1. Basis for preparation of Financial Statements:
The Financial Statements have been prepared on a going concern basis
under historical cost convention on accrual basis and in accordance
with the generally accepted accounting principles in India and the
provisions of Companies Act, 1956.
2. Use of Estimate:
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions to be made that affect the reported amount of
assets and liabilities on the date of the financial statements and the
reported amount of revenues and expenses during the reporting period.
The difference between the actual results and estimates are recognized
in the period in which the results are known/materialized.
3. Revenue recognition:
Revenues are recognized when it is earned and when there is no
significant uncertainty as to its measurement and realization. The
specific revenue recognition policies are as under:
a. Revenue from Turnkey Contracts, which are either Fixed Price or
Cost Plus contracts, is recognized based on work completion of activity
or achievement of milestone.
b. Revenue from sale of products (excluding under Agency arrangements)
is recognized upon passing of title of goods and/or on transfer of
significant risk and rewards of ownership thereto.
c. Revenue from Power distribution is accounted for on the basis of
billings to consumers and includes unbilled revenues accrued up to the
end of the accounting year.
d. Revenue from Services is recognized on performance of Service.
e. Dividend income is recognized when the right to receive dividend is
f. Income such as annual maintenance contracts, annual subscriptions,
Interest excluding interest on delayed payments; Facility Management is
recognized as per contractually agreed terms on time proportion basis.
g. Other income is recognized when the right to receive is
h. Delayed payment charges and interest on delayed payments are
recognized, on grounds of prudence, as and when recovered.
4. Fixed Assets, Intangible Assets and Capital Work in Progress:
Fixed Assets are stated at the cost of acquisition less accumulated
depreciation and impairment losses, if any. All identifiable costs
incurred up to the asset put to use are capitalized. Costs include
purchase price (including non-refundable taxes/duties) and borrowing
costs for the assets that necessarily take a substantial period of time
to get ready for its intended use. Costs are adjusted for grants
available to the company which are recognized based on reasonable
assurance that the company will comply with the conditions attached to
the grant and it is reasonably certain that the ultimate collection of
grants will be made.
Intangible Assets are stated at the cost of acquisitions less
accumulated amortization. In case of an internally generated assets
cost includes all directly allocable expenditures. Intangible assets
exclude the operating software, which forms an integral part of the
Capital Work In Progress include cost of fixed assets that are not yet
ready for their intended use as at the balance sheet date.
The depreciation on fixed assets is provided pro-rata to the period of
use of Assets using the straight-line method based on Economic useful
lives estimated by the management. The aggregate depreciation provided
based on estimated economic useful life is not less than the
depreciation as calculated at the rates specified in Schedule XIV of
the Companies Act, 1956.
6. Impairment of Assets:
An asset is treated as impaired when the carrying amount of assets
exceeds its recoverable value. An impairment loss is charged to
Statement of Profit and Loss in the year in which an asset is
identified as impaired. The impairment loss recognized in prior
accounting period/s is/are reversed if there has been a change in the
estimate of recoverable amount.
Current Investments are carried at the lower of cost or quoted/fair
value computed scrip wise. Long Term Investments are stated at cost.
Provision for diminution in the value of long-term investments is made
only if such decline is other than temporary.
a. Inventories including Work-in-process and stores and spares are
valued at the lower of cost and net realizable value.
b. Cost of inventories is generally ascertained on first in first out
9. Foreign currency transactions:
a. Transactions in foreign currencies are normally recorded at the
exchange rate prevailing on the date of the transaction.
b. Monetary foreign currency items are reported at the exchange rates
as at Balance Sheet date.
c. In respect of transaction covered under forward exchange contracts,
the difference between the exchange rates prevailing at the Balance
Sheet date and rate on the date of the contract is recognized as
exchange difference. The premium on forward contracts is amortized over
the life of the contract.
d. Non-monetary foreign currency items are carried at cost.
e. Any gains or losses on account of exchange difference either on
settlement or on translation are recognized in the Statement of Profit
f. Foreign branch operations which are integral part of Company''s
operations, transactions there at are reported as under:
i. Income and expenditure items at the exchange rate prevailing on the
date of transaction.
ii. Monetary items using exchange rates at the Balance Sheet date.
iii. Non-monetary items at the exchange rates prevailing on the date of
10. Employee Benefits:
a. Short-term employee benefits are recognized as an expense at the
undiscounted amount in Statement of Profit and Loss of the year in
which the related service is rendered.
b. Post-employment and other long-term employee benefits are
recognized as an expense at the present value of amount payable
determined actuarial valuation techniques in Statement of Profit and
Loss of the year in which the employee has rendered services. Actuarial
gains and losses in respect of post-employment and other long-term
benefits are charged to Statement of Profit and Loss.
c. In respect of employee''s stock options, the excess of market price
on the date of grant over the exercise price is recognized as deferred
employee compensation expenses, which are amortized over vesting
11. Provision for Current and Deferred Tax:
a. Current Tax: Provision is made for income tax, under the tax
payable method, based on the liability as computed after taking credit
for allowances, exemptions, and MAT credit entitlement for the year.
Adjustments in books are made only after the completion of the
assessment. In case of matters under appeal, due to disallowances or
otherwise, full provision is made when the Company accepts the said
b. Deferred tax: The differences that result between the profit
offered for income tax and the profit as per the financial statements
are identified and thereafter a deferred tax asset or deferred tax
liability is recorded for timing differences, namely the differences
that originate in one accounting period and reverse in another.
Deferred tax is measured based on the tax rates and tax laws enacted or
substantively enacted at the Balance Sheet date. Deferred tax asset is
recognized only to the extent there is virtual certainty that the asset
will be realized in the future. Carrying value of deferred tax asset is
adjusted for its appropriateness at each balance sheet date.
12. Provisions, Contingent Liabilities and Contingent Assets :
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
13. Financial Derivatives and Hedging Transactions:
In respect of Derivatives Contracts, premium paid provision for losses
on restatement and gains / losses on settlement are recognized in
Statement of Profit and Loss.
14. Borrowing Cost:
a. Borrowing costs, less any income on the temporary investment out of
those borrowings, that are directly attributable to acquisition of an
asset that necessarily takes a substantial period of time to get ready
for its intended use are capitalized as a part of the cost of that
b. Other borrowing costs are recognized as expense in the period in
which they are incurred.
a. Assets taken on lease, under which the less or effectively retains
all the risks and rewards of ownership, are classified as operating
lease. Operating lease payments are recognized as expense in Statement
of Profit and Loss on a straight-line basis over the lease term.
b. Assets acquired under leases where all the risks and rewards of
ownership are substantially transferred to company are classified as
Finance leases. Such leases are capitalized at the inception of the
lease at the lower of fair value or the present value of minimum lease
payments and liability is created for an equivalent amount. Each lease
rental paid is allocated between the liability and interest cost so as
to obtain a constant periodic rate of interest on the outstanding
liability for each period.
16. Provision for Doubtful Debts and Loans and Advances:
Provision is made for doubtful debts, loans and advances when the
management considers the debts, loans and advances to be doubtful of
17. Research and Development:
a. Revenue expenditure on Research and Development is charged to
Statement of Profit and Loss in the period in which it is incurred.
b. Capital expenditure on Research and Development is included under
the relevant fixed assets and depreciation thereon is provided as given
in policy no. 5 above.