1. Basis of Preparation of Financial Statements
The Financial Statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting and in
accordance with Generally Accepted Accounting Principles (Indian GAAP)
and comply in all material aspect with the applicable Accounting
Standards notified under Section 211(3C) of the Companies Act, 1956,
and the relevant provisions of the Companies Act, 1956, except where
During the year ended March 31, 2012, the Revised Schedule VI notified
under the Companies Act, 1956, has become applicable to the Company for
preparation and presentation of its financial statements. The
adaptation of Revised Schedule VI does not impact the recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosure made in the financial statements. The Company has also
reclassified the previous year figure in accordance with the
requirements applicable in the current year in terms of Revised
For recognition of Income and Expenses mercantile system of accounting
is followed except in case of insurance claims where on the ground of
prudence and as well as uncertainty in realization, the same is
accounted for as and when accepted/received.
The accounting policies have been consistently applied by the Company
except for the changes mentioned in Para 3.
2. Use of Estimates:
The preparation of financial statements in conformity with the
Generally Accepted Accounting Principles requires estimates and
assumptions to be made that affect reported amount of assets and
liabilities and disclosure of contingent liabilities on the date of
financial statements and the reported amount of revenues and expenses
during the reporting period. Difference between the actual results and
estimates are recognized in the period in which the results are known.
3. Change in Accounting Policies:
a) During the year under review the Company has credited gross bill
amount as revenue, instead of net of retention as it was thought to be
a better presentation of Financial Statement. Due to such change there
has been an increase of gross contract receipt to the extent of Rs. 708
relating to last year.
a) Stock of raw materials, stores and spares and fuel (except for those
relating to Construction activities) are valued at cost (weighted
average basis) or net realisable value whichever is lower.
b) Cost of Raw materials, stores, spares and fuel used in construction
activities are valued at cost (weighted average basis).
c) Work-in-progress is valued at cost and reflects the work done but
d) The cost of inventories comprises all cost of purchase, cost of
conversion and other incidental cost incurred in bringing the
inventories to their present location and condition.
e) Net realisable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and estimated
cost necessary to make the sale.
5. Fixed Assets
Fixed Assets are stated at cost of acquisition inclusive of duties (net
of VAT where input credit is availed) together with any incidental
costs for bringing the asset to its working condition for its intended
use less accumulated depreciation and impairment losses, if any.
Capital work in progress is stated at amounts spent up to the date of
the Financial Statement.
Intangible assets comprise of License fees and other implementation
cost of software (SAP) acquired for in-house use and is net of
amortization. Intangible assets under development are stated at cost.
6. Depreciation / Amortization
Depreciation on fixed assets acquired upto the year ended on Diwali
2040 S.Y. (Corresponding to 3rd November 1983) is provided by applying
the rates specified in Schedule-XIV of the Companies Act, 1956 and
calculated on written down value method.
In respect of the assets acquired thereafter, other than Construction
Accessories and Intangible Asset''s depreciation is charged on the
straight line method at the rates prescribed in Schedule-XIV of the
Companies'' Act 1956. Construction Accessories are depreciated over a
period of five years on straight line method from the year of addition.
Intangible Assets are amortized over the best estimates of its useful
7. Impairment of Assets
On annual basis the Company makes an assessment of any indicator that
may lead to impairment of assets. An asset is treated as impaired when
the carrying cost of the asset exceeds the recoverable value. If any
indication of such impairment exists, the reasonable amounts of those
assets are estimated and impairment loss is recognized. The impairment
loss recognized in prior accounting period is adjusted if there has
been a change in the estimate of recoverable amount.
8. Revenue Recognition
On Construction Contracts:
- The contract revenue is recognized by reference to the stage of
completion of the contract activity at the reporting date of the
financial statements on the basis of percentage completion method.
- The stage of completion of contracts is measured by reference to the
proportion that the contract costs incurred for work performed upto the
reporting date bear to the estimated total contract costs for each
- Losses on contracts are fully accounted for as an expense immediately
when it is certain that the total contract costs will exceed the total
contract price. Total contract cost are ascertained on the basis of
actual cost and cost to be incurred for the completion of contracts in
progress which is determined by the management based on technical data,
forecast and estimates of expenditure to be incurred in future.
- Price escalation claims and other additional claims are recognized as
i. They are realized or receipts thereof are mutually settled or
ii. Negotiations with the client have reached such an advanced stage
that there is reasonable certainty that the client will accept the
iii. Amount that is probable, if accepted by the client, to be measured
reliably by the Company.
On Sale of Goods:
- In case of sale of goods, the transfer of property in goods results
in the transfer of significant risks and rewards of ownership to the
buyer and revenue is recognized at the time of transfer of property.
9. Foreign Currency Transactions
Transactions in foreign currency are recorded using the exchange rate
prevailing at the date of transactions. Monetary assets and liabilities
related to foreign currency transactions unsettled at the end of the
year are translated at year end rate. All other foreign currency assets
and liabilities are stated at the rates prevailing at the date of
transaction other than those covered by forward contracts, which are
stated at the contracted rate. Exchange differences arising on foreign
currency transactions are recognized in the Statement of Profit & Loss.
Long-term investments are stated at cost, provision is made to
recognize a decline, if any, other than temporary, in the value of long
term investments. Investments in Joint Ventures are stated at cost.
Current investments being readily realisable and intended to be held
for less than a year are carried at cost or market rate whichever is
lower, on individual investment basis.
11. Employee Benefit (Retirement and Post Employment Benefit)
Liability for employee benefits, both short and long term, for present
and past services which are due as per the terms of employment are
recorded in accordance with Accounting Standard (AS) – 15 Employee
Benefits notified by Companies (Accounting Standard) Rules, 2006.
Liability on account of Gratuity is:
- Covered through recognized gratuity fund managed by Life Insurance
Corporation of India and contributions are charged to revenue; and
- Balance if any, is provided on the basis of valuation of the
liability by and independent Actuary as at the year end.
II. Provident Fund, ESI and Medical
Contribution to provident fund (defined contribution plan) and ESI made
to government administered Provident Fund and ESI are recognized as
expenses. The company has no further obligation beyond its monthly
contribution. Those employees who are not covered under ESI scheme (as
stated in the Act) are eligible for medical re-imbursement as per the
HR policy of the Company.
III. Leave Encashment
Liability for leave encashment is treated as a long term liability and
is provided on the basis of valuation by an independent Actuary as at
the year end.
12. 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 necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to the Statement of Profit and Loss.
13. Earnings Per Share
The Company reports basic and diluted earnings per share in accordance
with Accounting Standard (AS) - 20, EPS notified by Companies
(Accounting Standards) Rules, 2006. Basic earnings per equity share is
computed by dividing the net profit for the year attributable to the
equity share holders by the weighted average number of the equity
shares outstanding during the year. Diluted earnings per share is
computed by dividing the net profit during the year, adjusted for the
effects of dilutive potential equity share, attributable to the equity
share holders by the weighted average number of the equity shares and
dilutive equity potential equity shares outstanding during the year
except where the results are anti dilutive.
Tax expenses comprise of current tax and deferred tax.
Current tax is determined in respect of taxable income for the year
based on Income Tax Act 1961. Deferred tax is recognized, subject to
consideration of prudence, on timing difference (being the difference
between taxable income and accounting income that originates in one
period and are capable of being reversed in one or more subsequent
years) and is measured using tax rates and laws that have been enacted
or substantively enacted by the Balance Sheet date. Deferred tax assets
are reviewed at each Balance Sheet date and are recognized only if
there is reasonable certainty that they will be realized.
15. Accounting of Joint Venture contracts
a) In respect of its interest in Jointly Controlled Operations, the
Company recognize the asset that it controls and the liability that in
incurs along with the expenses that it incurs and the income it earns
from the Joint Venture in accordance with Accounting Standards (AS) 27.
b) In respect of its interest in Jointly Controlled Entity, the same is
recognized as an Investment in accordance with Accounting Standard (AS)
13, Accounting for Investment.
16. Provision, Contingent Liabilities & 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 recognised but are disclosed in the
Notes to Accounts. Disputed demands in respect of Income Tax and Sales
Tax etc are disclosed as contingent liability. Payments in respect of
such demands, if any, are shown as advance, till the final outcome.
Contingent Assets are neither recognized nor disclosed in the financial