(i) ACCOUNTING CONVENTION :
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by 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 method on an accrual
basis except in case of assets for which provision for impairment is
maGe and revaluation is carried out. The accounting policies have been
consistently applied by the company and are consistent with those used
in the previous year, claims of liquidated damages on supplies,
Warranties, fuel escalation charges payable to the electricity board
which are accounted for on acceptance and other claims accounted for
receipt/ payment basis, In view of uncertainty involved.
(ii) FIXED ASSETS AND DEPRECIATION :
(a) Fixed Assets ( Other than land & building, plant & machinery of the
company which have been re-valued and stated at the revalued figures )
are stated at cost net of cenvat less accumulated depreciation and
impairment , if any. Cost of acquisition or construction is inclusive
of freight, duties, taxes and incidential/preoperative expenses and
interest on loans attributable to the acquisition of assets upto the
date of commissioning of assets . Capital subsidy received against
specific assets is reduced from the value of relevant fixed assets .
(b) The depreciation has been provided on straight line method of
depreciation at the rates and in the manner prescribed in Schedule XIV
of the Companies Act, 1956 except on assets used in Engineering
Division, which is on written down value method.
(c) Depreciation is not provided during the year in respect of assets
sold, discarded during the year upto the date ot sales/discard.
(d) Depreciation is calculated on pro-rata basis from the date of
additions except on assets of Engineering Division which are
depreciated for a full year.
(e) Lease hold land are not amortized .
(f) Expenditure on New project and substantial expansion
Expenditure directly relating to construction activity is capitalized.
Indirect expenditure incurred during construction period is capitalized
as part of the indirect construction cost to the extant to which the
expenditure is indirectly related to construction or is incidental
thereto. Other indirect expenditure (including borrowing costs)incurred
during the construction period vmich is not related to the construction
activity nor is incidental thereto is charged to the profit and loss
account. Income earned during construction period is deducted from the
total of the indirect expenditure.
Inventories are valued as follows :-
(A) (a) Raw Material, Stores & Spares, Components, construction
material. food & beverages, liquor, crockery, cutlery, glassware,
utensils and linen At cost (FIFO method) or nel realizable value,
whichever is lower.
(t>) Process Stocks
At cost or net realizable value, which ever is lower. Cost for this
purpose includes direct material cost and appropriate of manufacturing
overheads on work done basis.
A Cost or net realizable value*, which ever is lower. Cost for this
purpose includes direct material cost and a proportion of manufacturing
(d) Goods in transit
Are stated at actual cost plus freight, if any._
* Net realizable value is estimated selling price in the ordinary
course of business.
B) Hotel Division :
Stock of operating supplies i.e. Crockery, cutlery, glassware,
utensils, linen etc. in circulation are treated as consumption as and
when issued from the stores.
iv) Foreign currency Transaction :
a) Transactions in foreign currencies are recorded on initial
recognition at the exchange rates prevailing at the time of transaction
b) Monetary items (i.e. receivables, payables, loans etc) denominated
in foreign currencies at the year end are restated at year end rates.
In case of monetary items which are covered by forward exchange
contracts, the difference between the year end rate and rate on the
date of the contract is recognized as exchange difference and the
premium paid on forward contracts is recognized over the life of the
c) Non monetary foreign currency items are carried at cost.
d) Any income or expenses on account of exchange difference either on
settlement or ''on translation is recognized as revenue except in cases
where they relate to acquisition of fixed assets in which case they are
adjusted to the carrying cost of such assets.
v) Revenue Recognition:
a) Engineering Division :
Sales of products (Fabricated goods) escalation and erection receipts
(sales is net of trade discount and sales tax) are accounted for on the
basis of bills/invoices acknowledged or paid by the project
b) Other Divisions :
Sales comprises of sales of goods, room sales etc. are excluding sales
tax/VAT . It is being accounted for net of returns/discount/claims etc
c) Income of interest on refund of income tax is accounted for in the
year, the order is passed by the concerned authority .
d) Revenue from real estate division are recognized on the percentage
of completions method of accounting. Revenue is recognized , in
relation to the sold areas only, on the basis of percentage of actual
cost incurred thereon including land as against the total estimated
cost of the project under execution subject to such actual costs being
30% or more of the total estimated cost. The estimates of saleable area
and cost are revised periodically by the management. The effect of such
changes to estimates is recognized in the period such changes are
e) Revenue is recognized when the shareholder''s right to receive
payment is established by the balance sheet date . Dividend from
subsidiaries is recognized even if the same is declared after the
balance sheet date but pertains to period on or before the date of
balance sheet as per the requirement of Schedule VI of the Companies
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long Term investments .Current
investments are carried at lower of cost and fair value determined on
and individual investment basis. Long term investments are carried at
cost. However, Provision for diminution in the value is made to
recognize a decline other than temporary in the value of the
vii) MISCELLANEOUS EXPENDITURE (To the extent not written off or
adjusted) Miscellaneous expenditure such as public issue expenditure
are amortized over a period of 5 years.
viii) RESEARCH AND DEVELOPMENT :
The revenue expenditure on research and development is charged as an
expense in the year in which it is incurred. Capital expenditure is
included in fixed assets
ix) Borrowing costs :
Borrowing costs directly attributable to the acquisition and
construction of and assets that necessarily takes a substantial period
of time to get ready for its intended use are capitalized as part of
the cost of the respective asset. All other borrowing costs are
expensed in the period they occur . Borrowing costs consists of
interest and other costs that an entity incurs in connection with the
borrowing of funds.
x) TAXATION :
(a) Current Tax :
The income tax liability provided taking into considerations of
claiming of deduction under section 80 IB of the Income Tax Act. and in
accordance with the provisions of the Income Tax Act, 1961, as advised
by income tax consultant.
(b) Deferred Tax Liabilities/(Assets)
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.
xi) Retirement and other employee benefits :
a) Retirement benefit in the form of provident fund is a defined
benefit obligation of the company and the contributions are charged to
the profit and loss account of the year when the contributions to the
funds are due. Shortfall in the funds, if ^^ any, is adequately
provided for by the company .
b) Gratuity :
Gratuity liability is a defined benefit obligation of the company . The
company provides for gratuity to all eligible employees. The benefit is
in the form of lump sump payments to vested employees on resignation,
retirement, on death while in employment or on termination of
employment of and amount equivalent to 15 days basic salary payable to
each completed year of service. Vesting occurs upon completion of 5
years of services. The company has not made annual contributions to
funds administered by trustees or managed by insurance companies.
Actuarial valuation for the liabilities has , however has not bten
c) Leave Salaries:
Liabilities for privilege leave benefits, in accordance with the rules
of the company is provided for, as prevailing salary rate for the
entire un-availed leave balance as at the balance sheet date.
xii) Impairment of assets:
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimation of recoverable
A Provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow cf
resources will be required to settled the obligation , in respect of
which a reliable estimate can be made. Provisions are not disclosed to
its present value and are determined based on best management estimate
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
best estimates . Other contingent liabilities are not recognized but
are disclosed in the notes. Contingent assets are neither recognized
nor disclosed in the financial statement.
xiv) Earning per Share:
Basic earnings per share is calculated by dividing the Net Profit or
Loss for the period attributable to equity share holders (After
deducting taxes etc.) by the weighted average number of the equity
shares outstanding during the period.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity share holders and
the weighted average number of shares outstanding during the period are
adjusted for the effect of all dilutive potential equity shares.
xv) Use of Estimate:
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
Liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operation during the reporting
period end. Although these estimates are based upon management''s .best
no knowledge of current events and actions , actual results could
differ from these estimates . Difference between actual results and
estimates is recognized in the period in which the results are known /
materialized. xvi) Operating Lease - Lease rentals in respect of
assets taken are charged to profit & loss account as per the terms of
the lease agreement.