1.1 Basis of Accounting
The financial statements have been prepared under the historical cost
convention on accrual basis and in accordance with the accounting
principles generally accepted in India and comply with mandatory
Accounting Standards notified by the Central Government of India under
the Companies (Accounting Standards) Rules, 2006 and with the relevant
provisions of the Companies Act, 1956.
1.2 Use of estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported amount of
assets, liabilities, revenue and expenses and disclosure of contingent
liabilities as of the date of the financial statements. Actual results
could differ from those estimated. Difference between the actual
results and estimates are recognised in the period in which the results
are known / materialised.
1.3 Revenue Recognition
Income in respect of sale of goods is recognised at the time of
transfer of title. Sales are inclusive of all taxes.
Revenue in respect of Engineering Contracts is recognised as and when
progressive bills are raised based on customers measurement acceptance
and terms of the Contract, taking into consideration technical estimate
revision, costs to complete and stages of completion. Profits are
recognised after charging corresponding proportionate costs relating to
the Contractual billings. Escalation, which in the opinion of the
Management is recoverable on the contract are also recognised as and
when the claims are accepted by the customers.
Provision for anticipated losses on contracts is being made in the year
they are established.
Revenue from other Contracts is recognised based on completed Contract
method, when rendering of service is completed or substantially
Revenue from sale of windmill development rights is recognized on
transfer of the rights to the buyer under the terms of contract.
Dividend Income on Investments is accounted for when the right to
receive the payment is established.
Long term investments are stated at cost. Provision for diminution in
value is made if the decline is other than temporary in nature.
Current Investments are stated at lower of cost and fair value
determined on the basis of each category of investments.
1.5 Fixed Assets and Depreciation
Fixed assets are stated at cost. Cost comprises of the purchase price
and any attributable cost of bringing the assets to its working
condition for its intended use. With regard to assets acquired under
the finance lease, the cost of assets is capitalised while the annual
charges are charged to revenue. Intangible Assets are stated at cost.
Depreciation is provided for on Straight Line method at the rates and
in the manner prescribed under Schedule XIV of the Companies Act, 1
Leasehold improvements are written off over the primary period of their
Individual assets costing Rs.5,000/- each or less is depreciated in
full in the year of addition.
Technical Know-how fees are amortised over the period of 5 to 10 years
based on estimated useful life of the asset.
Software cost is amortised over a period of 5 years based on
Managements evaluation of their estimated useful life.
Lease hold Land Using Rights is amortised over the primary period of
lease, which is 20 years.
1.6 Impairment of Assets
At each balance sheet date, the carrying values of the tangible and
intangible assets ore reviewed to determine whether there is any
indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if
any). Where there is on indication that there is a likely impairment
loss for a group of assets, the company estimates the recoverable
amount of the group of assets as a whole and the impairment losses, if
Raw Materials and stores and spares are valued at cost. Cost on FIFO
basis includes freight, taxes and duties net of VAT credit wherever
Stock of land for windmill projects is valued at lower of cost and net
realisable value. Cost of land includes purchase consideration, stamp
duties and registration charges for transfer of title.
1.8 Foreign Currency Transaction
Foreign currency transactions are recorded at the rate prevailing on
the date of transaction. At the year end, all monetary assets and
liabilities denominated in foreign currency are restated at the year
end exchange rates.
Exchange differences arising on actual payment/realisation are
recognised in profit and loss account.
1.9 Employee Benefits:
a. Short Term Employee Benefits : All employee benefits payable wholly
within twelve months of rendering the service are classified as short
term employee benefits. Short term employee benefits, including
accumulated compensated absences, at the balance sheet date, are
recognized as an expense as per the Company''s scheme based on expected
obligations on undiscounted basis.
b. Long Term Employee Benefits:
(i) Defined Contribution Plans:
Contribution to state governed provident fund scheme and employee state
insurance scheme ore defined contribution plans. The contribution
paid/payable under the schemes is recognised during the period in which
the employee renders the related service.
(ii) Defined Benefit Plans:
The liability for Gratuity to employees as at Balance Sheet date is
determined on the basis of actuarial valuation based on Projected Unit
Credit method and is not funded. The contribution there of paid /
payable is charged in the books of accounts.
The obligation for long term employee benefits such as long term
compensated absence is provided for based on actuarial valuation as at
the balance sheet date, using the Projected Unit Credit Method.
Actuarial gains and losses arising from experience adjustments and
effects of changes in actuarial assumptions are immediately recognised
in the Profit and Loss Account as income or expense.
Provision for taxation comprise of the Current Tax Provision, Fringe
Benefits tax and the net change in the Deferred Tax Asset or Liability
during the year.
Current Tax is determined in accordance with the provisions of Income
Tax Act, 1961, on the Income for the period chargeable to tax.
Provision for Deferred Tax is made for timing differences arising
between the taxable incomes and accounting income computed using the
tax rates and the laws that have been enacted or substantively enacted
as of the balance sheet date. Deferred Tax assets in respect of
unabsorbed depreciation and carry forward of losses are recognized if
there is virtual certainty that there will be sufficient future taxable
income available to realize such losses. Other deferred tax assets are
recognized if there is reasonable certainty that there will be
sufficient future taxable income available to realize such assets.
1.11 Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Provisions are not discounted to its present
value and are determined based on best 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.
Contingent liability is disclosed for (i) Possible obligation which
will be confirmed only by future events not wholly within the control
of the Company or (ii) Present obligations arising from past events
where it is not probable that an outflow of resources will be required
to settle the obligation or a reliable estimate of the amount of the
obligation cannot be made. Contingent assets are neither recognized nor
disclosed in the financial statements.
1.12 Segment reporting:
a. The generally accepted accounting principles used in the
preparation of the financial statements are applied to record revenue
and expenditure in individual segments.
b. Segment revenue and segment results include transfers between
business segments. Such transfers are accounted for at the agreed
transaction value and such transfers are eliminated in the
consolidation of the segments.
c. Expenses that are directly identifiable to segments are considered
for determining the segment result. Expenses which relate to the
company as a whole and are not allocable to segments are included under
unallocated corporate expenses.
d. Segments assets and liabilities include those directly identifiable
with the respective segments. Unallocated corporate assets and
liabilities represent the assets and liabilities that relate to the
company as a whole and not allocable to any segment.
1.13 Employee Stock Option Scheme
In respect of stock options granted to the employees under the stock
option schemes established, the Company determines the compensated cost
based on the intrinsic value method and the compensation cost is
amortised on a straight line basis over the vesting period.