1.1 Basis of Preparation and Use of Accounting Estimates:
The financial statements are prepared under the Historical Cost
convention, on accrual basis of accounting and in accordance with
Generally Accepted Accounting Principles (GAAP) in India and in
compliance with the provisions of the Companies Act, 1956 and the
Accounting Standards as specified in the Companies (Accounting
Standards) Rules, 2006 prescribed by the Central Government. However,
certain escalation and other claims, which are not ascertainable /
acknowledged by customers, are not taken into account.
The preparation of Financial Statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of income and expenses for the period, balances of
Assets and Liabilities and disclosures relating contingent liabilities
as of the date of the financial statements. Examples of such estimates
include useful life of tangible and intangible fixed assets, contract
costs expected to be incurred to complete construction contracts,
provision for doubtful debts, income taxes and future obligations under
the employee retirement benefit plans, etc. Actual results could differ
from those estimates and differences, if any, are recognized in the
period in which results are known.
1.2. Revenue Recognition:
a. Construction Contracts:
i. Revenue recognition and Valuation of Contract WIP are as per the
Accounting Standard - 7 (AS 7).
ii. Revenue is recognized on the basis of agreed price between the
client and the Company for various items of work done.
iii. Stage / Percentage of completion is determined with reference to
the Certificates given by the clients / management as well as on the
billing schedule agreed with them, for the value of work done during
iv. Valuation of Contract WIP:
At Realizable Sale Value on Percentage Completion method in respect of
contracts where the outcome of the contract can be estimated reliably.
Where the outcome cannot be estimated reliably, no profit is being
recognized. Expected losses on contracts are assessed periodically and
v. Cost incurred is recognized in the accounts for the items of work
done in the year of recognition of revenues.
vi. Expenditure incurred on items used at construction sites, viz.
construction aids, scaffolding materials, temporary structures, are
charged off to the revenue at the end of each financial year on the
basis of both physical count and their ascertainment of balance useful
b. Profit or Loss on Contracts executed by Joint ventures under profit
sharing arrangements (being jointly controlled entities, in terms of
Accounting Standards 27, Financial reporting of Interests in Joint
ventures ), is accounted as and when the same is determined by the
Joint Venture. Revenue from services rendered to such Joint ventures is
accounted on accrual basis. In determining this policy due weightage is
given to the principle of Substance over Form.
i. Sale of building products exclude the respective States'' VAT and
are stated net of discounts.
ii. Service Income from designing charges excludes applicable Service
Tax and are stated net of discounts.
d) Dividends on Investments are accounted on the basis of declaration
of dividends on the underlying investments.
e) Interest income is recognized using the time proportion method
taking into account the amounts invested and the applicable rate of
1.3. Employee Benefits:
Liability for employee benefits, both short and long term, for present
and past services which are due as per the terms of employment and as
required by law are recorded in accordance with Accounting Standard
(AS) 15 (Revised) Employee Benefits issued by the Institute of
Chartered Accountants of India.
Gratuity is a defined benefit plan, provided in respect of past
services based on the actuarial valuation carried out by LIC of India
and corresponding contribution to the fund is expensed in the year of
Superannuation Scheme is a defined contribution plan, which is funded
with LIC of India, and corresponding contribution to the fund is
c) Provident Fund:
Provident fund is a defined contribution plan with the Regional
Provident Fund Commissioner and the contribution made during the year
as per the plan is expensed.
d) Leave Encashment:
Liability for leave is treated as a short-term liability and is
accounted for as and when earned by the employee. Further earned leave
in excess of the prescribed limit as and when encased by the employees
are expensed to revenue.
1.4. Fixed Assets and Depreciation:
a. Fixed Assets:
Fixed Assets are stated at cost net of tax duty credits availed,
accumulated depreciation and impairment losses where applicable. Cost
comprises purchase price and all direct / indirect costs incurred to
bring the asset to its working condition for its intended use.
Depreciation on Fixed Assets is provided under Written down Value
Method at the rates specified in Schedule XIV to the Companies Act,
1956 except for the variations in respect of the following items:
- For Office Equipments -40%
- Temporary Structures/Interiors - 20%
1.5. Impairment of Assets:
Impairment loss, if any, is provided to the extent, the carrying amount
of assets exceeds their recoverable amount. Recoverable amount is
higher of an asset''s net selling price and its value in use. Value in
use, estimated periodically, is the present value of estimated future
cash flows expected to arise from the continuing use of an asset and
from its disposal at the end of its useful life.
a. Assets acquired under leases where substantially all the risks and
rewards of ownership are retained by the company are classified as
b. Assets acquired on leases where a significant portion of the risks
and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the Profit and Loss
Account on accrual basis.
a. Investments are classified as Long Term and Current investments.
Long Term Investments are carried at cost less provision for permanent
diminution, if any, in value of such investments. Current investments
are carried at lower of cost and fair value, determined on the basis of
b. The Company has securities (trade & non-trade), immovable
properties and investments in Partnership firms and Joint Ventures,
which are classified as referred to above.
Inventory of raw materials is valued at cost determined on FIFO method.
Inventory of manufactured goods is valued at lower of cost and net
realizable value. Cost of manufactured goods include related overheads.
1.9. Borrowing Cost:
Borrowing cost will be capitalized in line with AS 16.
The Expenditure, the benefits of which are estimated to accrue over
more than one accounting period are amortized over such periods.
Improvements made on leased premises are written off over 3 years.
1.11.Foreign Currency Transactions:
The Company has adopted Accounting Standard (AS) -11(Revised 2003) in
respect of Foreign Currency transactions.
Foreign currency transactions are recorded on initial recognition in
the reporting currency using the exchange rate on the date of such
transaction. All exchange differences arising on settlement/conversion
of foreign currency transactions are included in the profit and loss
account, except in cases where they relate to the acquisition of fixed
assets, in which case they are adjusted in the cost of the
a. Current Tax:
Provision for tax is determined in accordance with the current tax
b. Deferred Tax:
Deferred tax is recognized on timing differences between the accounting
income and the taxable income for the year, and quantified using the
tax rates and laws enacted or substantively enacted as on the balance
sheet date. Deferred tax assets relating to unabsorbed
depreciation/business losses are recognized and carried forward to the
extent there is virtual certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realized. Other deferred tax assets are recognized and carried forward
to the extent that there is a reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets can be realized.
1.13.Accounting for Interests in Joint Ventures:
Interest in Jointly controlled entities and operations is accounted as
a. Company''s share in profits or losses is accounted on determination
of the Profit or loss by the Joint venture.
b. Investment is carried at cost net of Company''s share in recognized
profit or loss.
1.14.Earnings Per Share (EPS):
In arriving at the EPS, the Company''s net profit after tax, computed in
terms of the Indian GAAP, is divided by the weighted average number of
equity shares outstanding on the last day of the reporting period. The
EPS thus arrived is known as ''Basic EPS''.