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Accounting Policies of GTL Ltd. Company

Mar 31, 2015

1 Basis for preparation of Financial Statements:

The Financial Statements have been prepared on a going concern basis under historical cost convention on accrual basis, in accordance with the generally accepted accounting principles in India and relevant provisions of the Companies Act, 2013.

2 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 on the date of the financial statements and the reported amount of revenues and expenses during the reporting year. The difference between the actual results and estimates are recognised in the year in which the results are known / materialized.

3 Revenue recognition:

Revenues are recognised when it is earned and when there is no significant uncertainty as to its measurement and realization. The specific revenue recognition policies are as under:

a. Revenue from Turnkey Contracts, which are either Fixed Price or Cost Plus contracts, is recognised based on work completion of activity or achievement of milestone.

b. Revenue from sale of products (excluding under Agency arrangements) is recognised upon passing of the title of goods and/or on transfer of significant risk and rewards of ownership thereto.

c. Revenue from Power distribution is accounted for on the basis of billings to consumers and includes unbilled revenues accrued upto the end of the accounting year.

d. Revenue from Services is recognised on performance of Service.

e. Dividend income is recognised when the right to receive dividend is established.

f. Income such as annual maintenance contracts, annual subscriptions, Interest excluding interest on delayed payments, Lease Rentals, Facility Management is recognised as per contractually agreed terms on time proportion basis.

g. Other income is recognised when the right to receive is established.

h. Delayed payment charges and interest on delayed payments are recognised, on grounds of prudence, as and when recovered.

4 Fixed Assets, Intangible Assets and Capital Work-in-progress:

Fixed Assets are stated at the cost of acquisition less accumulated depreciation and impairment losses, if any. All identifiable costs incurred upto the date asset is put to use are capitalized. Costs include purchase price (including non-refundable taxes/duties) and borrowing costs for the assets that necessarily take a substantial period of time to get ready for its intended use. Costs are adjusted for grants available to the Company which are recognised based on reasonable assurance that the Company will comply with the conditions attached to the grant and it is reasonably certain that the ultimate collection of grants will be made.

Intangible Assets are stated at the cost of acquisition less accumulated amortization. In case of an internally generated assets, cost includes all directly allocable expenditures. Intangible assets exclude the operating software, which forms an integral part of the hardware.

Capital Work-in-progress includes cost of fixed assets that are not ready for their intended use as at the balance sheet date.

5 Depreciation:

a. Depreciation on Fixed Assets is provided to the extent of depreciable amount on Straight Line Method over the useful life of the assets and in the manner prescribed in Schedule II to the Companies Act, 2013 except in respect of following Fixed Assets where the assessed useful life is different than that prescribed in Schedule II.

i) In respect of the following assets, the useful economic life as assessed is lower than the useful life for these assets as stated in Schedule II.

ii) Assets costing individually Rs. 5,000 or less are depreciated fully in the year of purchase.

b. The leasehold improvements have been depreciated over the lease period.

6 Impairment of Assets:

An asset is treated as impaired when the carrying amount of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting year/s is reversed if there has been a change in the estimate of recoverable amount.

7 Investments:

Current Investments are carried at the lower of cost or quoted / fair value computed scrip wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if decline in the value of such investments is other than temporary.

8 Inventories:

a. Inventories including Work-in-process and stores and spares are valued at the lower of cost and net realizable value.

b. Cost of inventories is generally ascertained on first in first out basis.

9 Foreign currency transactions:

a. Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date of the transaction.

b. Monetary foreign currency items are reported at the exchange rates as at Balance Sheet date.

c. In respect of transactions covered under forward exchange contracts, the difference between the exchange rates

prevailing at the Balance Sheet date and rate on the date of the contract is recognised as exchange difference. The premium on forward contract/s is amortized over the life of the contract.

d. Non-monetary foreign currency items are carried at cost.

e. Any gains or losses on account of exchange difference either on settlement or on translation are recognised in the Statement of Profit and Loss.

f. Foreign branch operations which are integral part of Company's operations, transactions there at are reported as under:

i. Income and expenditure items at the exchange rate prevailing on the date of transaction.

ii. Monetary items using exchange rates at the Balance Sheet date.

iii. Non-monetary items at the exchange rates prevailing on the date of transaction.

10 Employee Benefits:

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

b. Post-employment and other long-term employee benefits are recognised as an expense at the present value of amount payable determined using actuarial valuation techniques in the Statement of Profit and Loss of the year in which the employee has rendered services. Actuarial gains and losses in respect of post-employment and other long-term benefits are charged to the Statement of Profit and Loss.

c. In respect of employee's stock options, the excess of market price on the date of grant over the exercise price is recognised as deferred employee compensation expenses, which are amortized over vesting period.

11 Provision for Current and Deferred Tax:

a. Current Tax: Provision is made for income tax, under the tax payable method, based on the liability as computed after taking credit for allowances, exemptions, and MAT credit entitlement for the year. Adjustments in books are made only after the completion of the assessment. In case of matters under appeal, due to

disallowances or otherwise, full provision is made when the Company accepts the said liabilities.

b. Deferred tax: The differences that result between the profit / loss offered for income tax and the profit / loss as per the financial statements are identified and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent there is virtual certainty that the asset will be realized in the future. Carrying value of deferred tax asset is adjusted for its appropriateness at each balance sheet date.

12 Provisions, Contingent Liabilities and Contingent Assets :

Provisions involving substantial degree of estimation in measurement are recognised 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. Contingent Assets are neither recognised nor disclosed in the financial statements.

13 Financial Derivatives and Hedging Transactions:

In respect of Derivative Contracts, premium paid, provision for losses on restatement and gains / losses on settlement are recognised in the Statement of Profit and Loss.

14 Borrowing Cost:

a. Borrowing costs, less any income on the temporary investment out of those borrowings, that are directly attributable to acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as a part of the cost of that asset.

b. Other borrowing costs are recognised as expense in the period in which they are incurred.

15 Leases:

a. Assets taken on lease, under which the lessor effectively retains all the risks and rewards of ownership, are classified as operating lease. Operating lease payments are recognised as expense in

the Statement of Profit and Loss on a straight-line basis over the lease term.

b. Assets acquired under leases where all the risks and rewards of ownership are substantially transferred to the Company are classified as Finance leases. Such leases are capitalized at the inception of the lease at the lower of fair value or the present value of minimum lease payments and liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

16 Provision for Doubtful Debts and Loans and Advances:

Provision is made for doubtful trade receivables, loans and advances when the management considers trade receivables, loans and advances to be doubtful of recovery.

17 Research and Development:

a. Revenue expenditure on Research and Development is charged to the Statement of Profit and Loss in the year in which it is incurred.

b. Capital expenditure on Research and Development is included under the relevant fixed assets and depreciation thereon is provided as given in policy no. 5 above

18 Cash and Cash equivalents :

Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand, cheques in hand and deposits with banks having maturity period less than three months from the date of acquisition.

19 Discontinued operations:

An operation of the Company is considered as discontinued when it meets the following criteria:

A discontinued operation is a component of the Company's business, that can be distinguished operationally and for financially reporting purposes and which represents a separate major line of business or geographical area of operations that company is disposing of substantially in its entirety, such as by selling the component in a single transaction or by demerger or spin-off of ownership of the component to the Company's shareholders or disposing of piecemeal, such as by selling off the component's assets and settling its liabilities individually; or terminating through abandonment.


Mar 31, 2014

1. Basis for preparation of Financial Statements:

The Financial Statements have been prepared on a going concern basis under historical cost convention on accrual basis and in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956 (to the extent applicable) and the provisions of Companies Act, 2013 (to the extent notified).

2. Use of Estimate:

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions to be made that 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 year. The difference between the actual results and estimates are recognized in the year in which the results are known / materialized.

3. Revenue recognition:

Revenues are recognized when it is earned and when there is no significant uncertainty as to its measurement and realization. The specific revenue recognition policies are as under:

a. Revenue from Turnkey Contracts, which are either Fixed Price or Cost Plus contracts, is recognized based on work completion of activity or achievement of milestone.

b. Revenue from sale of products (excluding under Agency arrangements) is recognized upon passing of the title of goods and/or on transfer of significant risk and rewards of ownership thereto.

c. Revenue from Power distribution is accounted for on the basis of billings to consumers and includes unbilled revenues accrued up to the end of the accounting year.

d. Revenue from Services is recognized on performance of Service

e. Dividend income is recognized when the right to receive dividend is established.

f. Income such as annual maintenance contracts, annual subscriptions, Interest excluding interest on delayed payments, Lease Rentals, Facility Management is recognized as per contractually agreed terms on time proportion basis.

g. Other income is recognized when the right to receive is established.

h. Delayed payment charges and interest on delayed payments are recognized, on ground of prudence, as and when recovered.

4. Fixed Assets, Intangible Assets and Capital Work in Progress:

Fixed Assets are stated at the cost of acquisition less accumulated depreciation and impairment losses, if any. All identifiable costs incurred up to the asset put to use are capitalized. Costs include purchase price (including non-refundable taxes/duties) and borrowing costs for the assets that necessarily take a substantial period of time to get ready for its intended use. Costs are adjusted for grants available to the Company which are recognized based on reasonable assurance that the Company will comply with the conditions attached to the grant and it is reasonably certain that the ultimate collection of grants will be made.

Intangible Assets are stated at the cost of acquisition less accumulated amortization. In case of an internally generated assets, cost includes all directly allocable expenditures. Intangible assets exclude the operating software, which forms an integral part of the hardware.

Capital Work In Progress include cost of fixed assets that are not ready for their intended use as at the balance sheet date.

5. Depreciation:

The depreciation on fixed assets is provided pro-rata to the period of use of Assets using the straight-line method based on Economic useful lives estimated by the management. The aggregate depreciation provided based on estimated economic useful life is not less than the depreciation as calculated at the rates specified in Schedule XIV of the Companies Act, 1956.

Assets costing individually Rs. 5,000 or less are depreciated fully in the year purchase.

6. Impairment of Assets:

An asset is treated as impaired when the carrying amount of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting year/s is reversed if there has been a change in the estimate of recoverable amount.

7. Investments:

Current Investments are carried at the lower of cost or quoted / fair value computed scrip wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if decline in the value of such investments is other than temporary.

8. Inventories:

a. Inventories including Work-in-process and stores and spares are valued at the lower of cost and net realizable value.

b. Cost of inventories is generally ascertained on first in first out basis.

9. Foreign currency transactions:

a. Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date of the transaction.

b. Monetary foreign currency items are reported at the exchange rates as at Balance Sheet date.

c. In respect of transactions covered under forward exchange contracts, the difference between the exchange rates prevailing at the Balance Sheet date and rate on the date of the contract is recognized as exchange difference. The premium on forward contract/s is amortized over the life of the contract.

d. Non-monetary foreign currency items are carried at cost.

e. Any gains or losses on account of exchange difference either on settlement or on translation are recognized in the Statement of Profit and Loss.

f. Foreign branch operations which are integral part of Company''s operations, transactions there at are reported as under:

i. Income and expenditure items at the exchange rate prevailing on the date of transaction.

ii. Monetary items using exchange rates at the Balance Sheet date.

iii. Non-monetary items at the exchange rates prevailing on the date of transaction.

10. Employee Benefits:

a. 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.

b. Post-employment and other long-term employee benefits are recognized as an expense at the present value of amount payable determined using actuarial valuation techniques in the Statement of Profit and Loss of the year in which the employee has rendered services. Actuarial gains and losses in respect of post- employment and other long-term benefits are charged to the Statement of Profit and Loss.

c. In respect of employee''s stock options, the excess of market price on the date of grant over the exercise price is recognized as deferred employee compensation expenses, which are amortized over vesting period.

11. Provision for Current and Deferred Tax:

a. Current Tax: Provision is made for income tax, under the tax payable method, based on the liability as computed after taking credit for allowances, exemptions, and MAT credit entitlement for the year. Adjustments in books are made only after the completion of the assessment. In case of matters under appeal, due to disallowances or otherwise, full provision is made when the Company accepts the said liabilities.

b. Deferred tax: The differences that result between the profit / loss offered for income tax and the profit / loss as per the financial statements are identified and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognized only to the extent there is virtual certainty that the asset will be realized in the future. Carrying value of deferred tax asset is adjusted for its appropriateness at each balance sheet date.

12. 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 it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

13. Financial Derivatives and Hedging Transactions:

In respect of Derivative Contracts, premium paid, provision for losses on restatement and gains / losses on settlement are recognised in the Statement of Profit and Loss.

14. Borrowing Cost:

a. Borrowing costs, less any income on the temporary investment out of those borrowings, that are directly attributable to acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as a part of the cost of that asset

b. Other borrowing costs are recognized as expense in the period in which they are incurred.

15. Leases:

a. Assets taken on lease, under which the lessor effectively retains all the risks and rewards of ownership, are classified as operating lease. Operating lease payments are recognized as expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

b. Assets acquired under leases where all the risks and rewards of ownership are substantially transferred to the Company are classified as Finance leases. Such leases are capitalized at the inception of the lease at the lower of fair value or the present value of minimum lease payments and liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

16. Provision for Doubtful Debts and Loans and Advances:

Provision is made for doubtful trade receivables, loans and advances when the management considers trade receivables, loans and advances to be doubtful of recovery.

17. Research and Development:

a. Revenue expenditure on Research and Development is charged to the Statement of Profit and Loss in the year in which it is incurred.

b. Capital expenditure on Research and Development is included under the relevant fixed assets and depreciation thereon is provided as given in policy no. 5 above

2.1.3 Terms, Rights, Preferences and restrictions attached to equity shares:

The Company has only one class of equity shares having a face value of Rs. 10/- per share. Each holder of equity share is entitled to one vote on show of hands and in case of poll, one vote per equity share. A member shall not have any right to vote whilst any call or other sum shall be due and payable to the Company in respect of any of the equity shares of such member. All equity shares of the Company rank pari-passu in all respects including the right to dividend.

In the event of winding-up of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, if any, after distribution of all preferential amounts in proportion to the number of shares held at the time of commencement of winding-up.

The equity shareholders have all other rights as available to equity shareholders as per the provisions of the Companies Act, 1956 (to the extent applicable) and the provisions of Companies Act, 2013 (to the extent notified), read together with Memorandum of Association of the Company.

2.1.4 Terms, Rights, Preferences and restrictions attached to 0.01% - Non Participating Optionally Convertible Cumulative Preference Shares (OCPS):

The Company has only one class of preference shares, having face value of Rs. 10/- per share allotted to Chennai Network Infrastructure Limited (CNIL). In terms of the issue, CNIL had right to convert OCPS into equity shares from the expiry of 6 months from the date of allotment till 18 months of the date of allotment. However, CNIL has opted for non- conversion of OCPS into equity shares.

The OCPS carry a dividend of 0.01 % per annum, payable on a cumulative basis on the date of conversion / redemption as the case may be. Any declaration and payment of dividend shall at all times be subject to the availability of Profits and the terms of the restructuring of the debts under the Corporate Debt Restructure (CDR) Mechanism, unless otherwise agreed by the CDR Lenders. Further, in the event of inability of the Company to declare / pay dividend due to non-availability of Profits / pursuant to the terms of restructuring, the dividend may be waived by CNIL.

After the expiry of a period of 6 months from the Allotment Date, the OCPS may at the Option of the Company be redeemed at any time prior to the expiry of 20 years from the date of the allotment, in part or in full, after providing a prior written notice of 30 days to CNIL. As agreed by the OCPS holder, the original term providing Yield To Maturity of 8% by way of redemption premium has been repealed by the Board during the year.

Other than as permitted under applicable laws, CNIL will not have a right to vote at the Company''s General Meetings. CNIL also agrees to waive the right to vote in the event it waives the right to receive dividend.

In the event of winding-up of the Company, the OCPS holders will be entitled to receive in proportion to the number of shares held at the time of commencement of winding-up, any of the remaining assets of the Company, if any, after distribution to all secured creditors and preference shareholders right to receive monies out of the remaining assets of the Company shall be reckoned pari-passu with other unsecured creditors, however, in priority to the equity shareholders.

The OCPS holders shall have such rights as per the provisions of the Companies Act, 1956 (to the extent applicable) and the provisions of Companies Act, 2013 (to the extent notified), read together with Memorandum of Association of the Company.

2.3.1 Nature of security:

I) Security created:

a. A first charge and mortgage on all immovable properties, present and future;

b. A first charge by way of hypothecation over all movable assets, present and future;

c. A first charge on the Trust and Retention Account and other reserves and any other bank accounts wherever maintained, present & future;

d. A first charge, by way of assignment or creation of charge, over:

i. all the right, title, interest, benefits, claims and demands whatsoever in the Project Documents duly acknowledged and consented to by the relevant counter-parties to such Project Documents, all as amended, varied or supplemented from time to time;

ii. all the rights, title, interest, benefits, claims and demands whatsoever in the Clearances;

iii. all the right title, interest, benefits, claims and demands whatsoever in any letter of credit, guarantee, performance bond provided by any party to the Project Documents;

iv. all the rights, title, interest, benefits, claims and demands whatsoever in Insurance Contracts / proceeds under Insurance Contracts;

e. Pledge of all shares held in the Company by one of the Promoters of the Company namely Mr. Manoj G. Tirodkar;

f. Pledge of all investments of the Company, except investment in Global Rural Netco Ltd (GRNL) which will be pledged on fulfillment of financial covenant agreed with the lenders of GRNL;

g . Mr. Manoj G. Tirodkar one of the promoters of the Company has extended a personal guarantee. The guarantee is limited to an amount of Rs. 394.28 Cr.; and

h. Mr. Manoj G. Tirodkar and Global Holding Corporation Private Limited promoters of the Company have executed sponsor support agreement to meet any shortfall or expected shortfall in the cash flows towards the debt servicing obligations of the Company;

II) Security offered pending creation of charge

a. The Company''s one of the promoters namely GHC along with its step down subsidiaries has to extend corporate guarantee; and

b. GHC has to pledge its holding in the Company that is currently pledged by GHC in favor of its lenders, as and when released either in full or part.

III) Prior to the restructuring of the Company''s debts under CDR Mechanism, the Company created security on certain specified tangible assets of the Company in favour of Andhra Bank, Punjab National Bank, Union Bank of India, Vijaya Bank, IDBI Bank Limited, State Bank of Hyderabad, Bank of Baroda, UCO Bank, Indian Overseas Bank, Indian Bank, Canara Bank and Dena Bank for their respective credit facilities other than term loans, aggregating Rs. 1,572 Cr. In terms of CDR Documents inter- alia Master Restructuring Agreement, the earlier charges are not satisfied by the Company after creation of new security as stated in I above.

2.7.1 The Balances of Trade Payables are subject to reconciliation and confirmation. Appropriate adjustment if necessary will be considered in the year of reconciliation.

2.7.2 Disclosure in accordance with Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.

The information required to be disclosed has been furnished to the extent parties have been identified as Micro, Small and Medium Enterprises on the basis of information available in this regard with the Company.

2.8.1 Dues to holders of Rated Redeemable Unsecured Rupee Non-Convertible Debentures comprise of unpaid amount of debentures due for redemption in Feb 13 and Feb 14 of Rs. 470.00 Cr. each.

The holders of Rated Redeemable Unsecured Rupee Non-Convertible Debentures have given their consent to be part of Corporate Debt Restructuring Scheme. Accordingly, the Company and the holders of Rated Redeemable Unsecured Rupee Non-Convertible Debentures have entered into amendment to the original sanction letter on March 22, 2014 to restructure NCD debt. pending fulfillment of conditions mentioned therein, the effect of the same is not given in the books.

2.8.2 External Commercial Borrowing (ECB) of US$ 150 Mn. availed by the Company was due for repayment in September 2011 and therefore entire amount due to ECB lenders is overdue for payment.

The Company and ECB lenders had agreed to an indicative term sheet for restructuring of ECB that has been approved by Reserve Bank of India (RBI). The diverse stand taken by different sets of lenders has resulted in non-execution of inter-creditor agreement. In order to over-come impasse, the Company arranged for joint meeting of CDR lenders, ECB lenders and NCD holders in February 2014 and the Company is awaiting required documents for concluding ECB restructuring. Pending execution of documentation, the Company has accrued interest on ECB at original agreed rate.

In the meantime the Company has commenced discussion with certain lenders to do settlement of the respective dues.

2.8.3 Dues payable to Banks for Secured Long Term Loan of Rs. 67.19 Cr. (Nil) comprises of:

a. Overdue amount of Rs. 65.72 Cr. relating to period January 2014 to March 2014.

b. Overdue amount of Rs. 1.47 Cr. relating to period June 2013 to December 2013. The Company has made funds available before the due date of payment of loan in the current account with the concerned bank. However, the same is not appropriated by the said bank against the loan liability.

2.8.4 Interest accrued and due on borrowings comprises of

a) Overdue Interest of Rs. 415.50 Cr. relating to the period May 2011 to March 2014 (Rs. 250.89 Cr. for the period May 2011 to February 2013) on ''Rated Redeemable Unsecured Rupee Non- convertible Debentures;

b) Overdue Interest of Rs. 86.67 Cr. relating to the period for December 12, 2011 to March 31, 2014 (Rs. 44.66 Cr. for the period December 12, 2011 to March 19, 2013) on External Commercial Borrowing;

c) Overdue Interest of Rs. 23.00 Cr. (Nil) and Rs. 0.81 Cr. (Rs. 0.24 Cr.) on Term Loan and Funded Interest Term Loan respectively relating to the period February 14 to March 14, out of such overdue interset Rs. 3.13 Cr. and Rs. 0.08 Cr. on Term Loan and Funded Interest Term Loan respectively has been paid subsequently.

d) Overdue Interest of Rs. 1.78 Cr. for period April 13 to February 14 (Nil) on Term Loan and Rs. 0.08 Cr. for the period July 2011 to February 2014 (Rs. 0.01 for the month of March 13) on Funded Interest Term Loan. The Company has made funds available before the due date of payment of interest in the current account with the concerned bank. However, the same is not appropriated by the said bank against the interest liability.

2.11.1 For basis of Valuation Refer Point No. 7 of Note No. 1 "Significant Accounting Policy"

2.11.2 Details of aggregate amount of Quoted Investment, Market value thereof and aggregate amount of Unquoted Investment:

2.11.3 Pursuant to settlement arrived during the year between Chennai Network Infrastructure Limited (CNIL), IFCI Ltd (IFCI) and the Company, IFCI has returned to the Company equity shares of GTL Infrastructure Ltd (GIL) which were appropriated by IFCI in the past for their financial assistance to CNIL and resultantly, the Company''s investment in GIL as at March 31, 2014 has increased.

2.11.4 Pursuant to settlement arrived during the year with the suppliers for advances and the Company, the Company has accepted from its suppliers Redeemable preference shares of Rs. 200.00 Cr. and Fully Convertionble Debenture of Rs. 150.00 Cr. of Globle Rural Netco Limited and Optionally convertible preference shares of Rs. 241.48 Cr. of European Projects and Aviation Limited.

2.11.5 The Company holds investment in both quoted / unquoted equity and preference shares. In respect of Company''s investment in unquoted shares excluding investment in subsidiaries, the book value of these investments, as ascertained from the latest available audited / unaudited financials of the investee companies, is much lower than carrying cost of these investments. Similarly, the market value of Company''s quoted investment is much below the carrying cost of such investment.

However, in the opinion of the Management, having regard to the long-term nature of these investments and future business plans of the investee companies, the diminution in the value of investments does not require provision as such diminution is not other than temporary.

2.12.1 The Company had paid advances for procurement of material to execute large telecom projects such as BSNL Mega Tender, Aircel and other telecom projects. In view of discontinuation of these projects, the corresponding purchases have not taken place and hence the advances paid for supplies for these materials are not getting adjusted. The Company therefore has entered into agreement with the suppliers for recovery of the said advances. Accordingly during the year, the Company has made part recovery of the said advances and also acquired from the suppliers investment in other companies. The balance advances will be realised by the Company as per the agreed terms.

2.12.2 In view of telecom slowdown and lower business growth internationally, the operating margins and cash flow of Company''s subsidiaries have witnessed pressure. Therefore, during the year Company and its subsidiaries have mutually agreed on repayment terms of these advances and in accordance therewith these advances are considered as long term. The corresponding amount of the previous year has also been reclassified and presented accordingly.

2.13.1 For basis of Valuation - Refer Point No. 7 of Note No. 1 "Significant Accounting Policies."

2.13.2 Details of aggregate amount of Quoted Investment, Market value thereof and aggregate amount of Unquoted Investment:

2.14.1 For basis of valuation – Refer Point No. 8 of Note No. 1 "Significant Accounting Policies."

2.15.1 The Company has sought the balance confirmations from the customers and has received such confirmations from some customers. In respect of remaining customers, balances are subject to confirmation and thereby appropriate adjustment, if necessary, will be considered in the year of reconciliation.

2.23.1 Disclosure of Employee Benefits as defined in Accounting Standard 15 "Employee Benefit":

b) Defined Benefit Plan

The employee''s Gratuity Fund Scheme, which is defined benefit plan, is managed by Trust maintained with Life Insurance Corporation of India (LIC). The present value of obligation is determined based on actuarial valuation using Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognized in same manner as gratuity.

2.26.1 Provision of Income tax includes tax liability of Rs. 25.57 Cr. towards tax liability determined for Assessment Years 2005-06 to 2012-13 upon conclusion of proceedings before Appropriate Statutory Authority and the Company also to receive balance tax refund of Rs. 44.14 Cr. (inclusive of interest).

2.27.1 The Company has a Deferred Tax Asset of Rs. 158.81Cr. as on March 31, 2014 (Rs. 119.44 Cr. as on March 31, 2013). In the absence of reasonable certainty of sufficient future taxable income against which Deferred Tax Asset can be realized, the same is not recognised in accordance with AS 22 on Accounting for Taxes on Income issued by ICAI.


Mar 31, 2013

1. Basis for preparation of Financial Statements:

The Financial Statements have been prepared on a going concern basis under historical cost convention on accrual basis and in accordance with the generally accepted accounting principles in India and the provisions of Companies Act, 1956.

2. Use of Estimate:

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions to be made that 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. The difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

3. Revenue recognition:

Revenues are recognized when it is earned and when there is no significant uncertainty as to its measurement and realization. The specific revenue recognition policies are as under:

a. Revenue from Turnkey Contracts, which are either Fixed Price or Cost Plus contracts, is recognized based on work completion of activity or achievement of milestone.

b. Revenue from sale of products (excluding under Agency arrangements) is recognized upon passing of title of goods and/or on transfer of significant risk and rewards of ownership thereto.

c. Revenue from Power distribution is accounted for on the basis of billings to consumers and includes unbilled revenues accrued up to the end of the accounting year.

d. Revenue from Services is recognized on performance of Service

e. Dividend income is recognized when the right to receive dividend is established.

f. Income such as annual maintenance contracts, annual subscriptions, Interest excluding interest on delayed payments; Facility Management is recognized as per contractually agreed terms on time proportion basis.

g. Other income is recognized when the right to receive is established.

h. Delayed payment charges and interest on delayed payments are recognized, on grounds of prudence, as and when recovered.

4. Fixed Assets, Intangible Assets and Capital Work-in- Progress:

Fixed Assets are stated at the cost of acquisition less accumulated depreciation and impairment losses, if any. All identifiable costs incurred up to the asset put to use are capitalized. Costs include purchase price (including non-refundable taxes/duties) and borrowing costs for the assets that necessarily take a substantial period of time to get ready for its intended use. Costs are adjusted for grants available to the Company which are recognized based on reasonable assurance that the Company will comply with the conditions attached to the grant and it is reasonably certain that the ultimate collection of grants will be made.

Intangible Assets are stated at the cost of acquisitions less accumulated amortization. In case of an internally generated assets cost includes all directly allocable expenditures. Intangible assets exclude the operating software, which forms an integral part of the hardware.

Capital Work-In-Progress include cost of fixed assets that are not yet ready for their intended use as at the balance sheet date.

5. Depreciation:

The depreciation on fixed assets is provided pro-rata to the period of use of Assets using the straight-line method based on Economic useful lives estimated by the management. The aggregate depreciation provided based on estimated economic useful life is not less than the depreciation as calculated at the rates specified in Schedule XIV of the Companies Act, 1956.

Assets costing individually Rs. 5,000 or less are depreciated fully in the year purchase.

6. Impairment of Assets:

An asset is treated as impaired when the carrying amount of assets exceeds its recoverable value. An impairment loss is charged to Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period/s is reversed if there has been a change in the estimate of recoverable amount.

7. Investments:

Current Investments are carried at the lower of cost or quoted/ fair value computed scrip wise. Long-Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such decline is other than temporary.

8. Inventories:

a. Inventories including Work-in-process and stores and spares are valued at the lower of cost and net realizable value.

b. Cost of inventories is generally ascertained on first in first out basis.

9. Foreign currency transactions:

a. Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date of the transaction.

b. Monetary foreign currency items are reported at the exchange rates as at Balance Sheet date.

c. In respect of transaction covered under forward exchange contracts, the difference between the exchange rates prevailing at the Balance Sheet date and rate on the date of the contract is recognized as exchange difference. The premium on forward contracts is amortized over the life of the contract.

d. Non-monetary foreign currency items are carried at cost.

e. Any gains or losses on account of exchange difference either on settlement or on translation are recognized in the Statement of Profit and Loss.

f. Foreign branch operations which are integral part of Company’s operations, transactions there at are reported as under:

i. Income and expenditure items at the exchange rate prevailing on the date of transaction.

ii. Monetary items using exchange rates at the Balance Sheet date.

iii. Non-monetary items at the exchange rates prevailing on the date of transaction.

10. Employee Benefits:

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

b. Post-employment and other long-term employee benefits are recognized as an expense at the present value of

amount payable determined using actuarial valuation techniques in Statement of Profit and Loss of the year in which the employee has rendered services. Actuarial gains and losses in respect of post-employment and other long-term benefits are charged to Statement of Profit and Loss.

c. In respect of employee’s stock options, the excess of market price on the date of grant over the exercise price is recognized as deferred employee compensation expenses, which are amortized over vesting period.

11. Provision for Current and Deferred Tax:

a. Current Tax: Provision is made for income tax, under the tax payable method, based on the liability as computed after taking credit for allowances, exemptions, and MAT credit entitlement for the year. Adjustments in books are made only after the completion of the assessment. In case of matters under appeal, due to disallowances or otherwise, full provision is made when the Company accepts the said liabilities.

b. Deferred tax: The differences that result between the profit / loss offered for income tax and the profit / loss as per the financial statements are identified and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognized only to the extent there is virtual certainty that the asset will be realized in the future. Carrying value of deferred tax asset is adjusted for its appropriateness at each balance sheet date.

12. 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 it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

13. Financial Derivatives and Hedging Transactions:

In respect of Derivatives Contracts, premium paid, provision for losses on restatement and gains/losses on settlement are recognized in Statement of Profit and Loss.

14. Borrowing Cost:

a. Borrowing costs, less any income on the temporary investment out of those borrowings, that are directly attributable to acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as a part of the cost of that asset.

b. Other borrowing costs are recognized as expense in the period in which they are incurred.

15. Leases:

a. Assets taken on lease, under which the lessor effectively retains all the risks and rewards of ownership, are classified as operating lease. Operating lease payments are recognized as expense in Statement of Profit and Loss on a straight-line basis over the lease term.

b. Assets acquired under leases where all the risks and rewards of ownership are substantially transferred to company are classified as Finance leases. Such leases are capitalized at the inception of the lease at the lower of fair value or the present value of minimum lease payments and liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

16. Provision for Doubtful Debts and Loans and Advances:

Provision is made for doubtful receivables, loans and advances when the management considers the receivables, loans and advances to be doubtful of recovery.

17. Research and Development:

a. Revenue expenditure on Research and Development is charged to Statement of Profit and Loss in the period in which it is incurred.

b. Capital expenditure on Research and Development is included under the relevant fixed assets and depreciation thereon is provided as given in policy No. 5 above


Mar 31, 2012

1. Basis for preparation of Financial Statements:

The Financial Statements have been prepared on a going concern basis under historical cost convention on accrual basis and in accordance with the generally accepted accounting principles in India and the provisions of Companies Act, 1956.

2. Use of Estimate:

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions to be made that 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. The difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

3. Revenue recognition:

Revenues are recognized when it is earned and when there is no significant uncertainty as to its measurement and realization. The specific revenue recognition policies are as under:

a. Revenue from Turnkey Contracts, which are either Fixed Price or Cost Plus contracts, is recognized based on work completion of activity or achievement of milestone.

b. Revenue from sale of products (excluding under Agency arrangements) is recognized upon passing of title of goods and/or on transfer of significant risk and rewards of ownership thereto.

c. Revenue from Power distribution is accounted for on the basis of billings to consumers and includes unbilled revenues accrued up to the end of the accounting year.

d. Revenue from Services is recognized on performance of Service.

e. Dividend income is recognized when the right to receive dividend is established.

f. Income such as annual maintenance contracts, annual subscriptions, Interest excluding interest on delayed payments; Facility Management is recognized as per contractually agreed terms on time proportion basis.

g. Other income is recognized when the right to receive is established.

h. Delayed payment charges and interest on delayed payments are recognized, on grounds of prudence, as and when recovered.

4. Fixed Assets, Intangible Assets and Capital Work in Progress:

Fixed Assets are stated at the cost of acquisition less accumulated depreciation and impairment losses, if any. All identifiable costs incurred up to the asset put to use are capitalized. Costs include purchase price (including non-refundable taxes/duties) and borrowing costs for the assets that necessarily take a substantial period of time to get ready for its intended use. Costs are adjusted for grants available to the company which are recognized based on reasonable assurance that the company will comply with the conditions attached to the grant and it is reasonably certain that the ultimate collection of grants will be made.

Intangible Assets are stated at the cost of acquisitions less accumulated amortization. In case of an internally generated assets cost includes all directly allocable expenditures. Intangible assets exclude the operating software, which forms an integral part of the hardware.

Capital Work In Progress include cost of fixed assets that are not yet ready for their intended use as at the balance sheet date.

5. Depreciation:

The depreciation on fixed assets is provided pro-rata to the period of use of Assets using the straight-line method based on Economic useful lives estimated by the management. The aggregate depreciation provided based on estimated economic useful life is not less than the depreciation as calculated at the rates specified in Schedule XIV of the Companies Act, 1956.

6. Impairment of Assets:

An asset is treated as impaired when the carrying amount of assets exceeds its recoverable value. An impairment loss is charged to Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period/s is/are reversed if there has been a change in the estimate of recoverable amount.

7. Investments:

Current Investments are carried at the lower of cost or quoted/fair value computed scrip wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such decline is other than temporary.

8. Inventories:

a. Inventories including Work-in-process and stores and spares are valued at the lower of cost and net realizable value.

b. Cost of inventories is generally ascertained on first in first out basis.

9. Foreign currency transactions:

a. Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date of the transaction.

b. Monetary foreign currency items are reported at the exchange rates as at Balance Sheet date.

c. In respect of transaction covered under forward exchange contracts, the difference between the exchange rates prevailing at the Balance Sheet date and rate on the date of the contract is recognized as exchange difference. The premium on forward contracts is amortized over the life of the contract.

d. Non-monetary foreign currency items are carried at cost.

e. Any gains or losses on account of exchange difference either on settlement or on translation are recognized in the Statement of Profit and Loss.

f. Foreign branch operations which are integral part of Company's operations, transactions there at are reported as under:

i. Income and expenditure items at the exchange rate prevailing on the date of transaction.

ii. Monetary items using exchange rates at the Balance Sheet date.

iii. Non-monetary items at the exchange rates prevailing on the date of transaction.

10. Employee Benefits:

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

b. Post-employment and other long-term employee benefits are recognized as an expense at the present value of amount payable determined actuarial valuation techniques in Statement of Profit and Loss of the year in which the employee has rendered services. Actuarial gains and losses in respect of post-employment and other long-term benefits are charged to Statement of Profit and Loss.

c. In respect of employee's stock options, the excess of market price on the date of grant over the exercise price is recognized as deferred employee compensation expenses, which are amortized over vesting period.

11. Provision for Current and Deferred Tax:

a. Current Tax: Provision is made for income tax, under the tax payable method, based on the liability as computed after taking credit for allowances, exemptions, and MAT credit entitlement for the year. Adjustments in books are made only after the completion of the assessment. In case of matters under appeal, due to disallowances or otherwise, full provision is made when the Company accepts the said liabilities.

b. Deferred tax: The differences that result between the profit offered for income tax and the profit as per the financial statements are identified and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognized only to the extent there is virtual certainty that the asset will be realized in the future. Carrying value of deferred tax asset is adjusted for its appropriateness at each balance sheet date.

12. 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 it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

13. Financial Derivatives and Hedging Transactions:

In respect of Derivatives Contracts, premium paid provision for losses on restatement and gains / losses on settlement are recognized in Statement of Profit and Loss.

14. Borrowing Cost:

a. Borrowing costs, less any income on the temporary investment out of those borrowings, that are directly attributable to acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as a part of the cost of that asset.

b. Other borrowing costs are recognized as expense in the period in which they are incurred.

15. Leases:

a. Assets taken on lease, under which the less or effectively retains all the risks and rewards of ownership, are classified as operating lease. Operating lease payments are recognized as expense in Statement of Profit and Loss on a straight-line basis over the lease term.

b. Assets acquired under leases where all the risks and rewards of ownership are substantially transferred to company are classified as Finance leases. Such leases are capitalized at the inception of the lease at the lower of fair value or the present value of minimum lease payments and liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

16. Provision for Doubtful Debts and Loans and Advances:

Provision is made for doubtful debts, loans and advances when the management considers the debts, loans and advances to be doubtful of recovery.

17. Research and Development:

a. Revenue expenditure on Research and Development is charged to Statement of Profit and Loss in the period in which it is incurred.

b. Capital expenditure on Research and Development is included under the relevant fixed assets and depreciation thereon is provided as given in policy no. 5 above.


Jun 30, 2011

1. Basis for preparation of Financial Statements:

The Accounts have been prepared on a going concern basis under historical cost convention on accrual basis and in accordance with the generally accepted accounting principles in India and the provisions of Companies Act, 1956.

2. Use of Estimate :

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions to be made that 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. The difference between the actual results and estimates are recognised in the period in which the results are known / materialized.

3. Revenue recognition:

Revenues are recognized when it is earned and when there is no significant uncertainty as to its measurement and realization The specific revenue recognition policies are as under:

a. Revenue from Turnkey Contracts, which are either Fixed Price or Cost Plus contracts, is recognized based on work completion of activity or achievement of milestone.

b. Revenue from sale of products (excluding under Agency arrangements) is recognized upon passing of title of goods and/or on transfer of significant risk and rewards of ownership thereto.

c. Revenue from Services is recognized on performance of Service

d. Dividend income is recognized when the right to receive dividend is established.

e. Income such as annual maintenance contracts, annual subscriptions, Interest excluding interest on overdue receivables of energy bills, Facility Management is recognized as per contractually agreed terms on time proportion basis.

f. Other income is recognized when the right to receive is established.

g. Interest on overdue receivables of energy bills (Power Distribution Franchise) is accounted as & when recovered

4. Fixed Assets, Intangible Assets & Capital Work in Progress:

Fixed Assets are stated at the cost of acquisition less accumulated depreciation and impairment losses, if any. All identifiable costs incurred up to the asset put to use are capitalized. Costs include purchase price (including non-refundable taxes/duties) and borrowing costs for the assets that necessarily take a substantial period of time to get ready for its intended use.

Intangible Assets are stated at the cost of acquisitions less accumulated amortisation. In case of an internally generated assets cost includes all directly allocable expenditures. Intangible assets exclude the operating software, which forms an integral part of the hardware.

Capital Work In Progress includes advances paid for acquisition of fixed assets and cost of fixed assets that are not yet ready for there intended use as at balance sheet date.

5. Depreciation :

The depreciation on fixed assets is provided pro-rata to the period of use of Assets using the straight-line method based on Economic useful lives estimated by the management. The aggregate depreciation provided on the basis of estimated economic useful life is not less than the depreciation as calculated at the rates specified in Schedule XIV of the Companies Act, 1956.

6. Impairment of Assets:

An asset is treated as impaired when the carrying amount 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 estimate of recoverable amount.

7. Investments:

Current Investments are carried at the lower of cost or quoted / fair value computed scrip wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such decline is other than temporary.

8. Inventories:

a. Inventories including Work-in-process and stores and spares are valued at the lower of cost and net realizable value.

b. Cost of inventories is generally ascertained on first in first out basis.

9. Foreign currency transactions:

a. Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date of the transaction.

b. Monetary foreign currency items are reported at the exchange rates as at Balance Sheet date.

c. In respect of transaction covered under forward exchange contracts, the difference between the exchange rates prevailing at the Balance Sheet date and rate on the date of the contract is recognised as exchange difference. The premium on forward contracts is amortised over the life of the contract

d. Non-monetary foreign currency items are carried at cost.

e. Any gains or losses on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss Account

f. Foreign branch operations being integral part of Company's operations, transactions thereat are reported as under:

i. Income and expenditure items at the exchange rate prevailing on the date of transaction.

ii. Monetary items using exchange rates at the Balance Sheet date.

iii. Non-monetary items at the exchange rates prevailing on the date of transaction.

10. Employee Benefits:

a. 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.

b. Post employment and other long-term employee benefits are recognized as an expense in the profit and loss account of 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 post employment and other long-term benefits are charged to the profit and loss account.

c. In respect of employee's stock options, the excess of market price on the date of grant over the exercise price is recognized as deferred employee compensation expense, which are amortised over vesting period.

11. Provision for Current and Deferred Tax:

a. Current Tax: Provision is made for income tax, under the tax payable method, based on the liability as computed after taking credit for allowances, exemptions and MAT credit entitlement for the year . Adjustments in books are made only after the completion of the assessment. In case of matters under appeal, due to disallowances or otherwise, full provision is made when the Company accepts the said liabilities.

b. Deferred tax: The differences that result between the profit offered for income tax and the profit as per the financial statements are identified and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognized only to the extent there is virtual certainty that the asset will be realized in the future. Carrying values of Deferred tax asset is adjusted for its appropriateness at each balance sheet date.

12. Provisions, Contingent Liabilities & Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised 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. Contingent Assets are neither recognised nor disclosed in the financial statements.

13. Financial Derivatives Hedging Transactions:

In respect of Derivatives Contracts, premium paid, provision for losses on restatement and gains / losses on settlement are recognised in the Profit and Loss Account.

14. Borrowing Cost:

a. Borrowing costs, less any income on the temporary investment out of those borrowings, that are directly attributable to acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as a part of the cost of that asset

b. Other borrowing costs are recognized as expense in the period in which they are incurred.

15. Leases:

a. Assets taken on lease, under which the lessor effectively retains all the risks and rewards of ownership, are classified as operating lease. Operating lease payments are recognized as expense in the profit and loss account on a straight-line basis over the lease term.

b. Assets acquired under leases where all the risks and rewards of ownership are substantially transferred to company are classified as Finance leases. Such leases are capitalized at the inception of the lease at the lower of fair value or the present value of minimum lease payments and liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

16. Provision for Doubtful Debts and Loans and Advances:

Provision is made in the Accounts for doubtful debts and loans and advances when the management considers the debts and loans and advances to be doubtful of recovery.

17. Research and Development:

a. Revenue expenditure on Research and Development is charged to Profit and Loss Account in the period in which it is incurred.

b. Capital expenditure on Research and Development is included under the relevant fixed assets and depreciation thereon is provided as given in policy no. 5 above


Mar 31, 2010

1. Basis for preparation of Financial Statements:

The Accounts have been prepared on a going concern basis under historical cost convention on accrual basis and in accordance with the generally accepted accounting principles in India and the provisions of Companies Act, 1956.

2. Use of Estimate :

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions to be made that 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. The difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

3. Revenue recognition:

Revenues are recognized when it is earned and when there is no significant uncertainty as to its measurement and realization. The specific revenue recognition policies are as under

a. Revenue from Turnkey Contracts, which are either Fixed Price or Cost Plus contracts, is recognized based on work completion of activity or achievement of milestone.

b. Revenue from sale of products (excluding under Agency arrangements) is recognized upon passing of title of goods and/or on transfer of significant risk and rewards of ownership thereto.

Revenue from Services is recognized of performance of Service.

c. Dividend income is recognized when the right to receive dividend is established.

d. Income such as annual maintenance contracts, annual subscriptions, Interest, Facility Management is recognized as per contractually agreed terms on time proportion basis.

e. Other income is recognized when the right to receive is established.

4. Fixed Assets, Intangible Assets & Capital Work in Progress:

Fixed Assets are stated at the cost of acquisition less accumulated depreciation and impairment losses, if any. All identifiable costs incurred up to asset put to use are capitalized. Costs include purchase price (including non-refundable taxes/duties) and borrowing costs for the assets that necessarily take a substantial period of time to get ready for its intended use.

Intangible Assets are stated at the cost of acquisitions less accumulated amortisation. In case of an internally generated assets cost includes all directly allocable expenditures. Intangible assets exclude the operating software, which forms an integral part of the hardware.

Capital Work In Progress includes advances paid for acquisition of fixed assets and cost of fixed assets that are not yet ready for there intended use as at balance sheet.

5. Depreciation:

The depreciation on fixed assets is provided pro-rata to the period of use of Assets using the straight-line method based on Economic useful lives as estimated by the management. The aggregate depreciation provided on the basis of estimated economic useful life is not less than the depreciation as calculated at the rates specified in Schedule XIV of the Companies Act, 1956.

The managements estimate of Economic useful lives of the various fixed assets is given below: -

The leasehold improvements have been depreciated over lease period.

Assets costing individually Rs. 5,000 or less are depreciated fully in the year of purchase.

6. 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 estimate of recoverable amount.

7. Investments:

Current Investments are carried at the lower of cost or quoted / fair value computed scrip wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such decline is other than temporary.

8. Inventories:

a. Inventories including Work-in-process and stores and spares are valued at the lower of cost and net realizable value.

b. Cost of inventories is generally ascertained on first in first out basis.

9. Foreign currency transactions:

a. Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date of the transaction.

b. Monetary foreign currency items are reported at the exchange rates as at Balance Sheet date.

c. In respect of transaction covered under forward exchange contracts, the difference between the exchange rates prevailing at the Balance Sheet date and rate on the date of the contract is recognised as exchange difference. The premium on forward contracts is amortised over the life of the contract

d. Non-monetary foreign currency items are carried at cost.

e. Any gains or losses on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss Account

f. Foreign branch operations being integral part of Companys operations, transactions thereat are reported as under:

i. Income and expenditure items at the exchange rate prevailing on the date of transaction.

ii. Monetary items using exchange rates at the Balance Sheet date.

iii. Non-monetary items at the exchange rates prevailing on the date of transaction.

10. Employee Benefits:

a. 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.

b. Post employment and other long-term employee benefits are recognized as an expense in the profit and loss account of 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 post employment and other long-term benefits are charged to the profit and loss account.

c. In respect of employees stock options, the excess of market price on the date of grant over the exercise price is recognized as deferred employee compensation expense, which are amortised over vesting period.

11. Provision for Current and Deferred Tax:

a. Current Tax: Provision is made for income tax, under the tax payable method, based on the liability as computed after taking credit for allowances, exemptions and MAT credit entitlement for the year . Adjustments in books are made only after the completion of the assessment. In case of matters under appeal, due to disallowances or otherwise, full provision is made when the Company accepts the said liabilities.

b. Deferred tax: The differences that result between the profit offered for income tax and the profit as per the financial statements are identified and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences

that originate in one accounting period and reverse in another. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognized only to the extent there is virtual certainty that the asset will be realized in the future. Carrying values of Deferred tax asset is adjusted for its appropriateness at each balance sheet date.

12. Provisions, Contingent Liabilities & Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised 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. Contingent Assets are neither recognised nor disclosed in the financial statements.

13. Financial Derivatives Hedging Transactions:

In respect of Derivatives Contracts, premium paid provision for losses on restatement and gains / losses on settlement are recognised in the Profit and Loss Account.

14. Borrowing Cost:

a. Borrowing costs, less any income on the temporary investment out of those borrowings, that are directly attributable to acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as a part of the cost of that asset

b. Other borrowing costs are recognized as expense in the period in which they are incurred.

15. Leases:

a. Assets taken on lease, under which the lessor effectively retains all the risks and rewards of ownership, are classified as operating lease. Operating lease payments are recognized as expense in the profit and loss account on a straight-line basis over the lease term.

b. Assets acquired under leases where all the risks and rewards of ownership are substantially transferred to company are classified as Finance leases. Such leases are capitalized at the inception of the lease at the lower of fair value or the present value of minimum lease payments and liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

16. Provision for Doubtful Debts and Loans and Advances :

Provision is made in the Accounts for doubtful debts and loans and advances in cases where the management considers the debts and loans and advances to be doubtful of recovery.

17. Research and Development:

a. Revenue expenditure on Research and Development is charged to Profit and Loss Account in the period in which it is incurred.

b. Capital expenditure on Research and Development is included under the relevant fixed assets and depreciation thereon is provided as given in policy no. 5 above

Convertible Debentures (NCDs) of Rs.10.00 lacs each for cash at par aggregating Rs.140,000 lacs on private placement basis on the terms and conditions stipulated in the Information Memorandum. These NCDs are listed on BSE in the Debt Segment.

In terms of provisions of the Companies Act, 1956, the Company has created Debenture Redemption Reserve on pro-rata basis of Rs.5,116.29 Lacs as at March 31,2010.

 
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