incidental expenses
related to acquisition and installation of the assets.
Intangible assets compriseof licence fees, software and other
implementation cost for software Oracle finance (ERP) acquired for
Capital work-in-progress includes cost of fixed assets that are not yet
ready for their intended use.
(a) Depreciation on the assets of the Company is charged on straight
line method at the rates specified in Schedule XIV of Companies Act,
1956, on single shift basis, including those purchased under hire
(b) Depreciation for additions to / deductions from assets is
calculated on prorate basis from / to the date of additions /
(c) Software and implementation cost including users licence fees of
the Enterprise Resource Planning System(ERP) and other application
software costs are amortised over a period of Five years.
(d) Assets costing less than Rs. 5,000/- are depreciated at 100
%percent in the year of purchase.
Investments are valued at cost of acquisition.
No provision is made for diminution in value, if any: if considered to
be temporary in nature.
a) Raw Materials and Stores are valued at the lower of cost or net
realisable value. The cost is arrived at by first-in-first out method
except cost of spares which is valued at weighted average method.
b) Work-in-progress is valuedat Net realisable value.
7. RETIREMENT BENEFITS TO EMPLOYEES
Defined contribution obligation: Company''s contribution to provident
fund and Employees State Insurance are defined contribution obligations
which are charged to the Profit & Loss Account on accrual basis.
Defined benefit obligations: Gratuity and Earned Leaves are defined
benefit obligations which are recognized on actuarial valuation basis
as per Projected Unit Method.
Gratuity and accumulated leaves expected to be settled / paid /
utilized within next 12 months is treated as short term, liabilities
and balance is treated as long term.
8. REVENUE RECOGNITION
Revenue is recognised as follows:
I) Contract revenue is recognised by adding the aggregate costincurred
and proportionate margin, using the percentage completion method.
Percentage of completion is determined as a proportion of cost incurred
to date to the total estimated contract cost. Foreseeable losses are
accounted for as and when they are determined except to the extent they
are expected to be recovered through claims presented or to be
presented to the customer or in arbitration.
Claims are accounted as income in the year of receipt of arbitration
award or acceptance by client.
ii) Revenue from contracts executed in Joint Ventures (Jointly
Controlled Operations, in terms of Accounting Standard (AS) 27
Financial Reporting of Interests in Joint Ventures), is
recognised on the same basis as similar contracts independently
executed by the Company.
iii) Small Insurance claims are accounted for on cash basis and major
claims are accounted for as and when the same are lodged..
iv) All other expenses and income are accounted for on accrual basis.
9. BORROWING COSTS
Borrowing Cost that are attributable to the acquisition, construction
of qualifying assets are capitalised as part of cost of such asset up
to the date the assetis ready for its intended use. All other borrowing
costs are recognised as an expense in the year in which they are
a) Tax on income for the current period is determined on the basis of
taxable income and tax credit computed in accordance with the
provisions of the Income Tax Act 1961.
b) Deferred Tax is recognised on the basis of timing differences, being
the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred Tax Asset is recognised subject to the
consideration of prudence and carried forward only to the extent that
there is virtual certainty that the asset will be adjusted against
c) Provision for taxation has been made on the taxable income for the
tax year ended 31st March, 2012. Further, provision for tax in respect
of income accrued during the quarter from 1st April, 2012 to 30th June,
2012has been made on the basis of provisions of Income Tax law and tax
rates applicable to the relevant financial year.
11. FOREIGN CURRENCY TRANSACTIONS, FOREIGN OPERATIONS, AND FORWARD
a) Foreign operations of a Joint Venture have been classified as
integral foreign operations and financial statement are translated as
under at each balance sheet date:
i) Foreign currency monetary items are reported using the closing rate.
ii) Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction
iii) Non-monetary items which are carried at fair value or other
similar valuation denominated in a foreign currency are reported using
the exchange rate that existed when the values were determined.
iv) Revenue and Expenses are recognised at yearly average of exchange
rates prevailing during the year.
v) Exchange difference arising on translation is recognized as income
or expenses of the period in which they arise.
b) Monetary Assets and liabilities related to foreign currency
transaction remaining unsettled at the end of the year are translated
at year end rates. The difference in translation of monetary assets
and liabilities and unrealized gains or losses on exchange translation
are recognized in the statement profit and loss.
12. ACCOUNTING OF JOINT VENTURES
Jointly Controlled Operations:
In respect of joint venture contracts in the nature of Jointly
Controlled Operations, the assets controlled, liabilities incurred, the
share of income and expenses incurred are recognised in the agreed
proportions under respective heads in the financial Statements.
13. IMPAIRMENT OF ASSETS
At each Balance Sheet date, the carrying amount of assets is tested for
impairment so as to determine,
a) The provision for impairment loss, if any, required or
b) The reversal, if any, required of impairment loss recognised in
Impairment loss is recognised when the carrying amount of an asset
exceeds its recoverable amountor value in use,
Recoverable amount is determined
a) in the case of an individual asset, at the higher of the net selling
price and the value in use.
b) in the case of a cash generating unit (a group of assets that
generates identified independent cash flows), at the higher of the cash
generating unit''s net selling price and the value in use.
(Value in use is determined as the present value of estimated future
cash flows from the continuing use of an asset and from its disposal at
the end of its useful life).
a. Assets acquired under leases where the company has substantially
all the risks and rewards of ownership are classified as finance
leases. Such assets are capitalised at the inception of the lease at
the lower of the fair value or the present value of minimum lease
payment and a liability is created for an equivalent amount. Each lease
rental paid is allocated between the liability and the interest cost.
b. Assets acquired on leases where a significant portion of the risk
and reward of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the statement of profit
& Loss on accrual basis.
15. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognised for liabilities that can be measured only by
using a substantial degree of estimation, if,
a) the company has a present obligation as a result of past event,
b) a probable outflow of resources is expected to settle the obligation
c) the amount of the obligation can be reliably estimated.
c) Reimbursement expected in respect of expenditure required to settle
a provision is recognized only when it is virtually certain that the
reimbursement will be received, Contingent Liability is disclosed in
the case of
a) a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
b) a possible obligation, if the probability of outflow of resources is
Contingent Assets are neither recognised, nor disclosed.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date.
16. DERIVATIVE AND HEDGING INSTRUMENTS ACCOUNTING
In respect of derivative contracts, premium paid , gains/ losses on
settlement and provision for losses for cash flow hedges are recognised
in the statement Profit and Loss.
17. CALCULATION OF EARNING PER SHARE (EPS)
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity share-holders by the
weighted average number of equity shares outstanding during the period.
Diluted earning per share is calculated by dividing the net profit or
loss for the period attributable to equity share-holders by the
weighted average number of shares outstanding during the period added
with the affect of all dilutive potential equity shares outstanding.
18. CASH & CASH EQUIVALENTS:
Cash and cash equivalents for the purpose of Cash flow Statement
comprise cash in hand and cash at bank and include cheques in hand.