a) 15,238 Equity Shares of Rs. 100 each (since converted into 1,52,380
equity shares of Rs.10 each) were allotted as fully paid up pursuant to
the Amalgamation Order (1966) under Sector/396 of the Companies
b) 75,000 Equity Shares of Rs. 100 each (since converted Into 7,50,000
equity shares of Rs. 10 each) were allotted as fully paid up in
consideration for transfer of ownership of some properties.
c) 1,82,50,000 Equity Shares of Rs. 10 each fully paid have been allotted
during the financial year 2009-10 to the President of India at premium
of Rs. 30 per equity share.
1) Accounting Convention
The Financial Statements are prepared under the historical cost
convention and comply in all material aspects with generally accepted
accounting principles in India, the Accounting Standards issued by the
Institute of Chartered Accountants of India and the relevant provisions
of the Companies Act, 1956.
2) Use of Estimates
The preparation of Financial Statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions in respect of certain items that affect the
reported amounts of assets and liabilities as at the date of the
financial statements and the reported amount of income and expenses
during the ''repeating period. Actual results/outcome could differ from
estimates. Any revision in accounting estimates is recognized
prospectively in the period in which such results do materialize.
3) Dispute Income Tax and Sales Tax Demand
The disputed Income Tax and Sales Tax demands in respect of assessments
completed and against which appeals have been filed are disclosed by
way of contingent liability and are charged to accounts in the year of
4) Fixed Assets and Depreciation
a) Fixed Assets
i) Fixed assets are valued at cost of acquisition, net of ''Grant in
aid'' where applicable.
ii) Fixed Assets retired from active use and held for disposal are
stated at the lower of book value and/or net realizable value and are
shown separately in the financial statements. Loss determined, if any,
is recognized in the profit and loss statement
iii) In cases where receipts/scrutiny of final bills of the
contractors/suppliers, settlement of the rates to be paid for extra
items and price escalation etc. are pending, the capitalization is
effected provisionally, based on value work completed as certified by
Project Engineers. Difference, if any, Is proposed to be accounted for
in the year in which the final bills are settled.
iv) Intangible Assets (Software) are stated at their cost of
Depreciation on fixed assets is provided pro-rata, on Straight Line
Method on the following rates:
i) On fixed assets existing as on 31.3.1987, at the rates already
adopted in earlier years.
ii) On addition in the Fixed Assets during the period from 01.04.1987
to 15.12.1993, at the pre-revised rates as per the schedule XIV of the
Companies Act, 1956.
iii) On additions made to fixed assets from 16.12.1993 onwards, as per
revised rates prescribed in schedule XIV of the Companies Act, 1956.
iv) On Intangible Assets (Software), cost is amortized over a period of
legal right to use or 3 years, whichever is earlier.
The rates at which depreciation has been charged are given in annexure
Long term investments are stated at cost. Provision for diminution in
value of each investment, if any, is made, to recognize the decline,
other than of temporary nature.
6) Valuation of Inventories
Stocks and stores including stock of crockery, cutlery, glassware and
linen etc., in hand as well as in circulation are valued at cost on
FIFO basis or realizable value whichever is less.
7) Execution of Projects for Clients
i) Value of work done in respect of projects executed including cost
plus/deposit/ turnkey/project management work are shown in the accounts
at best estimates by the management after deduction for likely
rejections, if any, by the client.
ii) Indirect costs are treated as period costs and are charged to
profit and loss account in the year of incurrence.
8) Deferred revenue Expenditure
Payment of compensation to employees retiring under Voluntary
Retirement Scheme Is treated as deferred revenue expenditure and
written off over a period ending 31.3.2010.
9) Provision. Contingent Liabilities and Contingent Assets
i) 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 outflow of sources.
ii) Where as a result of past events, there is a possible obligation
that may, but probably will not, require any outflow of resources, no
provision is recognized but appropriate disclosure is made in the notes.
iii) Contingent assets are neither recognized nor disclosed in the
10) Employees Benefits
A) Provident Fund
Company''s contributions to Provident Fund are charged to Profit & Loss
i) Provision for Gratuity Is made on the basis of Actuarial Valuation.
ii) Contribution towards Gratuity scheme is based on the premium
contribution called for by the Life Insurance Corporation of India
(LIC) with whom the Company has entered into an agreement. As per the
terms of its scheme, LIC settles the claim for the full value of the
gratuity paid by the Company to its employees, as and when such a
payment is made.
C) Leave Encashment
The provision for leave encashment is made on the basis of actuarial
11) Deferred Taxation
i) Deferred tax is provided during the year, using the liability method
on all temporary differences at the Balance sheet date between the tax
basis of assets and liabilities and their carrying amounts for
financial reporting purposes in accordance with the Accounting Standard
iii) Deferred Tax Asset is recognized, subject to consideration of
prudence, only to the extent that there is reasonable certainty that
sufficient taxable profits will be available against which such
Deferred Tax Assets can be realized. In situations where the company
has any unabsorbed depreciation or carry forward tax losses, deferred
tax assets are recognized only if there Is virtual certainty supported
by convincing evidence that they can be realized against future taxable
iii) Deferred Tax Assets and Liabilities are measured at the rates that
are expected to apply to the period when the asset is realized or the
liability is settled, based on tax rates (and tax laws) that have been
enacted or substantially enacted at the balance sheet date.
12) Government Grant
i) The Government grant received for up gradation of properties is
recognized as income from the year in which respective properties are
upgraded and to the extent grant related costs incurred i.e. written
off as depreciation, revenue expenditure each year.
ii) The balance of Government Grant to the extent not adjusted as at
the close of the year, is carried in the financial statements as
''Deferred Government Grant'' after ''Reserves & Surplus.''
13) Revenue Recognition
i) Income from Projects is recognized on the percentage of completion
method including in respect of cost plus/deposit/turnkey/project
management work. In terms of this method, revenue is recognized in
proportion to the actual costs incurred as against the total estimated
cost of project under execution. The determination of revenues under
this method involves making estimates, some of which are of technical
nature, concerning, where relevant, the percentages of completion,
costs of completion (including cost of rejection), expected revenues
ii) Income from services rendered in respect of projects /license
fees/Management fee are accounted for (exclusive of service tax) as per
terms of the agreement. However, where such service charges/fees are
not realised in cash for significant period the accrual thereof is
postponed to be accounted for on receipt.
iii) Revenue from sales (net of returns and discounts) is recognized on
transfer of substantial risks and rewards to the customers. Sales tax
and value added tax are excluded.
iv) Interest income, other than management fees income/interest on
loans and advances from subsidiary companies which are accounted for on
receipt basis or on receipt of Tax deduction certificate because of
liquidity problem in those companies referred to in (ii) above, and
income from investments are accounted for on accrual basis at the
contracted rates and/or at the time of establishment of right to
receive respectively. i
v) Interest/Damages on overdue amounts recoverable from licensees are
accounted for on realization basis.
14) Foreign Currency Transactions
a) Transactions in foreign exchange:
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 that 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) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
recording/ reporting company''s monetary items at rates different from
those at which they were initially recorded during the year, or
reported in previous financial statements, are recognized as income or
as expenses in the year in which they arises. Exchange differences on
liabilities relating to fixed assets acquired from outside India are
added to the cost of such assets.
b) Money changing business
i) The transactions concluded during the period are recorded based on
the actual rate realize.
ii) Foreign currency'' balances as at close of the year are converted at
the year end rates.
iii) Income from money changing business as reflected in the accounts
is net of cost of sale of currency.
15. Borrowing Cost
i) Borrowing Costs if any, that are directly attributable to the
acquisition/construction of qualifying assets are capitalized as part
of the cost of the respective assets.
ii) Other borrowing costs are expensed in the year in which they are
16. Prior Period/Extraordinary Items
i) All prior period items which are material and which arise in the
current period as a result of ''errors or omissions'' in the preparation
of prior period''s financial statements are separately disclosed in the
current Statement of Profit & Loss. However differences in actual
income/expenditure arising out of over or under estimation'' in prior
period are not treated as prior period income/expenditure.
ii) All extraordinary items, i.e. gains or losses which arise from
events or transactions which are distinct from the ordinary activities
of the company and which are material are separately disclosed in the
statement of accounts.
Supplementary claims including insurance claims are accounting for on