i Accounting Convention
Financial statements are prepared in accordance with applicable
Accounting Standards under the historical cost convention on accrual
ii Use of Estimates
The presentation of financial statements requires certain estimates and
assumptions. These estimates and assumptions 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. Difference between the actual result and estimates are
recognized in the period in which the results are known / materialized.
iii Revenue Recognition
a. Construction Contracts
Running Account Bills for work completed are recognized on percentage
of completion method based on completion of physical proportion of the
contract work. Income on account of claims and extra item work are
recognized to the extent Company expects reasonable certainty about
receipts or acceptance from the client. When it is probable that total
contract cost will exceed the total contract revenue, the expected loss
is recognized immediately.
Dividends are recorded when the right to receive the payment is
established. Interest income is recognized in time proportionate basis.
iv Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation less
impairment losses, if any. Cost is inclusive of all identifiable
expenditure incurred to bring the assets to their working condition for
intended use. When an asset is disposed off, demolished or destroyed,
the cost and related depreciation are removed from the books of
accounts and resultant profit or loss, is reflected in the Statement of
Profit & Loss. Direct cost as well as related incidental and
identifiable expenses incurred on acquisition of fixed assets that are
not yet ready for their intended use or put to use as at the Balance
Sheet date are stated as Capital Work in Progress.
Depreciation is provided on the straight line method on all depreciable
assets at the rate prescribed in schedule XIV of the Companies Act,
1956 on pro-rata basis except that considering the useful life based on
technical evaluation by the management, higher rate than the prescribed
rates are applied on a few shuttering items of Machinery @ 30%, on
office equipments @ 12.5%, on all vehicles @ 15% and on remaining Plant
and Machineries which are acquired on or after 1st October, 2005 @
vi Impairment of Fixed Assets
The carrying cost of assets is reviewed at each Balance Sheet date to
determine whether there is any indication of impairment of assets. If
any indication exists, the recoverable value of such assets is
estimated. An impairment loss is recognized when the carrying cost of
assets exceeds its recoverable value. An impairment loss is reversed,
if there has been a change in the estimates used to determine the
recoverable amount and recognized in compliance with AS - 28.
Investments are stated at cost. Provision for diminution in the value
of long term investments is made only if such a decline is other than
temporary in the opinion of the Management.
viii Retirement Benefits
a. Gratuity liability is covered by payment thereof to Gratuity fund,
the defined benefit plan under Group Gratuity Cash Accumulation Scheme
of Life Insurance Corporation of India and SBI Life Insurance under
irrevocable trust. The Company''s liability towards gratuity are
determined on the basis of actuarial valuation done by independent
b. Contribution to Provident Fund and Superannuation Fund, the defined
contribution plans as per the schemes are charged to Statement of
Profit & Loss.
c. Provision for Leave encashment liability is made based on actuarial
valuation as at the Balance Sheet date.
d. All other short-term benefits for employees are recognized as an
expense at the undiscounted amount in the Statement of Profit & Loss of
the year in which the related service is rendered.
a. Construction materials, stores, spares and tools are valued at
lower of cost or net realizable value. Cost include cost of purchase
and other expenses incurred in bringing inventory to their respective
present location and condition. Cost is determined using FIFO method of
b. Work in progress is valued at lower of cost or net realizable
value. In case where work is completed but Running Account bill can not
be raised on client due to contractual conditions, the work in progress
is valued at contract rates.
x Provision for Taxes
a. Current Tax:
Tax on income for the current period is determined on the basis of
estimated taxable income and tax credit computed in accordance with
provisions of the Income Tax Act, 1961. b . Deferred Tax:
Deferred tax is recognized, on timing differences, being the difference
between the taxable income and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
It is calculated using the applicable tax rates and tax laws that have
been enacted or substantially enacted as on the balance sheet date.
Deferred tax assets which arises mainly on account of unabsorbed losses
or unabsorbed depreciation are recognized and carried forward only to
the extent that there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
xi Foreign Currency Transaction
a. Transactions denominated in Foreign Currency are recorded at the
exchange rate prevailing on the date of transaction.
b. In respect of transactions covered by forward exchange contracts,
the difference between the forward rate and the exchange rate at the
date of the transaction is recognized as income or expense over the
life of the contract. Any income or expense on account of exchange rate
difference either on settlement or on translation is recognized in
Statement of Profit & Loss.
c. Assets & Liabilities remaining unsettled at the end of the year,
other than covered by forward exchange contracts are translated at
exchange rate prevailing at the end of the year and the difference is
adjusted in Statement of Profit & Loss.
xii Borrowing Costs
Borrowing Costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that takes necessarily
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
xiii 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 that probability requires an outflow of resources.
A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no disclosure is made.
xiv Accounting for Project Mobilisation expenses
Expenditure incurred on creation of site infrastructures is written off
in proportion to work done at respective sites so as to absorb such
expenditure during the tenure of the contract.
xv Other Accounting Policies
Accounting Policies not specifically referred to, are consistent with
the generally accepted accounting practices.