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Accounting Policies of ABG Shipyard Ltd. Company

Mar 31, 2015

I). Basis of Accounting

The financial statements are prepared under the Historical Cost Conventions on the basis of Going Concern and as per applicable Indian Accounting Standards notified under relavant provisions of The Companies Act, 2013.

ii). Use of estimates

The preparation of financial statements requires the management of the company to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference, if any, between the actual results and estimates is recognised in the year in which the results are known / materialized .

iii). Revenue

Revenue is recognized in accounts in accordance with Accounting Standard-7 'Accounting for Construction Contracts'. The method of recognition is on percentage completion basis. Revenue is recognised under Percentage Completion Method on the basis of proportion that contract costs incurred for work performed up to the reporting date bears to the estimated total contract costs.

Revenue from ship repair is recognised on the basis of job completion.

Dividend income on investment is accounted for in the year in which the right to receive the payment is established.

Interest income is recognised on the time proportion basis.

iv). Fixed Assets

Tangible Assets:

Fixed Assets are recorded at Cost. Cost is purchase cost and in the case of Freehold Land, includes development cost incurred, together with all incidental costs of acquisition, borrowing costs and other related internal costs and is netted of for Cenvat and Value Added Tax.

Profit/Loss on disposal of fixed assets is recognised in the Statement of Profit and Loss.

Intangible Assets:

Intangible assets are recognized and accounted at cost in accordance with Accounting Standard-26 'Intangible Assets'.

v). Capital Work In Progress

All expenditure, relating to development of land, buildings, dry docks and plant & machinery etc. are accumulated and shown as capital work-in-progress till the completion of such activities. Capital advances are presented under loans and advances .

vi). Investments

Long Term investments are stated at cost. Cost includes incidental expenses of acquisition. Decline in value of investment other than of temporary nature is recognised in Statement of Profit and Loss.

vii). Borrowing costs

Borrowing Costs attributable to the acquisition and construction of the Qualifying Assets, which take substantial period of time to get ready for their intended use, are capitalized as part of the cost of respective assets up to the date when such assets are ready for their intended use. Other Borrowing costs are charged to the Profit and Loss account.

viii). Depreciation and Amortisation

a) Freehold land is not depreciated. Leasehold land is amortised equally over the period of lease.

b) Dry Docks (included in Plant & Machinery) and Dry Docks Civil Works (included in Factory Building) and Jetty are depreciated on Straight Line Method as per estimated useful life of the asset prescribed in Schedule II to the Companies Act, 2013.

c) Other assets are depreciated on Written Down Value Method as per estimated useful life of the asset prescribed in Schedule II to the Companies Act, 2013.

d) Depreciation on additions / deletions to Fixed Assets made during the year is provided on pro-rata basis from or up to date of such additions / deletions as the case may be.

e) Depreciation on amounts added on revaluation is recouped from Revaluation Reserve

f) Intangible assets are amortised over a period of five years

ix). Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. The company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired and if such indication exists, the carrying value of such asset is reduced to its recoverable amount and a provision is made for such impairment loss in the profit and loss account. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount

x). Employees' Benefits

Provident Fund: Provident Fund contributions are made as per a defined contribution scheme and the contribution of company is charged to Profit and Loss account of the year when become due. The company has no other obligation other than to contribute and deposit the contribution to respective authorities.

NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2015

Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

Long term employee benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of long term benefits are charged to the Profit and Loss account.

xi). Valuation of Inventory

Inventories of spares, consumables, components are valued at lower of cost and net realizable value. Cost represents purchase cost and other incidental costs, if any. Cost of inventories is computed on Weighted Average and specific inventory on specific identification basis. Finished goods are valued at lower of cost and net realisable value.

xii). Work in Progress and Cost Allocation

Each construction contract is considered as a cost center and all costs directly identifiable to the Contract are charged on actual basis. Indirect miscellaneous costs are also allocated to the various contracts using appropriate overhead recovery method. Contract work-in-progress is valued at cost, including therein profit or loss arrived at in accordance of Accounting Standard -7 'Accounting for Construction Contracts'

xiii). Foreign Currency Transactions

Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of the transactions. Monetary assets and liabilities are translated at the year end using closing rate if remain unsettled at the year end. Non monetary foreign currency items are carried at cost.

The resulting gain or loss on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

The Company has w.e.f. 07th December,2006 chosen to apply notification issued by Companies (Accounting Standard) Amendment Rules 2011 GSR 913 (E) & 914 (E) dated 29.12.2011 as regards monetary long term assets and liabilities. Consequently, the resulting gain or loss on account of exchange difference on settlement or on translation is so far as they relate to depreciable assets is added or deducted from the cost of the asset.

xiv). Derivative Accounting

The Institute of Chartered Accountants of India has, in 2008, issued an announcement on 'Accounting for Derivatives' inter alia requiring provision for losses on all derivative contracts outstanding at the balance sheet date by marking them to market keeping in view the principle of prudence, other than for forward contracts to which Accounting Standard (AS) 11- 'The Effect of Change in Foreign Exchange Rates' is applicable.

xv). Government Subsidy

Government subsidy related to shipbuilding contracts are recognized on compliance with the relevant conditions and is recognized in the Statement of Profit and Loss and presented under 'Revenue from Operations'.

xvi). Operating Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments / receipts are recognized as an expense / income in the Statement of Profit and Loss on a straight-line basis over the lease term.

xvii). Provisions for Current and Deferred Tax

Provision for Current Tax is made on the basis of taxable income under the provision of the Income Tax Act, 1961.

"Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date."

Deferred tax assets relating to unabsorbed depreciation / business losses are recognized and carried forward to the extent there is virtual certainty that sufficent future taxable income will be available against which such deferred tax assets can be realised.

Other deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The company recognizes MAT credit available as an asset only to the extent there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT Credit is allowed to be carried forward. In the year in which the Company recognizes MAT Credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the statement of Profit and Loss and shown as "MAT Credit Entitlement." The Company reviews the "MAT Credit Entitlement" asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that it will pay normal tax during the sufficient period.

xviii). Provisions, Contingent Liabilities and Contingent Assets

A provision is made based on reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent liabilities, if material, are disclosed in notes forming part of financial statements. Contingent Assets are not recognized/ disclosed.

a) The Company has two classes of shares referred to as Equity Shares and Compulsorily Convertible Preference Shares (CCPS) having par value of Rs 10/- respectively. Each holder of equity share(s) is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the company after distribution of all preferential amounts.

The holders of CCPS will be entitled to apply for equity shares of the Company on Entitlement Date as per Special Resolutions passed by the shareholders through Postal Ballott on 27th September, 2014 and as amended vide Special Resolution passed through Postal Ballott on 29th December, 2014 and the equity shares shall be allotted at the minimum price determined pursuant to Regulation 76(1) of SEBI ICDR Regulations, 2009. Hence the total number of Equity Shares assuming full conversion shall be determined as per Revelant date being the date 30 days prior to the Entitlement date.

b) None of the above shares are reserved for issue under options and contract / commitments for sale of shares or disinvestment.

c) 31211040 (P.Y.34212057) Equity Shares of Rs.10/- each are held by the holding company ABG International Pvt. Ltd.

d) Shares alloted , as fully paid up, pursuant to contract(s) without payment being effected in cash / bonus shares /bought back / forfeited/ calls unpaid in the previous 5 years - NIL

e) Pursuant to the scheme of CDR , the company has alloted total 29,17,768 nos. of equity shares of Rs. 10 /-each at a premium of Rs. 265.92 per equity shares to the CDR lenders towards conversion of the Funded interest Term Loan (FITL)/Interest on FITL.

f) Pursuant to the scheme of CDR, the Company has allotted total 25,70,93,339 Nos. of 0.01 % Compulsorily Convertible Preference Shares (CCPS) of Face Value Rs.10/- each have been issued to CDR lenders towards conversion of the Funded interest Term Loan (FITL)/ Interest on FITL..

g) Shareholders holding above 5% Equity Shares with voting rights in the company.

Out of the above debentures, debentures were falling due for repayment till 31st March 2015 amounting to Rs. 50.00 crores subsequent to restructuring terms of repayment by the debenture holders In view of sec 71 of the Companies Act, 2013 read with Rule 18 of the Com- panies (Share Capital and Debentures) Rule, 2014, the Company was required to invest 15% of the said amount in specified securities. In view of management the said amount need to be deposited on maturity and not on restructuring of repayment term for debentures already matured in earlier years Due to liquidity constraints , the company has not deposited the 15% amount even if a contrary view is taken.


Mar 31, 2014

I). Basis of Accounting

The financial statements are prepared under the Historical Cost Conventions on the basis of Going Concern and as per applicable Indian Accounting Standards notified under section 211 (3C) of The Companies Act, 1956.

ii). Use of estimates

The preparation of financial statements requires the management of the company to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference, if any, between the actual results and estimates is recognised in the year in which the results are known / materialized .

iii). Revenue

Revenue is recognized in accounts in accordance with Accounting Standard-7 ''Accounting for Construction Contracts'' issued by Institute of Chartered Accountants of India. The method of recognition is on percentage completion basis. Revenue is recognised under Percentage Completion Method on the basis of proportion that contract costs incurred for work performed up to the reporting date bears to the estimated total contract costs.

Revenue from ship repair is recognised on the basis of job completion.

iv). Fixed Assets Tangible Assets:

Fixed Assets are recorded at Cost. Cost is purchase cost and in the case of Freehold Land, includes development cost incurred, together with all incidental costs of acquisition, borrowing costs and other related internal costs and is netted of for Cenvat and Value Added Tax. Profit/Loss on disposal of fixed assets is recognised in the Statement of Profit and Loss.

Intangible Assets:

Intangible assets are recognized and accounted at cost in accordance with Accounting Standard-26 ''Intangible Assets'' issued by Institute of Chartered Accountants of India.

v). Capital Work In Progress

All expenditure, relating to development of land, buildings, dry docks and plant & machinery etc. are accumulated and shown as capital work-in-progress till the completion of such activities. Capital advances are presented under loans and advances

vi). Investments

Long Term investments are stated at cost. Cost includes incidental expenses of acquisition. Decline in value of investment other than of temporary nature is recognised in Statement of Profit and Loss.

vii). Borrowing costs

Borrowing Costs attributable to the acquisition and construction of the Qualifying Assets, which take substantial period of time to get ready for their intended use, are capitalized as part of the cost of respective assets up to the date when such assets are ready for their intended use. Other Borrowing costs are charged to the Profit and Loss account.

viii). Depreciation and Amortisation

a) Freehold land is not depreciated. Leasehold land is amortised equally over the period of lease.

b) Dry Docks (included in Plant & Machinery) and Dry Docks Civil Works (included in Factory Building) and Jetty are depreciated on Straight Line Method in accordance with Accounting Standard - 6 ''Depreciation Accounting'' of the Institute of Chartered Accountants of India at the rates prescribed in Schedule XIV to the Companies Act, 1956.

c) Other assets are depreciated on Written Down Value Method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

d) Depreciation on additions / deletions to Fixed Assets made during the year is provided on pro-rata basis from or up to date of such additions / deletions as the case may be.

e) Depreciation on amounts added on revaluation is recouped from Revaluation Reserve

f) Intangible assets are stated at cost less accumulated amortisation and are amortised over a period of five years.

ix). Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. The Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired and if such indication exists, the carrying value of such asset is reduced to its recoverable amount and a provision is made for such impairment loss in the profit and loss account. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount

x). Employees'' Benefits

Provident Fund: Provident Fund contributions are made as per a defined contribution scheme and the contribution of company is charged to Profit and Loss account of the year when become due. The Company has no other obligation other than to contribute and deposit the contribution to respective authorities.

Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

Long term employee benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of long term benefits are charged to the Profit and Loss account.

xi). Valuation of Inventory

Inventories of spares, consumables, components are valued at lower of cost and net realizable value. Cost represents purchase cost and other incidental costs, if any. Cost of inventories is computed on Weighted Average/ FIFO basis. Finished goods are valued at lower of cost and net realisable value.

xii). Work in Progress and Cost Allocation

Each construction contract is considered as a cost center and all costs directly identifiable to the Contract are charged on actual basis. Indirect miscellaneous costs are also allocated to the various contracts using appropriate overhead recovery method. Contract work-in-progress is valued at cost, including therein profit or loss arrived at in accordance of Accounting Standard -7 ''Accounting for Construction Contracts''

xiii). Foreign Currency Transactions

Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of the transactions. Monetary assets and liabilities are translated at the year end using closing rate if remain unsettled at the year end. Non monetary foreign currency items are carried at cost.

The resulting gain or loss on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

The Company has w.e.f. 07th December,2006 chosen to apply notification issued by Companies (Accounting Standard) Amendment Rules 2011 GSR 913 (E) & 914 (E) dated 29.12.2011 as regards monetary long term assets and liabilities. Consequently, the resulting gain or loss on account of exchange difference on settlement or on translation is so far as they relate to depreciable assets is added or deducted from the cost of the asset.

xiv). Derivative Accounting

The Institute of Chartered Accountants of India has, in 2008, issued an announcement on ''Accounting for Derivatives'' inter alia requiring provision for losses on all derivative contracts outstanding at the balance sheet date by marking them to market keeping in view the principle of prudence, other than for forward contracts to which Accounting Standard (AS) 11- ''The Effect of Change in Foreign Exchange Rates'' is applicable. The Company has entered into Forward Contracts to hedge a firm commitment or a highly probable forecast transaction to which AS-11 is not applicable and hence, the Company has applied aforesaid announcement.

xv). Government Subsidy

Government subsidy related to shipbuilding contracts are recognized on compliance with the relevant conditions and is recognized in the Statement of Profit and Loss and presented under ''Revenue from Operations''.

xvi). Operating Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments / receipts are recognized as an expense / income in the Statement of Profit and Loss on a straight-line basis over the lease term.

xvii). Provisions for Current and Deferred Tax

Provision for Current Tax is made on the basis of taxable income under the provision of the Income Tax Act, 1961.

Deferred Tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

In accordance with the guidance note issued by Institute of Chartered Accountants of India, the Company recognises MAT Credit as an asset only to the extent ,the probability exists that the Company will become liable to pay normal Income Tax during the specified period as per provision of the Income Tax Act, 1961.

xviii). Provisions, Contingent Liabilities and Contingent Assets

A provision is made based on reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent liabilities, if material, are disclosed in notes forming part of financial statements. Contingent Assets are not recognized/ disclosed.

a) During the year the company has increased its authorised capital vide shareholder resolution in Extra Ordinary General Meeting held on 29th March 2014. Registration of the same with the Registering authority is pending.

b) The Company has only one class of shares referred to as Equity Shares having par value of Rs 10/-. Each holder of equity share(s) is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion of the number of equity shares held by the shareholders.

c) None of the above shares are reserved for issue under options and contract / commitments for sale of shares or disinvestment.

d) 34212057 (P.Y.33648204 ) Equity Shares of Rs.10/- each are held by the holding company ABG International Pvt. Ltd, as per dematerialised holding statement and includes shares pending for registration. 31605002 equity shares are pledged with lenders

e) Shares alloted, as fully paid up, pursuant to contract(s) without payment being effected in cash / bonus shares /bought back / forfeited/ calls unpaid in the previous 5 years - NIL


Mar 31, 2012

I) Basis of Accounting

The financial statements are prepared under the Historical Cost Conventions on the basis of Going Concern and as per applicable Indian Accounting Standards notified under section 211 (3C) of The Companies Act, 1956

ii) Use of estimates

The preparation of financial statements requires the management of the company to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference, if any, between the actual results and estimates is recognised in the year in which the results are known / materialized .

Mi) Revenue

Revenue is recognized in accounts in accordance with Accounting Standard-7 Accounting for Construction Contracts' issued by Institute of Chartered Accountants of India. The method of recognition is on percentage completion basis. Revenue is recognised under Percentage Completion Method on the basis of proportion that contract costs incurred for work performed up to the reporting date bears to the estimated total contract costs.

Revenue from ship repair is recognised on the basis of job completion.

iv) Fixed Assets

Tangible Assets:

Fixed Assets are recorded at Cost. Cost is purchase cost and in the case of Freehold Land, includes development cost incurred, together with all incidental costs of acquisition, borrowing costs and other related internal costs and is netted of for Cenvat and Value Added Tax.

Profit/Loss on disposal of fixed assets is recognised in the Statement of Profit and Loss.

Intangible Assets:

Intangible assets are recognized and accounted at cost in accordance with Accounting Standard-26 'Intangible Assets- issued by Institute of Chartered Accountants of India.

v) Capital Work In Progress

All expenditure, relating to development of land, buildings, dry docks and plant & machinery etc. are accumulated and shown as capital work-in-progress till the completion of such activities. Capital advances are presented under loans and advances.

vi) Investments

Long Term investments are stated at cost. Cost includes incidental expenses of acquisition. Decline in value of investment other than of temporary nature is recognised in Statement of Profit and Loss.

vii) Borrowing costs

Borrowing Costs attributable to the acquisition and construction of the Qualifying Assets, which take substantial period of time to get ready for their intended use, are capitalized as part of the cost of respective assets up to the date when such assets are ready for their intended use. Other Borrowing costs are charged to the Statement of Profit and Loss.

viii) Depreciation and Amortisation

a) Freehold land is not depreciated. Leasehold land is amortised equally over the period of lease.

b) Dry Docks (included in Plant & Machinery) and Dry Docks Civil Works (included in Factory Building) and Jetty are depreciated on Straight Line Method in accordance with Accounting Standard - 6 'Depreciation Accounting' of the Institute of Chartered Accountants of India atthe rates prescribed in Schedule XIV to the Companies Act, 1956.

c) Other assets are depreciated on Written Down Value Method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

d) Depreciation on additions / deletions to Fixed Assets made during the year is provided on pro-rata basis from or up to date of such additions/deletions as the case may be.

e) Depreciation on amounts added on revaluation is recouped from Revaluation Reserve

f) Intangible assets are stated at cost less accumulated amortisation and are amortised over a period of five years.

ix) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. The company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired and if such indication exists, the carrying value of such asset is reduced to its recoverable amount and a provision is made for such impairment loss in the Statement of Profit and Loss. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

x) Employees' Benefits

Provident Fund: Provident Fund contributions are made as per a defined contribution scheme and the contribution of company is charged to Statement of Profit and Loss of the year when become due. The company has no other obligation other than to contribute and deposit the contribution to respective authorities.

Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

Long term employee benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of long term benefits are charged to the Statement of Profit and Loss.

xi) Valuation of Inventory

Inventories of spares, consumables, components are valued at lower of cost and net realizable value. Cost represents purchase cost and other incidental costs, if any. Cost of inventories is computed on Weighted Average/ FIFO basis. Finished goods are valued at lower of cost and net realisable value.

xii) Work in Progress and Cost Allocation

Each construction contract is considered as a cost center and all costs directly identifiable to the Contract are charged on actual basis. Indirect miscellaneous costs are also allocated to the various contracts using appropriate overhead recovery method. Contract work-in-progress is valued at cost, including therein profit or loss arrived at in accordance of Accounting Standard -7 'Accounting for Construction Contracts'

xiii) Foreign Currency Transactions

Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of the transactions. Monetary assets and liabilities are translated at the year end using closing rate if remain unsettled at the year end. Non monetary foreign currency items are carried at cost.

The resulting gain or loss on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

The Company has chosen to apply notification issued by Companies (Accounting Standard) Amendment Rules 2011 GSR 913 (E) & 914 (E) dated 29 12.2011 as regards monetary long term assets and liabilities. Consequently, the resulting gain or loss on account of exchange difference on settlement or on translation is so far as they relate to depreciable assets is added or deducted from the cost of the asset.

xvi) Derivative Accounting

The Institute of Chartered Accountants of India has, in 2008, issued an announcement on 'Accounting for Derivatives- inter alia requiring provision for losses on all derivative contracts outstanding at the balance sheet date by marking them to market keeping in view the principle of prudence, other than for derivative contracts to which Accounting Standard (AS) 11 - 'The Effect of Change in Foreign Exchange Rates' is applicable. The Company has entered into Derivative Contracts to hedge a firm commitment or a highly probable forecast transaction to which AS-11 is not applicable and hence, the Company has applied aforesaid announcement.

xv) Government Subsidy

Government subsidy related to shipbuilding contracts are recognized on compliance with the relevant conditions and is recognized in the Statement of Profit and Loss and presented under 'Revenue from Operations'.

xvi) Operating Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments / receipts are recognized as an expense / income in the Statement of Profit and Loss on a straight-line basis over the lease term.

xvii) Provisions for Current and Deferred Tax

Provision for Current Tax is made on the basis of taxable income under the provision of the Income Tax Act, 1961. Deferred Tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future. In accordance with the guidance note issued by Institute of Chartered Accountants of India, the Company recognises MAT Credit as an asset only to the extent ,the probability exists that the Company will become liable to pay normal Income Tax during the specified period as per provision of the Income Tax Act, 1961.


Mar 31, 2011

1. Basis of Accounting

The financial statements are prepared under the Historical Cost Conventions on the basis of Going Concern and as per applicable Indian Accounting Standards notified u/s 211 (3C) of The Companies Act, 1956.

2. Use of estimates

The preparation of financial statements requires the management of the company to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period . Difference if any between the actual results and estimates is recognised in which the results are known / materialized.

3. Revenue

Revenue is recognized in accounts in accordance with Accounting Standard-7 Accounting for Construction Contracts' issued by Institute of Chartered Accountants of India. The method of recognition is on percentage completion basis. Revenue is recognized under Percentage Completion Method on the basis of proportion that contract costs incurred for work performed up to the reporting date bears to the estimated total contract costs.

Revenue from ship repair is recognized on the basis of job completion.

4. Fixed Assets

Tangible Assets:

Fixed Assets are recorded at Cost. Cost is purchase cost and in the case of Freehold Land, includes development cost incurred, together with all incidental costs of acquisition, borrowing costs and other related internal costs and is netted of for Cenvat and Value Added Tax.

Profit/Loss on disposal of fixed assets is recognised in the Profit and Loss Account.

Intangible Assets:

Intangible assets are recognized and accounted at cost in accordance with Accounting Standard-26 Intangible Assets' issued by Institute of Chartered Accountants of India.

5. Capital Work In Progress

All expenditure, including advances given relating to development of land, buildings, dry docks and plant & machinery etc. are accumulated and shown as capital work-in-progress till the completion of such activities.

6. Borrowing costs

Borrowing Costs attributable to the acquisition and construction of the Qualifying Assets, which takes substantial period of time to get ready for its intended use, are capitalized as part of the cost of respective assets up to the date when such asset is ready for its intended use. Other Borrowing costs are charged to the Profit and Loss account.

7. Depreciation and Amortisation

a) Freehold land is not depreciated. Leasehold land is amortised equally over the period of lease.

b) Dry Docks (included in Plant & Machinery) and Dry Docks Civil Works (included in Factory Building) and Jetty are depreciated on Straight Line Method in accordance with Accounting Standard -6 'Depreciation Accounting' of the Institute of Chartered Accountants of India at ther ates prescribed in Schedule XIV to the Companies Act, 1956.

c) Other assets are depreciated on Written Down Value Method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

d) Depreciation on additions / deletions to Fixed Assets made during the year is provided on pro-rata basis from or up to date of such additions / deletions as the case may be.

e) Depreciation on amounts added on revaluation is recouped from Revaluation Reserve

f) Intangible assets are stated at cost less accumulated amortisation.

g) Software is amortised over a period of five years.

8. Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. The company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired and if such indication exists, the carrying value of such asset is reduced to its recoverable amount and a provision is made for such impairment loss in the profit and loss account. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

9. Employees'Benefits

Provident Fund: Provident Fund contributions are made as per a defined contribution scheme and the contribution of company is charged to Profit and Loss account of the year when become due. The company has no other obligation other than to contribute and deposit the contribution to respective authorities.

Short term employee benefits are recognized as an expense at the undiscounted amount in the Profit and Loss account of the year in which the related service is rendered.

Long term employee benefits are recognized as an expense in the Profit & Loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of long term benefits are charged to the Profit and Loss account.

10. Valuation of Inventory

Inventories of spares, consumables, components are valued at lower of cost and net realizable value. Cost represents purchase cost and other incidental costs, if any. Cost of inventories is computed on Weighted Average/ Fl FO basis.

11. Work in Progress and Cost Allocation

Each construction contract is considered as a cost center and all costs directly identifiable to the Contract are charged on actual basis. Indirect miscellaneous costs are also allocated to the various contracts using appropriate overhead recovery method. Contract work-in-progress is valued at cost, including therein profit or loss arrived at in accordance of Accounting Standard -7 'Accounting for Construction Contracts'

12. Foreign Currency Transactions

Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of the transactions. Monetary assets and liabilities are translated at the year end using closing rate if remain unsettled at the year end. Non monetary foreign currency items are carried at cost.

The resulting gain or loss on account of exchange difference either on settlement or on translation is recognised in the Profit & Loss account

The Company has w.e.f. or December,2006 chosen to apply notification issued by Companies (Accounting Standard) Amendment Rules 2009 GSR 225 (E) dated 31.03.2009 as regards monetary long term assets and liabilities. Consequently the resulting gain or loss on account of exchange difference on settlement or on translation is so far as they relate to depreciable assets is added or deducted from the cost of the asset.

13. Derivative Accounting

During the year ended 31st March, 2008, The Institute of Chartered Accountants of India has issued an announcement on 'Accounting for Derivatives' inter alia requiring provision for losses on all derivative contracts outstanding at the balance sheet date by marking them to market keeping in view the principle of prudence, other than for forward contracts to which Accounting Standard (AS) 11- 'The Effect of Change in Foreign Exchange Rates' is applicable. The Company has entered into Forward Contracts to hedge a firm commitment or a highly probable forecast transaction to which AS-11 is not applicable and hence, the Company has applied aforesaid announcement. Premium paid on forward contracts is recognized in the year of entering of contract.

14. Government Subsidy

Government subsidy related to shipbuilding contracts are recognized on compliance with the relevant conditions and is recognized in the Profit and Loss account and presented under 'Revenue from Operations'.

15. Operating Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments / receipts are recognized as an expense / income in the Profit and Loss Account on a straight-line basis over the lease term.

16. Provisions for Current and Deferred Tax

Provision for Current Tax is made on the basis of taxable income under the provision of the Income Tax Act, 1961.

Deferred Tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

In accordance with the guidance note issued by Institute of Chartered Accountants of India, the Company recognises MAT Credit as an asset only to the extent ,the probability exists that the Company will become liable to pay normal Income Tax during the specified period as per provision of the Income Tax Act, 1961.

17. Provisions, Contingent Liabilities and Contingent Assets

A provision is made based on reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent liabilities, if material, are disclosed by way of Notes to Accounts. Contingent Assete are not recognized/disclosed.

18. Investments

Long Term investments are stated at cost. Cost includes incidental expenses of acquisition. Decline in value of investment other than of temporary nature is recognised in Profit & Loss account.










Mar 31, 2010

1. Basis of Accounting

The financial statements are prepared under the Historical Cost Conventions on the basis of Going Concern and as per applicablelndianAccountingStandardsnotifiedu/s211 (3C) of The Companies Act, 1956.

2. Revenue

Revenue is recognized in accounts in accordance with Accounting Standard - 7 Accounting for Construction Contracts issued by Institute of Chartered Accountants of India. The method of recognition is on percentage completion basis. Revenue is recognized under Percentage Completion Method on the basis of proportionate contract costs incurred for work performed up to the reporting date bears to the estimated total contract costs.

Revenue from ship repair is recognized on the basis of job completion.

3. Fixed Assets

Tangible Assets:

Fixed Assets are recorded at Cost. Cost is purchase cost and in the case of Freehold Land, includes development cost incurred, together with all incidental costs of acquisition, borrowing costs and other related internal costs and is netted of for Cenvat and Value Added Tax.

Profit/Loss on disposal of fixed assets is recognised in the Profit and Loss Account.

Intangible Assets:

Intangible assets are recognized and accounted at cost in accordance with Accounting Standard-26 Intangible Assets issued by Institute of Chartered Accountants of India.

4. Capital Work In Progress

All expenditure, including advances given relating to development of land, buildings, dry docks and plant & machinery etc. are accumulated and shown as capital work-in-progress till the completion of such activities

5. Borrowing costs

Borrowing Costs attributable to the acquisition and construction of the Qualifying Assets, which takes substantial period of time to get ready for its intended use, are capitalized as part of the cost of respective assets up to the date when such asset is ready for its intended use. Other Borrowing costs are charged to the Profit and Loss account.

6. Depreciation and Amortisation

a) Freehold land is not depreciated. Leasehold land is amortised equally over the period of lease.

b) Dry Docks (included in Plant & Machinery) and Dry Docks Civil Works included in Factory Building) and Jetty are depreciated on Straight Line Method in accordance with Accounting Standard - 6 Depreciation Accounting of the Institute of Chartered Accountants of India at the rates prescribed in Schedule XIV to the Companies Act, 1956.

c) Other assets are depreciated on Written down Value Method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

d) Depreciation on additions / deletions to Fixed Assets made during the year is provided on pro-rata basis from or up to date of such additions / deletions as the case may be.

e) Depreciation on amounts added on revaluation is recouped from Revaluation Reserve.

f) Intangible assets are stated at cost less accumulated amortisation.

g) Software is amortised over a period of five years.

7. Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. The company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired and if such indication exists, the carrying value of such asset is reduced to its recoverable amount and a provision is made for such impairment loss in the profit and loss account. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

8. Employees Benefits

Provident Fund: Provident Fund contributions are made as per a defined contribution scheme and contribution of company is charged to Profit and Loss account of the year when become due. The company has no other obligation other than to contribute and deposit the contribution to respective authorities. Short term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

Long term employee benefits are recognized as an expense in the Profit & Loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of long term benefits are charged to the Profit and Loss account.

9. Valuation of Inventory

Inventories of spares, consumables, components are valued at lower of cost and net realizable value. Cost represents purchase cost and other incidental costs, if any. Cost of inventories is computed on weighted average / FIFO basis.

10. Work in Progress and Cost Allocation

Each construction contract is considered as a cost center and all costs directly identifiable to the Contract are charged on actual basis. Indirect miscellaneous costs are also allocated to the various contracts using appropriate overhead recovery method. Contract work-in-progress is valued at cost, including therein profit or loss arrived at in accordance of Accounting Standard -7, Accounting for Construction Contracts.

11. Foreign Currency Transactions

Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of the transactions. Monetary assets and liabilities are translated at the year end using closing rate if remain unsettled at the year end. Non monetary foreign currency items are carried at cost.

The resulting gain or loss on account of exchange difference either on settlement or on translation is recognised in the Profit & Loss account

The Company has w.e.f. 07th December,2006 chosen to apply notification issued by Companies (Accounting Standard) Amendment Rules 2009 GSR 225 (E) dated 31.03.2009 as regards monetary long term assets and liabilities. Consequently, the resulting gain or loss on account of exchange difference on settlement or on translation is so far as they relate to depreciable assets is added ordeducted from the cost of the asset.

12. Derivative Accounting

During the year ended 31st March, 2008, The Institute of Chartered Accountants of India has issued an announcement on Accounting for Derivatives inter alia requiring provision for losses on all derivative contracts outstanding at the balance sheet date by marking them to market keeping in view the principle of prudence, other than for forward contracts to which Accounting Standard (AS) 11- The Effect of Change in Foreign Exchange Rates is applicable. The Company has entered into Forward Contracts to hedge a firm commitment or a highly probable forecast transaction to which AS-11 is not applicable and hence, the Company has applied aforesaid announcement. Premium paid on forward contracts is recognized in the year of entering of contract.

13. Government Subsidy

Government subsidy related to shipbuilding contracts are recognized on compliance with the relevant conditions and is recognized in the Profit and Loss account and presented underRevenue from Operations.

14. Operating Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments / receipts are recognized as an expense / income in the Profit and Loss Account on a straight-line basis overthe lease term.

15. Provisions for Current and Deferred Tax

Provision for Current Tax is made on the basis of taxable income under the provision of the Income Tax Act, 1961.

Deferred Tax resulting from "timing differences" between Book and Taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

In accordance with the guidance note issued by The Institute of Chartered Accountants of India, the Company recognises MAT Credit as an asset only to the extent ,the probability exists that the Company will become liable to pay normal Income Tax during the specified period as per provision of the Income Tax Act1961.

16. Provisions, Contingent Liabilities and Contingent Assets

A provision is made based on reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent liabilities, if material, are disclosed by way of Notes to Accounts. Contingent Assets are not recognized/disclosed.

17. Investments

Long Term investments are stated at cost. Cost includes incidental expenses of acquisition. Decline in value of investment other than of temporary nature is recognised in Profit & Loss account.

 
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