a) Basis of preparation of Accounts
The financial statements have been prepared to comply in all material
respects with the accounting standards notified by the Companies
Accounting Standards Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis,
except for insurance and other claims which are accounted for on
acceptance/actual receipt basis. The accounting policies adopted in the
preparation of financial statements are consistent with those used in
the previous year, except for ''b'' below.
b) Change in accounting policy
Presentation and disclosure of financial statements
During the year ended 31 March 2012, the revised Schedule VI notified
under the Companies Act 1956, has become applicable to the company, for
preparation and presentation of its financial statements. 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 figures in accordance with the Revised Schedule VI requirements
applicable in the current year.
Change in Method of Valuation of Raw Material, Construction Material
and Stores & Spares Parts During the year, the Company has implemented
a new ERP system and thus changed its method of valuation of raw
materials, construction materials and stores & spares parts inventories
from First in First out to Weighted Average basis. Further, the
management believes that such change in the method of valuation of
inventories will result in a more appropriate presentation of these
inventories and will give a systematic basis of charge for raw
materials, construction materials and stores & spares parts consumption
and would be more representative of the time pattern in which the
economic benefits will be derived from the use of such inventories. Had
the Company continued to use the earlier basis of valuation, the charge
to statement of profit and loss for the year would have been lower by
Rs 30.26 lacs and raw materials, construction materials and stores &
spares parts inventories would have been higher by Rs 30.26 lacs.
Foreign Currency Transactions
Pursuant to the Companies (Accounting Standards) (Second Amendment)
Rules, 2011 vide GSR 914(E) dated 29th December, 2011, the Company has
exercised the option of capitalizing exchange differences, in respect
of accounting periods commencing from 1st April, 2011, on long-term
foreign currency monetary items which were hitherto recognized as
income or expense in the period in which they arose. As a result, such
exchange differences so far as they relate to the acquisition of a
fixed asset are capitalized and depreciated over the remaining useful
life of the asset. For this purpose, the company treats a foreign
monetary item as long-term foreign currency monetary item, if it has
a term of 12 months or more at the date of its origination.
Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the Foreign Currency Monetary Item
Translation Difference Account and amortized over the remaining life
of the concerned monetary item
Had the Company continued to use the earlier basis of recognizing
exchange differences as income or as expenses in the period in which
they arise, the charge to statement of profit and loss for the year on
account of Foreign Exchange (Gain)/Loss would have been higher by
Rs 43.62 lacs and Gross Block and Net Block of Tangible Fixed Assets
would have been lower by Rs 43.62 lacs and Rs 39.06 lacs respectively.
c) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities, at the end of
reporting period. Although these estimates are based upon the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets and
liabilities in future periods.
d) Tangible Fixed Assets
Tangible Fixed assets are stated at cost of acquisition less
accumulated depreciation and impairment loss, if any. Cost is inclusive
of duties (net of CENVAT/VAT), taxes, incidental expenses,
erection/commissioning expenses etc. incurred upto the date the asset
is ready for its intended use.
Machinery Spares which can be used only in connection with a particular
item of Fixed Assets and whose use, as per the technical assessment, is
expected to be irregular are capitalized and depreciated
proportionately over the residual life of the respective assets
From accounting periods commencing on or after 1st April, 2011, the
company adjusts exchange differences arising on translation/settlement
of long-term foreign currency monetary items pertaining to the
acquisition of a depreciable asset to the cost of the asset and
depreciates the same over the remaining life of the asset.
e) Intangible Fixed Assets
Intangible assets are carried at cost less accumulated amortization and
impairment losses, if any.
Computer softwares not being part of the hardware operating system are
assessed to have a useful life of 3 years and are capitalized as
intangible fixed assets.
f) Depreciation & Amortization Tangible Fixed Assets
i. The classification of Plant and Machinery into continuous and
non-continuous process is done as per technical certification and
depreciation thereon is provided accordingly.
ii. Depreciation on tangible fixed assets except as mentioned below,
is provided using the Straight Line Method at the rates and in the
manner prescribed under Schedule XIV of the Companies Act, 1956 or at
rates determined based on the useful life of Assets estimated by the
management, whichever is higher.
- Tangible fixed assets acquired up to March 31, 1991 and tangible
fixed assets of the Wind Power Unit are depreciated at the rates
specified in Schedule XIV of the Companies Act, 1956 using written down
- Steel Shutterings are depreciated over a period of five years on
straight line method from the year of addition.
iii. Depreciation on Insurance Spares/standby equipments is provided
over the useful lives of the respective mother assets.
iv. Depreciation on fixed assets added/disposed off during the year,
is provided on pro-rata basis with reference to the month of
Intangible Fixed Assets
i. Computer softwares capitalized as intangible fixed assets are
amortized on a straight line basis over their useful life of 3 years.
g) Impairment of tangible and intangible fixed assets
The carrying amounts of assets are reviewed at each balance sheet date
to determine if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount which is
the greater of the asset''s net selling price and value in use. In
assessing the value in use, the estimated future cash flows are
discounted to their present value using a pre- tax discount rate that
reflects current market assessments of the time value of money and
risks specific to the assets.
Finance Leases, which effectively transfer to the Company,
substantially, all the risks and benefits incidental to the ownership
of the leased items, are capitalized at the lower of the fair value and
present value of the minimum lease payment at the inception of lease
term and disclosed as leased assets.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets, 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
i) Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs
are expensed in the period they occur.
Investments that are readily realisable and intended to be held for not
more than a year from the date on which such investments are made are
classified as current investments. All other investments are classified
as long-term investments. Long term investments are considered at
cost, unless there is an other than temporary decline in value
thereof, in which case, adequate provision for diminution is made in
the financial statements. Current Investments are carried at lower of
cost and fair value on an individual investment basis.
(i) Closing stock of stores and spares and raw materials (except for
those relating to construction activities) are valued at lower of cost
computed on ''Weighted Average'' basis and net realizable value. However,
materials and other supplies held for use in the production of
inventories are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at or above
cost. Cost includes expenses incidental to procurement thereof.
(ii) Finished goods and work in progress (except for those relating to
construction activities) are valued at the lower of cost (computed on
weighted average basis) and net realizable value. Costs in respect of
finished goods include direct material, labour and an appropriate
portion of overhead costs and excise duty.
(iii) Construction work in progress is valued at cost. However, in case
of contracts where losses are likely to occur, the stock is considered
at net ealized d value. Costs include materials, labour and an
appropriate portion of construction overheads.
(iv) Stores, components, etc. and construction materials at sites to be
used in contracts are valued at cost which is ascertained on ''Weighted
(v) Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
l) Revenue recognition
(i) Construction contracts
Revenue on contracts is recognised on percentage completion method
based on the stage of completion of the contract. The stage of
completion is determined as a proportion that contract costs incurred
for work performed upto the reporting date bears to the estimated total
costs. When it is probable that the total contract cost will exceed the
total contract revenue, the expected loss is recognized immediately.
For this purpose, total contract costs are ascertained on the basis of
actual costs incurred and costs to be incurred for completion of
contracts in progress, which is arrived at by the management based on
current technical data, forecasts and estimate of expenditure to be
incurred in future including contingencies, which being technical
matters have been relied upon by the auditors. Revisions in projected
profit or loss arising from change in estimates are reflected in each
accounting period which, however, cannot be disclosed separately in the
financial statements as the effect thereof cannot be accurately
Overhead expenses representing indirect costs that cannot be directly
aligned with the jobs, are distributed over the various contracts on a
(ii) Sale of Goods
Revenue from sale of goods is recognized on passage of title thereof to
the customers, which generally coincides with delivery. Sales are net
of taxes, returns, claims, trade discounts etc.
Revenue is recognized when the significant risks and rewards of
ownership of the goods get passed to the buyer.
(iii) Income from Services
Revenues from operation and maintenance contracts are recognised on
rendering of services as per the terms of contract.
Interest is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
m) Foreign currency translations
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the
Foreign currency monetary items are reported using the closing rate.
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 and non-monetary items which are carried
at fair value or other similar valuation denominated in a foreign
currency are reported using the exchange rates that existed when the
values were determined.
(iii) Exchange Differences
Exchange differences, in respect of accounting periods commencing from
1st April 2011, arising on reporting of long- term foreign currency
monetary items at rates different from those at which they were
initially recorded during the period, or reported in previous financial
statements, in so far as they relate to the acquisition of a
depreciable capital asset, are added to or deducted from the cost of
the asset (except for that part of exchange difference which is
regarded as an adjustment to interest costs) and are depreciated over
the balance life of the asset, and in other cases, such exchange
differences are accumulated in a Foreign Currency Monetary Items
Translation Difference Account and amortised over the balance period
of such long-term asset/liability.
Exchange differences arising on the settlement or reporting of monetary
items, not covered above, at rates different from those at which they
were initially recorded during the period, or reported in previous
financial statements, are recognized as income or expenses in the
period in which they arise.
(iv) Forward Exchange Contracts not intended for trading or speculation
The premium or discount arising at the inception of forward exchange
contracts is amortized as expenses or income over the life of the
respective contracts. Exchange differences on such contracts, except
the contracts which are long term foreign currency monetary items, are
recognized in the statement of profit and loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of forward exchange contract is recognized as income or expense
for the year. Any gain/loss arising on forward contracts which are long
term foreign currency monetary items is recognized in accordance with
paragraph 2 (m) (iii) above.
(v) Derivatives Instruments:
As per ICAI announcement, accounting for derivative contracts, other
than those covered under AS-11, are marked to market on a portfolio
basis, and the net loss after considering the offsetting effect on the
underlying hedge item is charged to the statement of profit and loss.
Net gains are ignored.
(vi) Translation of Integral foreign operations
The financial statements of an integral foreign operation are
translated as if the transactions of the foreign operation have been
those of the company itself.
(vii) Translation of Non-integral foreign operations
Exchange differences arising on a monetary item that, in substance,
forms part of the company''s net investment in a non-integral foreign
operation is accumulated in the foreign currency translation reserve
until the disposal of the net investment. On the disposal of such net
investment, the cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognized as
income or as expenses in the same period in which the gain or loss on
disposal is recognized.
n) Retirement and other employee benefits
Retirement benefits in the form of Provident Fund being a defined
contribution scheme, are charged to the Statement of Profit and Loss of
the year when the contributions to the funds are due. There are no
obligations other than the contribution payable to the fund.
Gratuity (funded) being defined benefit obligations and long term
compensated absences (unfunded) are provided for based on actuarial
valuation made at the end of each financial year using the projected
unit credit method.
Actuarial gain and losses are recognized immediately in the Statement
of Profit and Loss as income or expenses.
o) Income Taxes:
Tax expense comprises of current and deferred income tax. Current
income tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Indian Income Tax Act, 1961.
Deferred taxes reflect the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. In situations
where the company has unabsorbed depreciation or carry forward tax
losses, deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that such deferred tax
assets can be realised against future taxable profits.
The carrying amounts of deferred tax assets are reviewed at each
Balance Sheet date. The company writes down the carrying amount of the
deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
assets can be realised. Any such write down is reversed to the extent
it becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
p) Employee Stock Compensation Cost
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
Accounting for Employee Share-based Payments, issued by the Institute
of Chartered Accountants of India. The Company measures compensation
cost relating to employee stock options using the intrinsic value
method. Compensation expense is amortized over the vesting period of
the option on a straight line basis.
q) Segment Reporting
Identification of Segments
The Company has identified that its business segments are the primary
segments. The Company''s businesses are organized and managed separately
according to the nature of activity, with each segment representing a
strategic business unit that offers different products and serves
different markets. The analysis of geographical segments is based on
the areas in which major operating divisions of the Company operate.
Inter segment Transfers
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
Allocation of common costs
Common allocable costs are allocated to each segment on case to case
basis applying the ratio, appropriate to each relevant case. Revenue
and expenses, which relate to the enterprise as a whole and are not
allocable to segment on a reasonable basis, have been included under
the head Unallocated - Common
The accounting policies adopted for segment reporting are in line with
those of the Company.
r) Earning Per Share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period.
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.
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions made in terms of
Accounting Standard 29 are not discounted to their present value and
are determined based on management estimates required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and appropriately adjusted to reflect the current
Provision for warranties cost is based on the claims received upto the
year end as well as the management estimates of further liability to be
incurred in this regard during the warranty period.
t) Cash and Cash Equivalents
Cash and cash equivalents as indicated in the Cash Flow Statement
comprise of cash at bank and in hand and short-term investments with an
original maturity of three months or less.
u) Accounting for interests in joint ventures
In respect of joint ventures entered into with other parties in the
form of ''integrated joint ventures'', the accounting treatment is done
as below in terms of Accounting Standard 27 notified by the Companies
Accounting Standards Rules, 2006 (as amended) :
(i) Company''s share in profits and losses is accounted for on
determination of profits or losses by the Joint Ventures;
(ii) Investments are carried at cost, net of the Company''s share of
profits or losses, recognized in the accounts.
v) Measurement of EBIDTA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
finance costs, tax expenses, depreciation and amortization expenses
(EBITDA) as a separate line item on the face of the statement of profit
and loss. The company measures EBITDA on the basis of profit from
continuing operations. In its measurement, the company does not include
depreciation and amortization expenses, finance costs and tax expenses.
* 200,000 (1,593,000) Compulsorily Convertible Preference shares of Rs
140/- each have been converted in to 200,000 (1.593.000) Equity Shares
of Rs 10/- each at a premium of Rs 130/- per equity share.
** Nil (200,000) Compulsorily Convertible Preference shares of Series A
of Rs 160/- each have been converted in to Nil (200.000) Equity Shares
of Rs 10/- each at a premium of Rs 150/- per equity share.
*** 575,000 (1,775,000) convertible share warrants of Rs 140/- (600,000
convertible share warrants of Rs 140/- and 1.175.000 convertible share
warrants of Rs 160/-) each have been converted into 575,000 (1,775,000)
equity shares of Rs 10/- each fully paid up at a premium of Rs 130/-
per share (of Rs 130 on 600,000 equity shares and of Rs 150/- on
1.175.000 equity shares) upon exercise of the option by the warrant