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Accounting Policies of Hindustan Construction Company Ltd. Company

Mar 31, 2015

1.1 Basis of Preparation of Financial Statements

The financial statements of Hindustan Construction Company Limited ("the Company" or "HCC") have been prepared to comply in all material respects with the accounting standards notified by the Companies (Accounting Standards) Rules, read with Rule 7 to the Companies (Accounts) Rules 2014 in respect of Section 133 to the Companies Act, 2013. The financial statements are prepared under the historical cost convention, on an accrual basis of accounting. The accounting policies applied are consistent with those used in the previous year.

All the assets and liabilities have been classified as current or non-current, wherever applicable, as per the operating cycle of the Company as per the guidance as set out in the Schedule III to the Companies Act, 2013.

Operating cycle for the business activities of the Company covers the duration of the specific project/ contract /project line /service including the defect liability period, wherever applicable, and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective project.

1.2 Accounting Estimates

The preparation of the financial statements, in conformity with generally accepted accounting principles, requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and the results of operation during the reported period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates which are recognised in the period in which they are determined.

1.3 Fixed Assets

a Tangible fixed assets

Fixed assets are stated at cost of acquisition including attributable interest and finance costs till the date of acquisition / installation of the assets and improvement thereon less accumulated depreciation and accumulated impairment losses, if any.

b Intangible assets under development

Intangibles under development represent expenditure incurred in respect of intangible assets under development and are carried at cost.

c Other Intangible assets

Intangible assets comprise of license fees, implementation cost for software and other application software acquired for in-house use. These assets are stated at cost less accumulated amortisation and impairment losses, if any.

1.4 Depreciation/ Amortisation

Depreciation on tangible assets is provided:

i) In respect of buildings and sheds, on the written down value basis considering the useful life based on the management''s experience of use of the assets which is in line with industry practices.

ii) In respect of furniture and fixtures, office equipment, computers, plant and machinery, heavy vehicles, light vehicles and speed boat on straight line basis at rates prescribed in Schedule II to the Companies Act, 2013 on a pro-rata basis. However, certain class of plant and machinery are depreciated at the rates different from the rates prescribed in Schedule II to the Companies Act, 2013 having regard to useful life of those assets in construction projects based on the management''s experience of use of those assets which is in line with industry practices.

iii) In respect of helicopter and aircraft, on straight line basis considering the useful life based on the management''s experience of use of assets which is in line with industry practices.

iv) Leasehold improvements are amortised over the period of lease or their estimated useful lives as determined by the management, whichever is lower.

v) Software and implementation costs including users license fees and other application software costs are amortised over a period of five years.

1.5 Investments

Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments.

Current investments are carried in the financial statements at lower of cost or fair value determined on an individual investment basis. Non- current investments are carried at cost and provision for diminution in value is made to recognise a decline other than temporary in the value of the investments. Trade investments are the investments made for or to enhance the Company''s business interests.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. If an investment is acquired, or partly acquired, by the issue of shares or other securities, the acquisition cost is the fair value of the securities issued. If an investment is acquired in exchange for another asset, the acquisition is determined by reference to the fair value of the asset given up or by reference to the fair value of the investment acquired, whichever is more clearly evident.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.

1.6 Employee Benefits

i) Defined Contribution Plan

Contributions to defined contribution schemes such as provident fund, employees'' state insurance, labour welfare fund and superannuation scheme, etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. Company''s provident fund contribution, in respect of certain employees, is made to a government administered fund and charged as an expense to the Statement of Profit and Loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further defined obligations beyond the monthly contributions.

ii) Defined Benefit Plan

In respect of certain employees, provident fund contributions are made to a trust administered by the Company. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. Accordingly, the contribution paid or payable and the interest shortfall, if any, is recognised as an expense in the period in which services are rendered by the employee. The Company also provides for retirement/ post-retirement benefits in the form of gratuity and compensated absences. The Company''s liability towards such defined benefit plans is determined based on valuations, as at the balance sheet date, made by independent actuaries using the projected unit credit method. Actuarial gains and losses in respect of the defined benefit plans are recognised in the Statement of Profit and Loss in the period in which they arise. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method. The classification of the Company''s net obligation into current and non-current is as per the actuarial valuation report.

iii) Other Employee Benefits

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for the measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuations using the projected unit credit method at the period end. Accumulated leave which is expected to be utilised within next 12 months, is treated as short-term employee benefit. Actuarial gains and losses in respect of the defined benefit plans are recognised in the Statement of Profit and Loss in the period in which they arise. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

1.7 Inventories

a) The stock of construction materials, stores, spares and embedded goods and fuel is valued at cost, or net realisable value, whichever is lower. Cost is determined on weighted average basis and includes all applicable cost of bringing the goods to their present location and condition.

b) Project Work-in-Progress is valued at the contract rates and site mobilisation expenditure of incomplete contracts is stated at lower of cost or net realisable value.

1.8 Cash and Cash Equivalents

Cash and cash equivalents comprise of cash at bank and cash on hand. The Company considers all highly liquid investments with an original maturity of three month or less from date of purchase, to be cash equivalents.

1.9 Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on management''s estimate required to settle the obligation at the balance sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates. Provisions are recognised in the financial statements in respect of present probable obligations, for amounts which can be reliably estimated.

Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.

Contingent assets are neither recognised nor disclosed in the financial statements.

1.10 Borrowing costs

Borrowing costs relating to acquisition, construction or production of a qualifying asset which takes substantial period of time to get ready for its intended use are added to the cost of such asset to the extent they relate to the period till such assets are ready to be put to use. Other borrowing costs are charged to the Statement of Profit and Loss in the period in which it is accrued.

1.11 Foreign Exchange Translation of Foreign Projects and Accounting of Foreign Exchange Transactions

i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

iii) Treatment of Exchange Differences

Exchange differences arising on settlement/restatement of short term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

Exchange differences arising on long-term foreign currency monetary items related to acquisition of a fixed asset are capitalised and depreciated over the remaining useful life of the asset. Exchange differences arising on other long-term foreign currency monetary items are accumulated in the "Foreign Currency Monetary Translation Account" and amortised over the remaining life of the concerned monetary item.

1.12 Financial Derivatives and Hedging Transactions

Financial derivatives and hedging contracts are accounted on the date of their settlement and realised gain/loss in respect of settled contracts is recognised in the Statement of Profit and Loss along with the underlying transactions.

The premium or discount arising at the inception of forward exchange contracts entered into to hedge an existing asset/liability, is amortised as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract are recognised as income or as expense for the period.

Forward exchange contracts outstanding as at the year end on account of firm commitment/highly probable forecast transactions are marked to market and the losses, if any, are recognised in the Statement of Profit and Loss and gains are ignored in accordance with the Announcement of Institute of Chartered Accountants of India on ''Accounting for Derivatives'' issued in March 2008.

1.13 Revenue Recognition

i) Accounting of construction contracts

The Company follows the percentage completion method, based on the stage of completion at the Balance Sheet date, taking into account the contractual price and revision thereto by estimating total revenue including claims/variations as per Accounting Standard 7 and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done.

Revenue is recognised as follows:

a) In case of item rate contracts on the basis of physical measurement of work actually completed, at the Balance Sheet date.

b) In case of Lump sum contracts, revenue is recognised on the completion of milestones as specified in the contract or as identified by the management foreseeable losses are accounted for as and when they are determined except

to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration.

ii) Accounting of supply contracts-sale of goods

Revenue from supply contract is recognised when the substantial risk and rewards of ownership is transferred to the buyer and the collectability is reasonably measured. Revenue from product sales are shown as net of all applicable taxes and discounts.

iii) Accounting for claims

Claims are accounted as income in the period of receipt of arbitration award or acceptance by client or evidence of acceptance received. Interest awarded, being in the nature of additional compensation under the terms of the contract, is accounted as contract revenue on receipt of favorable award.

iv) Dividend income

Dividend is recognized when the right to receive the payment is established.

v) Interest income

Interest and other income are accounted for on accrual basis except where the receipt of income is uncertain in which case it is accounted for on receipt basis.

1.14 Accounting for Joint Venture Contracts

(a) Contracts executed in Joint Venture under work sharing arrangement (consortium) are accounted in accordance with the accounting policy followed by the Company as that of an independent contract to the extent work is executed.

(b) In respect of contracts executed in Integrated Joint Ventures under profit sharing arrangement (assessed as AOP under the Income tax laws), the services rendered to the Joint Ventures are accounted as income on accrual basis. The profit / loss is accounted for, as and when it is determined by the Joint Venture and the net investment in the Joint Venture is reflected as investments, loans & advances or current liabilities.

1.15 Taxation Current tax:

Provision for current tax is recognised based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Income Tax Act, 1961.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

Deferred tax:

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences between the financial statements'' carrying amount of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates or tax rates that are substantively enacted at the Balance Sheet dates. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment date. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. Where there is no unabsorbed depreciation/carry forward loss, deferred tax assets are recognised only to the extent there is a reasonable certainty of realisation in future. Such assets are reviewed at each Balance Sheet date to reassess realisation.

1.16 Leases

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

1.17 Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised in the Statement of Profit and Loss whenever the carrying amount of an asset or a cash generating unit exceeds its recoverable amount. The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

1.18 Earning per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

1.19 Share Issue Expenses

Share issue expenses are charged off against available balance in the Securities Premium Account.


Mar 31, 2014

1.1 Basis of Preparation of Financial Statements

The Company maintains its accounts on accrual basis. Management makes estimates and technical & other assumptions regarding the amounts of income and expenses in accordance with Indian GAAP in the preparation of the financial statements. Difference between the actual results and estimates are recognised in the period in which they are determined.

1.2 Fixed Assets

Fixed assets are stated at cost of acquisition including attributable interest & financial costs till the date of acquisition / installation of the assets and improvement thereon less accumulated depreciation / amortisation and accumulated impairment losses if any. Intangible assets comprise of licence fees , other implementation cost for software (ERP) and other application software’s acquired for in-house use.

1.3 Depreciation and Amortisation

Depreciation on fixed assets is provided:

i) In respect of buildings and sheds, furniture and office equipments on the written down value basis at rates prescribed in Schedule XIV of the Companies Act, 1956.

ii) In respect of plant & machinery, heavy vehicles, light vehicles, helicopter, aircraft and speed boat on the straight line basis at rates prescribed in schedule XIV of the Companies Act, 1956 on a pro-rata basis.

iii) In respect of computers depreciation is provided on straight line basis over a period of three years on a pro-rata basis.

iv) The depreciation on assets used for construction has been treated as period cost.

v) Fixed Assets includes cost incurred on the Lease hold Improvements at 247 park which is being amortised over a period of Nine years.

vi) Software and implementation costs including users licence fees of the Enterprise Recourse Planning (ERP) system and other application software costs are amortised over a period of 5 years.

1.4 Investments

Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

Current investments are carried in the financial statements at lower of cost or fair value determined on an individual investment basis. Long- term(Non Current) investments are carried at cost and provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

1.5 Employee Benefits

i) Defined Contribution plan

Contribution to provident fund and superannuation fund is accounted on accrual basis.

ii) Defined Benefit plan

Gratuity is charged to revenue on the basis of actuarial valuation and in case of daily rated workmen on actual basis computed on tenure of service as at the end of the year.

iii) Other Benefits

Short term and long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.

Accumulated leave which is expected to be utilised within next 12 months, is treated as short term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for the measurement purposes. Such long term compensated absences are provided for based on the actuarial valuations using the projected unit credit method at the year-end.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on market yields on Government securities as at the Balance Sheet date, having maturity periods approximating to the terms of the related obligations.

1.6 Inventories

a) The stock of stores, spares and embedded goods and fuel is valued at cost (weighted average basis), or net realisable value whichever is lower.

b) Work-in-Progress is valued at the contract rates and site mobilisation expenditure of incomplete contracts is stated at cost.

1.7 Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and cash in hand. The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase, to be cash equivalents.

1.8 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 recourses. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an out flow of resources. Contingent assets are neither recognised nor disclosed in the financial statements.

1.9 Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of such asset. Other borrowings costs are charged to statement of profit and loss as incurred.

1.10 Foreign Exchange Translation of Foreign Projects and Accounting of Foreign Exchange Transactions

a) Initial Recognition

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

b) Conversion

Foreign Currency Monetary Items are re-translated at the exchange rate prevailing on the reporting date.

c) Treatment of Exchange Differences

Exchange differences arising on settlement / restatement of short term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

The exchange differences arising on settlement / restatement of long term foreign currency monetary items are capitalised as part of the depreciable fixed assets to which the monetary items relates and depreciated over the remaining balance life of such assets and in other cases amortised over the balance period of such long term foreign currency monetary items. The unamortised balance is carried in the Balance Sheet as "Foreign Currency Monetary item Translation Difference Account" as a separate line item under "Reserves and Surplus Account".

1.11 Financial Derivatives & Hedging transactions

Financial derivatives and hedging contracts are accounted on the date of their settlement and realised gain / loss in respect of settled contracts is recognised in the statement of profit and loss along with the underlying transactions.

1.12 Revenue Recognition

i) Accounting of construction contracts

The Company follows the percentage completion method, based on the stage of completion at the balance sheet date, taking into account the contractual price and revision thereto by estimating total revenue including claims / variations as per Accounting Standard 7 and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done.

Revenue is recognized as follows:

a) In case of Item rate contracts on the basis of physical measurement of work actually completed at the balance sheet date.

b) In case of Lump sum contracts, revenue is recognized on the completion of milestones as specified in the contract or as identified by the management foreseeable losses are accounted for as and when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration.

ii) Accounting of Supply Contracts-Sale of goods

Revenue from supply contract is recognized when the substantial risk and rewards of ownership is transferred to the buyer.

iii) Accounting Policy for Claims

Claims are accounted as income in the year of receipt of arbitration award or acceptance by client or evidence of acceptance received.

1.13 Accounting for Joint Venture Contracts

(a) Contracts executed in Joint Venture under work sharing arrangement (consortium) are accounted in accordance with the Accounting policy followed by the Company as that of an independent contract to the extent work is executed.

(b) In respect of contracts executed in Integrated Joint Ventures under profit sharing arrangement (assessed as AOP under Income tax laws), the services rendered to the Joint Ventures are accounted as income on accrual basis. The profit / loss is accounted for, as and when it is determined by the Joint Venture and the net investment in the Joint Venture is reflected as investments, loans & advances or current liabilities.

1.14 Taxation

The tax expense comprises of current tax & deferred tax charged or credited to the Statement of Profit and Loss for the year. Current tax is calculated in accordance with the tax laws applicable to the current financial year. The deferred tax expenses or benefit is recognised using the tax rates and tax laws that have been enacted by the balance sheet date. In the event of unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. Other deferred tax assets are recognised only to the extent there is a reasonable certainty of realisation in future.

Minimum Alternate Tax(MAT) paid in a year is charged to the Statement of Profit & Loss as current tax. The company recognises MAT credit available as an asset only to the extent that there is convincing evidence that company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward.

1.15 Leases

Lease rentals in respect of assets acquired under operating lease are charged to Statement of Profit and Loss.

1.16 Impairment of Assets

At each Balance Sheet date, the management makes an assessment of any indicator that may lead to impairment of assets. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value, which is higher of net selling price and value in use. Any impairment loss is charged to Statement of Profit and Loss in the year in which it is identified as impaired.

1.17 Employees Stock Option Plan

In respect of the stock options granted pursuant to the Company''s Stock Option Scheme, market value of the Company''s shares as on the grant date was equal to the par value for the options granted, hence no accounting entries as per ESOP guidelines are required to be made.

1.18 Earnings per share

Basic and Diluted earnings per share is calculated by diving the net profit or loss for the period attributable to equity shareholders and weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity share.

b Terms/rights attached to shares:

The Company has only one class of equity shares having a par of value of Rs.1/- per share. Each holder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the no. of equity shares held by the shareholder.

d Shares reserved for issue under options :

As on 31.03.2014, there are 4,694,800 (previous year 6,154,080) stock options outstanding convertible into 4,694,800 (previous year 6,154,080) equity shares of Rs.1/- each, the same are convertible at an exercise price of Rs.52.03 per share.

During the period upto 31.03.2014 i.e. from 1.04.2013 till 31.03.2014, None of the Options were exercised / converted into Equity Shares. There were 1,459,280 (previous year 308,880) stock options that got lapsed during 01.04.2013 till 31.03.2014

e. Employees Stock Option Scheme:

i. Options granted

a) The Company offered 4,458,800 Stock Options on April 25, 2008 (each option carrying entitlement for one equity share of the face value of Rs.1/- each) at a price of Rs.132.50 per equity share.

In accordance with the approval of the board of directors and shareholders of the company, the ESOP compensation committee at its meeting held on July 20, 2009 had reprised 4,131,600 options at Rs.104.05 per equity share.

b) The ESOP Compensation committee at its meeting held on 23rd October 2008 granted 1,93,750 options at an exercise price of Rs.43.40 per equity share.

The ESOP Compensation Committee of the Company at its Meeting held on August 12, 2010 has decided to double the number of employee stock options (vested and unvested but not exercised and in-force as on the Record Date i.e. August 11, 2010) and halved the exercise price on account of issuance and allotment of Bonus Equity Shares in the proportion of 1:1.

Accordingly, 3,553,760 employee stock options in–force granted by the Company on April 25, 2008 have been doubled i.e. 7,107,520 and the exercise price in respect of the same has been halved i.e. it has been reduced from Rs.104.05 to Rs.52.03 and 1,93,750 employee stock options granted by the Company on October 23, 2008 have been doubled i.e. 387,500 and the exercise price in respect of the same has been halved i.e. it has been reduced from Rs.43.40 to Rs.21.70.

ii. Settlement Through Equity Shares.

iii. Options vested 46,49,800 number of options remain vested and outstanding as at 31.03.2014.

f. Bonus Shares/ Buy Back/Shares for consideration other than cash issued during past five years:

(i) Aggregate number and class of shares allotted as fully paid-up pursuant to contracts without payment being received in cash:

Nil

(ii) Aggregate number and class of shares allotted as fully paid-up by way of Bonus Shares:

303,256,460 Equity Shares were issued as fully paid Bonus Shares by capitalisation of Securities Premium Reserve on August 12, 2010.

(iii) Aggregate number and class of shares bought back:

Nil

g. Pursuant to Bonus Issue of Equity Shares in the proportion to 1:1, outstanding 95,146 Global Depository Shares(outstanding as of Record Date i.e. August 11, 2010) have increased to 190,292. Out of the total Global Depository Shares(GDR) issued 120,720 GDR''s are outstanding as on 31st March 2014.


Mar 31, 2013

1.1 Basis of Accounting

The Company maintains its accounts on accrual basis. Management makes estimates and technical and other assumptions regarding the amounts of income and expenses in accordance with Indian GAAP in the preparation of the financial statements. Difference between the actual results and estimates are recognised in the period in which they are determined.

1.2 Fixed Assets

Fixed assets are stated at cost of acquisition including attributable interest & financial costs till the date of acquisition/installation of the assets and improvement thereon less accumulated depreciation / amortisation and accumulated impairment losses if any. Intangible assets comprise of licence fees, other implementation cost for software (ERP) and other application softwares acquired for inhouse use.

1.3 Depreciation and Amortisation

Depreciation on fixed assets is provided:

i) In respect of buildings and sheds, furniture and office equipments on the written down value basis at rates prescribed in Schedule XIV of the Companies Act, 1956.

ii) In respect of plant & machinery, heavy vehicles, light vehicles, helicopter, aircraft and speed boat on the straight line basis at rates prescribed in Schedule XIV of the Companies Act, 1956 on a pro-rata basis.

iii) In respect of computers, depreciation is provided on straight line basis over a period of three years on a pro-rata basis.

iv) The depreciation on assets used for construction has been treated as period cost.

v) Fixed Assets includes cost incurred on the Lease hold Improvements at 247 park which is being amortised over a period of nine years.

vi) Software and implementation costs including users licence fees of the Enterprise Resource Planning (ERP) system and other application software costs are amortised over a period of five years.

1.4 Investments

Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made,are classified as current investments. All other investments are classifies as long-term investments.

Current investments are carried in the financial statements at lower of cost or fair value determined on an individual investment basis. Long-term(Non Current) investments are carried at cost, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

1.5 Employee Benefits

i) Defined Contribution plan

Contribution to provident fund and superannuation fund is accounted on accrual basis.

ii) Defined Benefit plan

Gratuity is charged to revenue on the basis of actuarial valuation and in case of daily rated workmen on actual basis computed on tenure of service as at the end of the year.

iii) Other Benefits

Short term and long term compensated absenses are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.

Accumulated leave which is expected to be utilised within next 12 months, is treated as short term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond tweleve months, as long-term employee benefit for the measurement purposes. Such long term compensated absences are provided for based on the actuarial valuations using the projected unit credit method at the year-end.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on market yields on Government securities as at the Balance Sheet date, having maturity periods approximating to the terms of the related obligations.

1.6 Inventories

a) The stock of stores, spares and embedded goods and fuel is valued at cost (weighted average basis), or net realisable value whichever is lower.

b) Work-in-Progress is valued at the contract rates and site mobilisation expenditure of incomplete contracts is stated at cost.

1.7 Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and cash in hand. The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase, to be cash equivalents.

1.8 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 resourses. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Contingent assets are neither recognised nor disclosed in the financial statements.

1.9 Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of such asset. Other borrowing costs are charged to Statement of Profit and Loss as incurred.

1.10 Foreign Exchange Translation of Foreign Projects and Accounting of Foreign Exchange Transactions

a) Initial Recognition

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

b) Conversion

Foreign Currency Monetary Items are re-translated at the exchange rate prevailing on the reporting date.

c) Treatment of Exchange Differences

Exchange differences arising on settlement/restatement of short term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

The exchange differences arising on revaluation of long term foreign currency monetary items are capitalised as part of the depreciable fixed assets to which the monetary items relates and depreciated over the remaining balance life of such assets and in other cases amortised over the balance period of such long term foreign currency monetary items. The unamortised balance is carried in the Balance Sheet as "Foreign currency monetary item translation difference account''.''

1.11 Financial Derivatives & Hedging transactions

Financial derivatives and hedging contracts are accounted on the date of their settlement and realised gain/loss in respect of settled contracts is recognised in the Statement of Profit and Loss along with the underlying transactions.

1.12 Revenue Recognition

i) Accounting of construction contracts

The Company follows the percentage completion method, based on the stage of completion at the balance sheet date, taking into account the contractual price and revision thereto by estimating total revenue including claims/variations as per Accounting Standard 7 and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done.

Revenue is recognized as follows:

a) In case of Item rate contracts on the basis of physical measurement of work actually completed at the balance sheet date.

b) In case of Lumpsum contracts, revenue is recognized on the completion of milestones as specified in the contract or as identified by the management. Foreseeable losses are accounted for as and when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration.

ii) Accounting of Supply Contracts-Sale of goods

Revenue from supply contract is recognized when the substantial risk and rewards of ownership is transferred to the buyer.

iii) Accounting Policy for Claims

Claims are accounted as income in the year of receipt of arbitration award or acceptance by client or evidence of acceptance received.

1.13 Accounting for Joint Venture Contracts

(a) Contracts executed in Joint Venture under work sharing arrangement (consortium) are accounted in accordance with the Accounting policy followed by the Company as that of an independent contract to the extent work is executed.

(b) In respect of contracts executed in Integrated Joint Ventures under profit sharing arrangement (assessed as AOP under Income tax laws), the services rendered to the Joint Ventures are accounted as income on accrual basis. The profit / loss is accounted for, as and when it is determined by the Joint Venture and the net investment in the Joint Venture is reflected as investments, loans & advances or current liabilities.

1.14 Taxation

The tax expense comprises of current tax & deferred tax charged or credited to the Statement of Profit and Loss for the year. Current tax is calculated in accordance with the tax laws applicable to the current financial year. The deferred tax expenses or benefit is recognised using the tax rates and tax laws that have been enacted by the balance sheet date. In the event of unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. Other deferred tax assets are recognised only to the extent there is a reasonable certainity of realisation in future.

Minimum Alternate Tax(MAT) paid in a year is charged to the Statement of Profit & Loss as current tax. The Company recognises MAT credit available as an asset only to the extent that there is convincing evidence that Company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward.

1.15 Leases

Lease rentals in respect of assets aquired under operating lease are charged to Statement of Profit and Loss.

1.16 Impairment of Assets

At each Balance Sheet date, the management makes an assessment of any indicator that may lead to impairment of assets. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value, which is higher of net selling price and value in use. Any impairment loss is charged to Statement of Profit and Loss in the year in which it is identified as impaired.

1.17 Employees Stock Option Plan

In respect of the stock options granted pursuant to the Company''s Stock Option Scheme, market value of the Company''s shares as on the grant date was equal to the par value for the options granted, hence no accounting entries as per ESOP guidelines are required to be made.

1.18 Earning per share

Basic and Diluted earning per share is calculatd by dividing the net profit or loss for the period attributable to equity shareholders and weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity shareholders and weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.


Mar 31, 2012

1.1 Basis of Accounting

The Company maintains its accounts on accrual basis. Management makes estimates and technical and other assumptions regarding the amounts of income and expenses in accordance with Indian GAAP in the preparation of the financial statements. Difference between the actual results and estimates are recognized in the period in which they are determined.

During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

1.2 Fixed Assets

Fixed assets are stated at cost of acquisition including attributable interest & financial costs till the date of acquisition/installation of the assets and improvement thereon less accumulated depreciation / amortization and accumulated impairment losses if any. Intangible assets comprise of license fees , other implementation cost for software (ERP) and other application software's acquired for in-house use.

1.3 Depreciation and Amortization

Depreciation on fixed assets is provided:

I) In respect of buildings and sheds, furniture and office equipments on the written down value method (pro-rata on additions and deletions of the year) at rates prescribed in Schedule XIV of the Companies Act, 1956.

ii) In respect of plant & machinery, heavy vehicles, light vehicles, helicopter, aircraft and speed boat on the straight line method at rates prescribed in schedule XIV of the Companies Act, 1956 on a pro-rata basis.

iii) In respect of computers depreciation is provided on straight line basis over a period of three years on a pro-rata basis.

iv) The depreciation on assets used for construction has been treated as period cost.

v) Fixed Assets includes cost incurred on the Lease hold Improvements at 247 park which is being amortized over a period of Nine years.

vi) Software and implementation costs including users license fees of the Enterprise Recourse Planning (ERP) system and other application software costs are amortized over a period of 5 years.

1.4 Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classifies as long-term investments.

Current investments are carried in the financial statements at lower of cost or fair value determined on an individual investment basis. Long-term investments are carried at cost, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

1.5 Employee Benefits

i) Defined Contribution plan

Contribution to provident fund and superannuation fund is accounted on accrual basis.

ii) Defined Benefit plan

Gratuity is charged to revenue on the basis of actuarial valuation and in case of daily rated workmen on actual basis computed on tenure of service as at the end of the year.

iii) Other Benefits

Short term and long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.

Accumulated leave which is expected to be utilized within next 12 months, is treated as short term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for the measurement purposes. Such long term compensated absences are provided for based on the actuarial valuations using the projected unit credit method at the year-end.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on market yields on Government securities as at the Balance Sheet date, having maturity periods approximating to the terms of the related obligations.

1.6 Inventories

a) The stock of stores, spares and embedded goods and fuel is valued at cost (weighted average basis), or net realizable value whichever is lower.

b) Work-in-Progress is valued at the contract rates and site mobilisation expenditure of incomplete contracts is stated at cost.

c) Certain loose plant, tools & service equipments costing below Rs 5 lacs are valued at proportionate written down value @ 3% p.m. over a period of 32 months.

1.7 Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and cash in hand . The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase, to be cash equivalents.

1.8 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 recourses. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an out flow of resources. Contingent assets are neither recognized nor disclosed in the financial statements.

1.9 Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as a part of the cost of such asset. Other borrowings costs are charged to statement of profit and loss as incurred.

1.10 Foreign Exchange Translation of Foreign Projects and Accounting of Foreign Exchange Transactions

a) Current assets and current liabilities are translated at the exchange rate prevailing on the last day of the year.

b) Gains or losses arising out of remittance / translations at the year-end are credited / debited to the statement of profit and loss for the year.

c) From the accounting periods commencing on or after December 7, 2006, the Company adjusts exchange differences arising on translation/settlement of long- term foreign currency monetary items pertaining to the acquisition of a depreciable asset to the cost of the asset and depreciated over the remaining life of the asset. Exchange differences arising on other long-term foreign currency monetary items are accumulated in the "Foreign Currency Monetary Item Translation Difference Account" and amortized over the remaining life of the concerned monetary item.

d) Foreign exchange transactions are converted into Indian rupees at the prevailing rate on the date of the transaction.

e) Exchange differences arising on contracts are recognized in the period in which they arise and the premium paid / received is accounted as expense / income over the period of the contract.

1.11 Financial Derivatives & Hedging transactions

Financial derivatives and hedging contracts are accounted on the date of their settlement and realized gain/loss in respect of settled contracts is recognized in the statement of profit and loss along with the underlying transactions.

1.12 Revenue Recognition

i) Accounting of construction contracts

The Company follows the percentage completion method, based on the stage of completion at the balance sheet date, taking into account the contractual price and revision thereto by estimating total revenue and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done.

Revenue is recognized as follows:

a) In case of Item rate contracts on the basis of physical measurement of work actually completed at the balance sheet date.

b) In case of Lump sum contracts, revenue is recognized on the completion of milestones as specified in the contract or as identified by the management Foreseeable losses are accounted for as and when they are determined except to the extent they are expected to be recovered through Claims presented or to be presented to the customer or in arbitration.

ii) Accounting of Supply Contracts-Sale of goods

Revenue from supply contract is recognized when the substantial risk and rewards of ownership is transferred to the buyer.

iii) Accounting Policy for Claims

Claims are accounted as income in the year of receipt of arbitration award or acceptance by client or evidence of acceptance received.

1.13 Accounting for Joint Venture Contracts

(a) Contracts executed in Joint Venture under work sharing arrangement (consortium) are accounted in accordance with the Accounting policy followed by the Company as that of an independent contract to the extent work is executed.

(b) In respect of contracts executed in Integrated Joint Ventures under profit sharing arrangement (assessed as AOP under Income tax laws), the services rendered to the Joint Ventures are accounted as income on accrual basis. The profit / loss is accounted for, as and when it is determined by the Joint Venture and the net investment in the Joint Venture is reflected as investments, loans & advances or current liabilities.

1.14 Taxation

The tax expense comprises of current tax & deferred tax charged or credited to the statement of profit and loss for the year. Current tax is calculated in accordance with the tax laws applicable to the current financial year. The deferred tax expenses or benefit is recognized using the tax rates and tax laws that have been enacted by the balance sheet date. In the event of unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. Other deferred tax assets are recognized only to the extent there is a reasonable certainty of realization in future. Minimum Alternate Tax(MAT) paid in a year is charged to the Statement of Profit & Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward.

1.15 Leases

Lease rentals in respect of assets acquired under operating lease are charged to Statement of profit and loss.

1.16 Impairment of Assets

At each Balance Sheet date, the management makes an assessment of any indicator that may lead to impairment of assets. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value, which is higher of net selling price and value in use. Any impairment loss is charged to statement of profit and loss in the year in which it is identified as impaired.

1.17 Employees Stock Option Plan

In respect of the stock options granted pursuant to the Company's Stock Option Scheme, market value of the Company's shares as on the grant date was equal to the par value for the options granted, hence no accounting entries as per ESOP guidelines are required to be made.

b Terms/rights attached to shares:

The Company has only one class of equity shares having a par value of Rs 1 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the apporoval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the no. of equity shares held by the shareholder.

d Shares reserved for issue under options :

There are 64,62,960 (previous year 70,97,500) stock options outstanding convertible into 64,62,960 (previous year 70,97,500) equity shares of Rs 1 each, the same are convertible at an exercise price of Rs 52.03 per share.

During the year 77500 Equity shares of Rs 1 each at an Exercise price of Rs 21.70 per share Options were converted into 77,500 Equity shares (previous year 26,860 out of which 20,000 at an exercise price of Rs 52.03 and 6,860 at an exercise price of Rs 104.05). There were 5,57,040 (previous year 948,500) stock options that got lapsed during the current year.

e. Employees Stock Option Scheme: i Options granted

a) The Company offered 44,58,800 Stock Options on April 25, 2008 (each option carrying entitlement for one equity share of the face value of Rs 1 each) at a price of Rs 132.50 per equity share. Out of the total Stock Options offered, 8,98,180 have been lapsed on account of resignation / retirement by employees.

In accordance with the approval of the board of directors and shareholders of the Company, the ESOP compensation committee at its meeting held on July 20, 2009 had reprised 41,31,600 options at Rs 104.05 per equity share.

b) The ESOP Compensation committee at its meeting held on October 23, 2008 granted 1,93,750 options at an exercise price of Rs 43.40 per equity share.

The ESOP Compensation Committee of the Company at its Meeting held on August 12, 2010 has decided to double the number of employee stock options (vested and unvested but not exercised and in-force as on the Record Date i.e. August 11, 2010) and halved the exercise price on account of issuance and allotment of Bonus Equity Shares in the proportion of 1:1. Accordingly, 35,53,760 employee stock options in-force granted by the Company on April 25, 2008 have been doubled i.e. 71,07,520 and the exercise price in respect of the same has been halved i.e. it has been reduced from Rs 104.05 to Rs 52.03 and 1,93,750 employee stock options granted by the Company on October 23, 2008 have been doubled i.e. 3,87,500 and the exercise price in respect of the same has been halved i.e. it has been reduced from Rs 43.40 to Rs 21.70.

f. Bonus Shares/ Buy Back/Shares for consideration other then cash issued during past five years

(i) Aggregate number and class of shares allotted as fully paid up pursuant to contracts without payment being received in cash Nil

(ii) Aggregate number and class of shares allotted as fully paid up by way of Bonus Shares 30,32,56,460 Equity Shares were issued as fully paid Bonus Shares by capitalisation of Securities Premium Reserve on August 12, 2010.

(iii) Aggregate number and class of shares bought back Nil

g. Pursuant to Bonus Issue of Equity Shares in the proportion to 1:1, outstanding 95,146 Global Depository Shares(outstanding as of Record Date i.e. August 11, 2010) have increased to 1,90,292. Out of the total Global Depository Shares(GDR) issued 1,20,720 GDR's are outstanding as on March 31, 2012.

1.18 Additional Information to Secured/Unsecured Long Term Borrowings:

The long term portion of debentures and term loans are shown under long term borrowings and the current maturities of the long term borrowings are shown under the current liabilities as per the disclosure requirements of the Revised Schedule VI.

1.19 Detail of Securities and Terms of repayment

I. Secured

(A) Privately Placed Non Convertible Debentures

i) 11.10% Non-Convertible Debentures - Note 4.I.(A)(1)

Secured by first charge by way of hypothecation of Company's specific plant and machineries as specified in first and second schedule of the trust deed executed on August 27, 2008 and Schedule II of Memorandum of Hypothecation dated March 28, 2011 in favor of IDBI Trusteeship Services Ltd. (ITSL), the trustees to the debenture holders. These debentures having a face value of Rs 10,00,000 each aggregating Rs 100 crore are to be redeemed in four equal installments at the end of 4th, 5th, 6th and 7th year from the date of allotment i.e. August 5, 2008.

ii) 9% Non-Convertible Debentures - Note 4.I.(A)(2)

Secured by first charge on Company's plant and machineries and heavy vehicles as specified in second schedule of the trust deed executed on January 17, 2007 in favour of AXIS Bank Ltd., the trustees to the debenture holders.

These debentures having a face value of Rs 10,00,000 each aggregating Rs 50 crore are to be redeemed in three annual equal installments commencing from the end of 3rd, 4th and 5th year from the date of first disbursement i.e. September 7, 2006. The first and second installment of Rs 16.67 crore each have been paid on the respective due dates i.e. September 7, 2009 and September 7, 2010. (Interest rate reset @ 10.92% w.e.f September 4, 2008). NCD has been repaid on paying final Installment of Rs 16.66 crore on September 7, 2011.

iii) 9.5% Non-Convertible Debentures - Note 4.I.(A)(3)

Secured by first charge on Company's plant and machineries and heavy vehicles as specified in second schedule of the trust deed executed on January 17, 2007 in favour of AXIS Bank Ltd., the trustees to the debenture holders.

These debentures having a face value of Rs 10,00,000 each aggregating Rs 50 crore are to be redeemed by bullet payment at the end of 5th year from the date of allotment i.e. November 20, 2006. NCD has been repaid by bullet payment on November 18, 2011.

The above debenture is also secured by way of mortgage of a flat situated at Lok Gaurav Complex, Vikhroli.

iv) 15.50% Non-Convertible Debentures - Note 4.I.(A)(4) Secured by exclusive first charge on specific marketable immovable assets of Lavasa Corporation Ltd., which is free from any encumbrances and charges, any restriction from Govt bodies /Department/ MOEF on creating mortgage, as specified in the subscription agreement executed on December 28, 2011 in favour of Axis Trustee Services Limited, the trustees to the debenture holders. These debentures having a face value of Rs 10,00,000 each aggregating Rs 120 crore are to be redeemed at the end of three years from the date of allotment, i.e. December 28, 2011.

(B) Term Loans

(a) Banks:

1. Axis Bank - Note 4.I.(B)(a)(i)(1)

Secured by first charge by way of hypothecation of specific plant and machineries and heavy vehicles as specified in the schedule annexed to the loan agreement executed on September 29, 2008. The loan is repayable in 5 equal half yearly installments of Rs 12 crore each. Floating interest @ 11.50% p.a.(base rate 10% 150 bps as on March 31, 2012) is applicable on the said loan. The period of Maturity w.r.t. balance sheet date is 2.5 years.

2. IDBI Bank- Note 4.I.(B)(a)(i)(2)

Secured by way of a) Second charge on all the movable assets of the Company as on March 31, 2008 and b) First charge on one Flat located at "Greater Kailas - II" New Delhi - 110048.The loan is repayable in 8 equal quarterly installment of Rs 33.75 crore each. Floating interest @14% p.a.(Base rate 10.75% 325 bps as on March 31, 2012) is applicable on the said loan. The period of maturity w.r.t. balance sheet date is one year and 10 months.

3. Bank of Baroda - Note 4.I.(B)(a)(i)(3)

Secured by first charge by way of hypothecation of specific plant and machineries movable properties as described in the second schedule of the Composite Hypothecation agreement of loan executed on May 18, 2009. The loan is repayable in 10 quarterly installments of Rs 3.125 crore each. Floating interest @ 13% p.a. (BPLR i.e. 15%- 200 bps as on March 31, 2012) is applicable on the said loan. The period of Maturity w.r.t. balance sheet date is 2 years and 2 months.

4. Development Bank of Singapore - Note 4.I.(B)(a)(i)(4) & 4.I.(B) (a)(ii)(2)

Secured by first charge by way of hypothecation of plant and machineries and heavy vehicles acquired under the facility as described in schedule I(2) to the deed of hypothecation executed on April 29, 2010. There are 5 different loans and the balance is payable in 12 equal quarterly installments. The details of individual loans are as under :

5. Standard Chartered Bank - Note 4.I.(B)(a)(i)(5) & 4.I.(B) (a) (ii)(1)

Secured by first charge by way of hypothecation of plant and machineries acquired under the facility as described in the first schedule to the memorandum of hypothecation executed on November 10, 2009.

There are 7 different loans repayable in 9 equal quarterly installments. The details of individual loans are as under :

6. Bank of Maharashtra Note 4.I.(B)(a)(i)(6)

Secured by first charge by way of hypothecation of specific plant and machineries in favour of the Bank as described in the fourth schedule of the deed of hypothecation executed on December 26, 2007. The outstanding loan is repayable in 5 quarterly installment of Rs 6.25 crore .Floating interest @ 12.10% p.a. (base rate 10.60% 1.5% on March 31, 2012) is applicable on the said loan. The period of maturity w.r.t. the balance sheet date is 9 months.

7. Export Import Bank of India - Note 4.I.(B)(a)(i)(7)

i) Rs 75 crore-Secured by first pari passu charge by way of hypothecation of plant and machineries acquired under the facility as described in the third schedule to the deed of hypothecation executed on June 23, 2010.The loan is repayable in 13 equal quarterly installments of Rs 5.77 crore. Floating interest @ 11.75% p.a. is applicable on the said loan. The period of maturity w.r.t the balance sheet date is 3.25 years.

ii) Rs 105 crore -Secured by (a) first charge on plant and machineries of the Company as specified in schedule III of the deed of hypothecation of movable fixed assets executed by the Company on July 23, 2010 and (b) An appropriate charge over the Tunnel Boring Machine including accessories of a subcontractor as specified in schedule I of the deed of hypothecation executed by a subcontractor on July 23, 2010 in favour of EXIM Bank. There are two loan of Rs 84 and Rs 21 crore @ 9% and 9.25% respectively. The loan are repayable in 7 equal half yearly installments of Rs15 crore (Rs 12 crore Rs 3 crore). The period of maturity w.r.t. the balance sheet date is 3 years 5 months.

8. Export Import Bank of India - Note 4.I.(B)(a)(i)(8)

Rs 50 crore-The loan is at fixed interest @ 11% p.a. and is repayable in 2 equal quarterly installments of Rs 25 crore each. The security on the said loan is yet to be created. The period of maturity w.r.t. the balance sheet date is 2 years .

9. State Bank of Travancore Term Loan Note 4.I.(B)(a)(i)(9)

Secured by a first charge by way of hypothecation of a pool of specific plant,machinery,tools and accessories acquired / to be acquired by the Company as specified in schedule II of the deed of hypothecation executed in favour of the Bank on February 15, 2007 and deed of hypothecation executed on March 23, 2009. The loan as at March 31, 2012 is repayable in 2 equal quarterly installments of Rs 7.5 crore each. Floating Interest @ 12.75% p.a.(base rate 10% 275 bps on March 31,2012) is applicable on the said loan.

10. Export Import Bank of India Note 4.I.(B)(a)(ii)(3)

Secured by (a) first, pari pasu charge on plant and machineries of the Company, as specified in schedule V of the Deed of hypothecation executed on September 27, 2010; (b) An undertaking for pledge of 50,05,000 of equity shares held by the Company in the share capital of HCC Mauritius Enterprises Ltd. in favour of EXIM Bank; (c) An undertaking by HCC Mauritius Enterprises Ltd. for non- disposal of its shareholding in Steiner AG, Switzerland. The foreign currency loan (ECB) is repayable 10 equal quarterly installments of Rs 5.21 crore. Floating interest @ 4.50% p.a.(L 400 bps) is applicable on the said loan. The period of maturity w.r.t. the balance sheet date is 3.5 years.

11. Toronto Dominion LLC -Note 4.I.(B)(a)(ii)(4)

Secured by way of first priority mortgage and security interest to and in favor of Wilmington Trust Company (the "Security Trustee") on one (1) Hawker model 4000 airframe bearing manufacture's serial number RC-26 together with two installed model PW308 engines more particularly described under Clause No. 2.1 as per the Aircraft Charge Agreement executed on January 6, 2011. The Foreign currency loan is repayable in balance 30 equal quarterly installment of Rs 2.51 crore each. Floating interest @ 1.47% (3 month Libor i.e. 0.2665% 1.20%) is applicable on the said loan. The period of maturity w.r.t. the balance sheet date is 7.5 years .

(b) Others:

1. SREI Equipment Finance Private Limited- Note 4.I.(B)(b)

Secured by first charge by way of hypothecation of specific movable assets as described in the annexure to schedule VIII of the loan agreement executed on February 3, 2010 (for disbursement of Rs 25 crore), on March 2, 2010 (for disbursement of Rs 50 crore) and on May 16, 2011 (for disbursement of Rs 45 crore).

II. Unsecured Loans

1. Canara Bank -Note 4.II.(i)(1)

The loan of Rs 60 crore is @ 12.75% interest p.a. and was repayable by bullet payment on December 21, 2011.

The loan of Rs 75 crore is @ 12.75% interest p.a. and is repayble in 3 equal quarterly installments of Rs 25 crore each. The period of maturity w.r.t. the balance sheet date is 1.5 years .

The loan of Rs 50 crore is @ 12.75% interest p.a. and is repayable by bullet payment on September 8, 2013. The period of maturity w.r.t. the balance sheet date is 1.5 years .

The loan of Rs 150 crore is @ 12.75% interest p.a. and is repayable by bullet payment on December 20, 2012.The period of maturity w.r.t. the balance sheet date is 9 months .

2. Syndicate Bank -Note 4.II.(i)(2)

The loan of Rs 200 crore is at @10% interest p.a.is due for repayment on May 29, 2013 by bullet repayment. The period of maturity w.r.t. the balance sheet date is 1 year 2 months.

3. United Bank of India -Note 4.II.(i)(3)

The loan of Rs 200 crore is at @ 9.20% interest p.a. is due for repayment on September 28, 2013 by bullet repayment. The period of maturity w.r.t. the balance sheet date is 1.5 years .

4. State Bank of Mysore -Note 4.II.(i)(4)

The loan of Rs 100 crore @ 9.25% is due for repayment on August 22, 2012 by bullet repayment. The period of maturity w.r.t. the balance sheet date is 5 months.

5. Axis Bank -Note 4.II.(i)(5)

The loan Rs 150 crore @ 12% is due for repayment on November 22, 2012 by bullet repayment. The period of maturity w.r.t. the balance sheet date is 8 months.

6. EXIM Bank -Note 4.II.(i)(6)

The loan of Rs 47 crore is @ 12% interest p.a. and is repayable in 4 equal quarterly installments of Rs 11.75 each. The period of maturity w.r.t. the balance sheet date is 1.5 years.

The loan of Rs 28.50 crore is @ 12% interest p.a. and is repayable in 2 half yearly installments of Rs 14.25 crore. The period of maturity w.r.t. the balance sheet date is 6 months.

The loan of Rs 85 crore is @ 11.75% interest p.a. and is repayable in 2 equal installments of Rs 42.50 crore each. The period of maturity w.r.t. the balance sheet date is 11 months.

7. EXIM Bank -Note 4.II.(ii)

The loan of Rs 50.87 crore is @ 4.5625% floating interest p.a.(Libor 400 bps) and is repayable by bullet repayment in March 2014. The period of maturity w.r.t. the balance sheet date is 2 years.

1.20 The Board of Directors in its meeting held on March 9, 2012 had decided to approach the banks through the Corporate Debt Restructuring (CDR) process for restructuring of the Company's debt. The CDR Empowered Group (CDR EG) in its meeting held on March 29, 2012 admitted the Company's proposal under the CDR. The final debt restructuring proposal is under consideration.

Note 5 Deferred Tax Liabilities (Net)

Deferred Tax liability for the period ended March 31, 2012 has been provided on the estimated tax computation for the year.

Major components of deferred tax assets and liabilities arising on account of timing differences are:

1. Cash Credit Limits - Note 9(I)(A)(a)(1) Secured by way of:

a. First charge on all current assets of the Company and Third/Residual charge on all moveable properties (including moveable plant and machinery, machinery spares, tools and accessories (excluding current assets) of the Company in favour of 3i-Infotech Trusteeship Services Ltd. ("Security Trustee") ranking on pari pasu basis amongst participating banks up to the limit of Rs 5300 crore (Rupees Five Thousand Three Hundred Crore Only).

b. Corporate Guarantee of HCC Real Estate Ltd. to the extent of fund based limits of Rs 1000 crore (Rupees One Thousand Crore Only).

c. The existing mortgage and charge on the immovable properties i.e. Land & Building at village Tara, District Raged of the Borrower for collaterally securing the working capital facilities shall continue to remain as security for working capital facilities too up to the limit of Rs 4300 crore (Rupees Four Thousand Three Hundred Crore Only).

The cash credit is repayable on demand and carries interest within the range of 13.50% to 14.50% p.a.

2. Punjab National Bank- Note 9(I)(A)(a)(2)

Short term loan is secured by way of subservient charge on the current assets of the Company as on present and future.

3. IDBI Bank - Note 9(I)(A)(a)(3)

First Charge on Current Assets & third charge on Moveable Assets .

4. Union Bank of India - Note 9(I)(A)(a)(4)

The charge on the bank from Union Bank is yet to be created.

5. Standard Chartered Bank - Note 9(I)(A)(a)(5)

First charge on current assets and third charge on fixed assets and

CORPORATE GURANTEE FROM hrel For 10000 crore.

1.21 The Company has amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act 2006, as at March 31,2012.

1.22 Advances from contracted of Rs 1284.80 crore (previous year Rs 1538.65 crore) have been guaranteed by Company's bankers to the extent of Rs 824.90 crore (previous year Rs 1069.49 crore).

1.23 Loans and advance to related parties represent inter corporate deposit placed with subsidiaries.

1.24 Inter Corporate Deposit of Rs 603.32 crore given to HCC Infrastructure Ltd., whose net worth is negative as of March 31, 2012 is considered fully recoverable considering long term prospects of the underlying business and expected cash flow.

1.25 During the current year, the Hon'able High Court of Calcutta while upholding the substantial part of the Award of Rs 148.67 crore disallowed some portion including interest there on amounting to Rs 35.50 crore. The Company has contested the same in the Supreme Court. Hence no provision is considered necessary.

1.26 Residual charge over identified receivable of Rs 626.16 crore has been created in favour of Yes Bank Ltd. in respect of loan availed by HCC Infrastructure Ltd.

1.27 Disclosure as per Clause 32 of the Listing agreement and as per Schedule VI of the Companies Act, 1956. Loans and advances/ICD given to Subsidiaries.

1.28 Inter Corporate Deposits are repayable on demand and interest is charged at market rates except interest free loan to the tune of Rs Nil (Previous year Rs 25.50 crore) and Rs 309.40 crore (Previous year Nil) to Pune Paud Toll Road Company Limited and HCC Real Estate Ltd w.e.f. 2010.

1.29 Loans and Advances include an amount due from an Officer of the Company Rs 0.05 crore (previous year Rs 0.07 crore). Maximum amount outstanding for the period Rs 0.07 crore (previous year Rs 0.09 crore).

1.30 The Company (Accounting Standards) Second Amendment Rules 2011 has amended the provision of AS-11 relating to "The Effects of the Changes in Foreign Exchange Rates" vide notification dated December 29, 2011. In terms of these amendments, the Company has carried over long term monetary exchange loss of Rs 5.32 crore through "Foreign Currency Monetary Items Translation Difference Account", to be amortized over the balance period of such long term asset/ liability.

1.31 Sub-contract, transportation, hire etc. include insurance Rs 36.24 crore (previous year Rs 36.36 crore), rates and taxes Rs 168.59 crore (previous year Rs 165.31 crore ) and lease rent Rs 27.39 crore (previous year Rs 17.23 crore ).

1.32 Light vehicle expenses grouped under construction expenses include insurance Rs 1.91 crore (previous year Rs 1.74 crore) and taxes Rs 0.17 crore (previous year Rs 0.12 crore).

1.33 The Company has taken various construction equipments and vehicles under non cancelable operating leases. The future minimum lease payments in respect of these as at March 31, 2012 are as follows.

The lease agreement provides for an option to the Company to renew the lease period at the end of the non cancelable period. There are no exceptional/restrictive covenants in the lease agreements.

1.34 Remuneration paid to Chairman & Managing Director and the President & Whole-time Director is in excess of the limits specified in Schedule XIII of the Companies Act, 1956 by Rs 7.63 crore. The Company has made an application seeking approval from Central Government. Approval is awaited.

1.35 In accordance with Accounting Standard 11 (Revised) the net exchange Loss debited to Profit & Loss Account is Rs 9.53 crore (previous year Loss Rs 8.60 crore).


Mar 31, 2011

1. Basis of Accounting

The Company maintains its accounts on accrual basis. Management makes estimates and technical and other assumptions regarding the amounts of income and expenses in accordance with Indian GAAP in the preparation of the financial statements. Difference between the actual results and estimates are recognised in the period in which they are determined.

2. Fixed Assets

Fixed assets are stated at cost of acquisition including attributable interest & financial costs till the date of acquisition/ installation of the assets and improvement thereon less accumulated depreciation / amortisation and impairment if any. Intangible assets comprise of licence fees, other implementation cost for software (ERP) and other application softwares acquired for inhouse use.

3. Depreciation

Depreciation on fixed assets is provided:

i) In respect of buildings and sheds, furniture and office equipments on the written down value method (pro-rata on additions and deletions of the year) at rates prescribed in Schedule XIV of the Companies Act, 1956.

ii) In respect of plant & machinery, heavy vehicles, light vehicles, helicopter, aircraft and speed boat on the straight line method at rates prescribed in schedule XIV of the Companies Act, 1956 on a pro-rata basis.

iii) In respect of computers depreciation is provided on straight line basis over a period of three years on a pro- rata basis.

iv) The depreciation on assets used for construction has been treated as period cost.

v) Software and implementation costs including users licence fees of the Enterprise Resourse Planning (ERP) system and other application software costs are amortised over a period of 5 years.

vi) Fixed Assets includes cost incurred on the Lease hold Improvements at 247 park which is being amortised over a period of Nine years.

4. Investments

Investments are classified as long-term and current investments. Long-term investments are shown at cost or written down value (in case of other than temporary diminution) and current investments are shown at cost or market value whichever is lower.

5. Employee Benefits

i) Defined Contribution plan

Contribution to provident fund and superannuation fund is accounted on accrual basis.

ii) Defined Benefit plan

Gratuity is charged to revenue on the basis of actuarial valuation and in case of daily rated workmen on actual basis computed on tenure of service as at the end of the year.

iii) Other Benefits

Short term and long term compensated absenses are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under

defined benefit plans, is based on market yields on Government securities as at the Balance Sheet date, having maturity periods approximating to the terms of the related obligations.

6. Inventories

a) The stock of stores, spares and embedded goods and fuel is valued at cost (weighted average basis), or net realisable value whichever is lower.

b) Work-in-Progress is valued at the contract rates and site mobilisation expenditure of incomplete contracts is stated at cost.

c) Certain loose plant, tools & service equipments costing below Rs. 5 lacs are valued at proportionate written down value @ 3% p.m. over a period of 32 months.

d) Site mobilisation expenses are presented as a deduction from advances from contractees to the extent funded by such advances.

7. 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 resourses. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

8. Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised. Other borrowings costs are expensed out.

9. Foreign Exchange Translation of Foreign Projects and Accounting of Foreign Exchange Transactions

a) Current assets and current liabilities are translated at the exchange rate prevailing on the last day of the year.

b) Gains or losses arising out of remittance / translations at the year-end are credited / debited to the profit and loss account for the year except in cases where they relate to acquisition of Fixed assets, in which case they are adjusted to the carrying cost of such assets.

c) Foreign exchange transactions are converted into Indian rupees at the prevailing rate on the date of the transaction.

d) Exchange differences arising on contracts are recognised in the period in which they arise and the premium paid / received is accounted as expense / income over the period of the contract.

10. Financial Derivatives & Hedging transactions

Financial derivatives and hedging contracts are accounted on the date of their settlement and realised gain/loss in respect of settled contracts is recognised in the profit & loss account along with the underlying transactions.

11. (i) Accounting of construction contracts

The Company follows the percentage completion method, based on the stage of completion at the balance sheet date, taking into account the contractual price and revision thereto by estimating total revenue and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done. Revenue is recognized as follows:

a) In case of Item rate contracts on the basis of physical measurement of work actually completed at the balance sheet date.

b) In case of Lumpsum contracts, revenue is recognized on the completion of milestones as specified in the contract or as identified by the management. Foreseeable losses are accounted for as and when

they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration. Claims are accounted as income in the year of receipt of arbitration award or acceptance by client of evidence of acceptance received.

(ii) Accounting of Supply Contracts

Revenue from supply contract is recognized when the substantial risk and rewards of ownership is transferred to the buyer.

12. Accounting for Joint Venture Contracts

(a) Contracts executed in Joint Venture under work sharing arrangement (consortium) are accounted in accordance with the accounting policy followed by the Company as that of an independent contract to the extent work is executed.

(b) In respect of contracts executed in Integrated Joint Ventures under profit sharing arrangement (assessed as AOP under Income tax laws), the services rendered to the Joint Ventures are accounted as income on accrual basis. The profit / loss is accounted for, as and when it is determined by the Joint Venture and the net investment in the Joint Venture is reflected as investments, loans & advances or current liabilities.

13. Taxation

The tax expense comprises of current tax & deferred tax charged or credited to the profit and loss account for the year. Current tax is calculated in accordance with the tax laws applicable to the current financial year. The deferred tax charge or credit is recognised using the tax rates and tax laws that have been enacted by the balance sheet date. Where there are unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. At each balance sheet date, recognised and unrecognised deferred tax assets are reviewed.

14. Leases

Lease rentals in respect of assets acquired under operating lease are charged to Profit and Loss account.

15. Impairment of Assets

The Company makes an assessment of any indicator that may lead to impairment of assets on an annual basis. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value, which is higher of net selling price and value in use. Any impairment loss is charged to profit and loss account in the year in which it is identified as impaired.

16. Employees Stock Option Plan

In respect of the stock options granted pursuant to the Companys stock option scheme, market value of the Companys shares as on the grant date was equal to the par value for the options granted, hence no accounting entries as per ESOP guidelines are required to be made.


Mar 31, 2010

1. Basis of Accounting

The Company maintains its accounts on accrual basis. Management makes estimates and technical and other assumptions regarding the amounts of income and expenses in accordance with GAAP in the preparation of the financial statements. Difference between the actual results and estimates are recognised in the period in which they are determined.

2. Fixed Assets

Fixed assets are stated at cost of acquisition including attributable interest & financial costs till the date of acquisition/ installation of the assets and improvement thereon less accumulated depreciation / amortisation.

Intangible assets comprise of licence fees, other implementation cost for software (ERP) and other application softwares acquired for inhouse use.

3. Depreciation

Depreciation on fixed assets is provided:

i) In respect of buildings and sheds, furniture and office equipments on the written down value method (pro-rata on additions and deletions of the year) at rates prescribed in Schedule XIV of the Companies Act, 1956.

ii) In respect of plant & machinery, heavy vehicles, light vehicles, helicopter, aircraft and speed boat on the straight line method at rates prescribed in schedule XIV of the Companies Act, 1956 on a pro-rata basis.

iii) In respect of computers depreciation is provided on straight line basis over a period of three years on a pro- rata basis.

iv) The depreciation on assets used for construction has been treated as period cost.

v) Software and implementation costs including users licence fees of the Enterprise Resourse Planning (ERP) system and other application software costs are amortised over a period of 5 years.

4. Investments

Investments are classified as long-term and current investments. Long-term investments are shown at cost or written down value (in case of other than temporary diminution) and current investments are shown at cost or market value whichever is lower.

5. Employee Benefits

i) Defined Contribution plan

Contribution to provident fund and superannuation fund is accounted on accrual basis.

ii) Defined Benefit plan

Gratuity is charged to revenue on the basis of actuarial valuation and in case of daily rated workmen on actual basis computed on tenure of service as at the end of the year.

iii) Other Benefits

Short term and long term compensated absenses are provided for based on actuarial valuation.

The actuarial valuation is done as per projected unit credit method.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on market yields on Government securities as at the Balance Sheet date, having maturity periods approximating to the terms of the related obligations.

6. Inventories

a) The stock of stores, spares and embedded goods and fuel is valued at cost (weighted average basis), or net realisable value whichever is lower.

b) Work-in-Progress is valued at the contract rates and site mobilisation expenditure of incomplete contracts is stated at cost.

c) Certain loose plant, tools & service equipments costing below Rs. 5 lacs are valued at proportionate written down value @ 3% p.m. over a period of 32 months.

d) Site mobilisation expenses are presented as a deduction from advances from contractees to the extent funded by such advances.

7. 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 resourses. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

8. Borrowing Costs

Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised. Other borrowings costs are expensed out.

9. Foreign Exchange Translation of Foreign Projects and Accounting of Foreign Exchange Transactions

a) Current assets and current liabilities are translated at the exchange rate prevailing on the last day of the year.

b) Gains or losses arising out of remittance / translations at the year-end are credited debited to the profit and loss account for the year except in cases where they relate to acquisition of Fixed assets, in which case they are adjusted to the carrying cost of such assets.

c) Foreign exchange transactions are converted into Indian rupees at the prevailing rate on the date of the transaction.

d) Exchange differences arising on contracts are recognised in the period in which they arise and the premium paid / received is accounted as expense / income over the period of the contract.

10. Financial Derivatives 8e Hedg "s ""S-sactiois

Financial derivatives and hedging contracts are accounted on the date of their settlement and realised gain/ loss in respect of settled contracts is recognised in the profit & loss account along with the underlying transactions.

11. Accounting of Construction Contracts

The Company follows the percentage completion method, based on the stage of completion at the balance sheet date, taking into account the contractual price and revision thereto by estimating total revenue and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done.

Revenue is recognized as follows:

a) In case of Item rate contracts on the basis of physical measurement of work actually completed at the balance sheet date.

b) In case of lumpsum contracts, revenue is recognized on the completion of milestones as specified in the contract or as identified by the management.

Foreseeable losses are accounted for as and when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration.

Claims are accounted as income in the year of receipt of arbitration award or acceptance by client or evidence of acceptance received.

12. Accounting for Joint Venture Contracts

(a) Contracts executed in Joint Venture under work sharing arrangement (consortium) are accounted in accordance with the accounting policy followed by the Company as that of an independent contract to the extent work is executed.

(b) In respect of contracts executed in Integrated Joint Ventures under profit sharing arrangement (assessed as AOP under Income tax laws), the services rendered to the Joint Ventures are accounted as income on accrual basis. The profit / loss is accounted for, as and when it is determined by the Joint Venture and the net investment in the Joint Venture is reflected as investments, loans & advances or current liabilities.

13. Taxation

The tax expense comprises of current tax & deferred tax charged or credited to the profit and loss account for the year. Current tax is calculated in accordance with the tax laws applicable to the current financial year. The deferred tax charge or credit is recognised using the tax rates and tax laws that have been enacted by the balance sheet date. Where there are unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. At each balance sheet date, recognised and unrecognised deferred tax assets are reviewed.

14. Leases

Lease rentals in respect of assets aquired under operating lease are charged to Pofit and Loss account.

15. Impairment of Assets

The Company makes an assessment of any indicator that may lead to impairment of assets on an annual basis.

An asset is treated as an impaired when the carrying cost of the asset exceeds its recoverable value, which is higher of net selling price and value in use. Any impairment loss is charged to profit and loss acco unt in the year in which it is identified

16. Employees Stock Option Plan

In respect of the stock options granted pursuant to the Companys stock option scheme, market value of the Companys shares as on the grant date was equal to the par value for the options granted, hence no accounting entries as per ESOP guidelines are required to be made.

 
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