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Accounting Policies of Hindustan Dorr-Oliver Ltd. Company

Mar 31, 2015

A) Method of Accounting

The financial statements are prepared under historical cost convention in accordance with the generally accepted accounting principles in India ( "Indian GAAP ") and comply in all material respects with the Accounting Standards specified under Section 133 of the Companies Act, 2013 ( "the Act 2013 ")/ Companies Act, 1956 ('the Act, 1956), read with Rule 7 of the Companies (Accounts) Rules, 2014 and other pronouncements of the Institute of Chartered Accountants of India ( "ICAI "). The accounting policies applied by the Company are consistent with those used in the previous year, unless otherwise stated.

All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the schedule III to the Act, based on the nature of work and the time between the acquisition of assets for processing and their realization in cash and cash equivalents.

b) Use of Accounting Estimates

The preparation of the financial statements in conformity with GAAP requires the management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amounts of income and expenses during the year of account. Examples of such estimates include contract costs expected to be incurred to complete construction contracts, provision for doubtful debts, income taxes and future obligations under employee retirement benefit plans.

Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

c) Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprise of purchase price, freight, non-refundable duties, taxes and any other cost attributable to bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready for its intended use. Assets retired from active use and held for disposal are stated at their estimated net realizable values or net book values, whichever is lower.

Capital work in Progress comprises advances paid to acquire fixed assets and the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.

d) Impairment

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment of assets. If any indication of such impairment exists, the recoverable amount of such assets is estimated and impairment is recognized if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

e) Investments

Current investments are carried at lower of cost and fair value. Long-term investments are stated at cost. Provision for diminution in value is made to recognize a decline other than temporary in the value of such investments.

f) Depreciation/Amortization

Depreciation is provided on the basis of the straight-line method as per useful life prescribed in Schedule II of the Companies Act, 2013 on the original cost of the Fixed Assets.

The premium, being the cost of leasehold land, is amortized over the lease period.

Technical Know-how is amortized over a period of five years in equal installments.

g) Borrowing Costs:

Borrowing costs that are attributable to the acquisition and construction of a qualifying asset are capitalized as a part of the cost of such assets till such time the asset is ready for its intended use. A qualifying asset is one that requires substantial period of time to get ready for its intended use. Other borrowing costs are recognized as an expense in the year in which they are incurred.

h) Inventories:

Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other anticipated losses, if any. Cost of manufactured goods and Work-in-Progress include related overheads incurred in bringing the inventories to their present location and condition and excise duty paid/payable.

i) Revenue Recognition:

Contracts Revenue

Contract Revenue is recognized by reference to the stage of completion of the contract activity at the reporting date of the financial statements on the basis of percentage of completion method.

The stage of completion of contracts is measured by reference to the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract.

An expected loss on the construction contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.

Price escalation and other claims and/or, variation in the contract work are included in contract revenue only when negotiations have reached an advanced stage such that it is probable that the customer will accept the claim; and the amount that is probable will be accepted by the customer can be measured reliably.

Incentive payments, as per customer-specified performance standards, are included in contract revenue only when the contract is sufficiently advanced and that it is probable that the specified performance standards will be met and the amount of the incentive payment can be measured reliably.

Others

In the case of other contracts, sales and profits are accounted for on the basis of actual work done on the contracts / dispatch of items.

Revenue from Sale of Goods

Revenue from sale of goods is recognised when substantial risks and rewards of ownership are transferred to the buyer under term of the contract.

Foreign Currency Transactions

a. The reporting currency of the Company is Indian Rupee.

b. Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing rate.

c. Exchan ge differences that arise on settlement of monetary items or on reporting of monetary items at each balance sheet date at the closing date are recognized as income or expense in the period in which they arise.

j) Employee Benefits

i) Gratuity

The company provides for obligation towards Gratuity, a defined benefit plan, covering eligible employees on the basis of an actuarial valuation using the projected unit credit method as at the year end. In case of funded defined plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the net obligation. Further, for certain employees, contributions are made to the fund administered by the management.

ii) Superannuation

Contributions made under a scheme of Life Insurance Corporation of India are charged to the profit and loss account.

iii) Leave Encashment

Liability for leave encashment is provided on the basis of actuarial valuation using the projected unit credit method as on the Balance Sheet date. Actuarial Gain/Losses, if any, are immediately recognized in the Profit and Loss account.

iv) Provident Fund

The contribution towards Provident Fund is made to the Statutory Authorities/ fund administered by the management and is charged to the profit and loss account.

k) Provisions and Contingencies

A provision is recognized when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Contingent liabilities are disclosed by way of a note to the accounts.

l) Income Taxes

Tax Expenses for the year comprises both current tax and deferred tax. Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and quantified using the tax rates and law enacted or substantively enacted by the reporting date. Where there is an unabsorbed depreciation or carry forward loss, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

m) Earnings Per Share

Basic earnings per share is calculated by dividing the net earnings after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For calculating diluted earnings per share, the number of shares comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of shares, if any which would have been used in the conversion of all dilutive potential equity shares. The number of shares and potentially dilutive equity shares are adjusted for the bonus shares and the sub-division of shares, if any.

n) Contingent Liabilities

Contingent liabilities are determined on the basis of available information and are disclosed by way of a note to the accounts.


Mar 31, 2014

A) Method of Accounting

The financial statements are based on historical cost convention on an accrual basis (except otherwise stated), in accordance with Generally Accepted Accounting Principles (GAAP) and in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies act, 1956 ("the Act") read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the revised schedule VI to the Act, based on the nature of work and the time between the acquisition of assets for processing and their realization in cash and cash equivalents.

b) Use of Accounting Estimates

The preparation of the financial statements in conformity with GAAP requires the management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amounts of income and expenses during the year of account. Examples of such estimates include contract costs expected to be incurred to complete construction contracts, provision for doubtful debts, income taxes and future obligations under employee retirement benefit plans.

Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

c) Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprise of purchase price, freight, non-refundable duties, taxes and any other cost attributable to bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready for its intended use. Assets retired from active use and held for disposal are stated at their estimated net realizable values or net book values, whichever is lower.

Capital work in progress comprises advances paid to acquire fixed assets and the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.

d) Impairment

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment of assets. If any indication of such impairment exists, the recoverable amount of such assets is estimated and impairment is recognized if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

e) Investments

Current investments are carried at lower of cost and fair value. Long-term investments are stated at cost. Provision for diminution in value is made to recognize a decline other than temporary in the value of such investments.

f) Depreciation/Amortization

Depreciation is provided on the basis of the straight-line method as per rates prescribed in Schedule XIV of the Companies Act, 1956 on the original cost of the fixed assets except the following which are depreciated based on useful life determined by the management:

The premium, being the cost of leasehold land, is amortized over the lease period.

Assets costing less than Rupees five thousand individually are fully depreciated in the year of purchase. Technical know-how is amortized over a period of five years in equal installments.

g) Borrowing Costs:

Borrowing costs that are attributable to the acquisition and construction of a qualifying asset are capitalized as a part of the cost of such assets till such time the asset is ready for its intended use. A qualifying asset is one that requires substantial period of time to get ready for its intended use. Other borrowing costs are recognized as an expense in the year in which they are incurred.

h) Inventories:

Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other anticipated losses, if any. Cost of manufactured goods and work-in-progress include related overheads incurred in bringing the inventories to their present location and condition and excise duty paid/payable.

i) Revenue Recognition:

Contracts Revenue

Contract revenue is recognized by reference to the stage of completion of the contract activity at the reporting date of the financial statements on the basis of percentage of completion method.

The stage of completion of contracts is measured by reference to the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract.

An expected loss on the construction contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.

Price escalation and other claims and/or, variation in the contract work are included in contract revenue only when negotiations have reached an advanced stage such that it is probable that the customer will accept the claim; and the amount that is probable will be accepted by the customer can be measured reliably.

Incentive payments, as per customer-specified performance standards, are included in contract revenue only when the contract is sufficiently advanced and that it is probable that the specified performance standards will be met and the amount of the incentive payment can be measured reliably.

Others

In the case of other contracts, sales and profits are accounted for on the basis of actual work done on the contracts / dispatch of items.

Foreign Currency Transactions

a. The reporting currency of the Company is Indian Rupee.

b. Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing rate.

c. Exchange differences that arise on settlement of monetary items or on reporting of monetary items at each balance sheet date at the closing date are recognized as income or expense in the period in which they arise.

j) Employee Benefits

i) Gratuity

The Company provides for obligation towards Gratuity, a defined benefit plan, covering eligible employees on the basis of an actuarial valuation using the projected unit credit method as at the year end. In case of funded defined plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the net obligation. Further, for certain employees, contributions are made to the fund administered by the management.

ii) Superannuation

Contributions made under a scheme of Life Insurance Corporation of India are charged to the profit and loss account.

iii) Leave Encashment

Liability for leave encashment is provided on the basis of actuarial valuation using the projected unit credit method as on the Balance Sheet date. Actuarial gain/losses, if any, are immediately recognized in the profit and loss account.

iv) Provident Fund

The contribution towards provident fund is made to the statutory authorities/ fund administered by the management and is charged to the profit and loss account.

k) Provisions and Contingencies

A provision is recognized when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Contingent liabilities are disclosed by way of a note to the accounts.

l) Income Taxes

Tax expenses for the year comprises both current tax and deferred tax. Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and quantified using the tax rates and law enacted or substantively enacted by the reporting date. Where there is an unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

m) Earnings Per Share

Basic earnings per share is calculated by dividing the net earnings after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For calculating diluted earnings per share, the number of shares comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of shares, if any which would have been used in the conversion of all dilutive potential equity shares. The number of shares and potentially dilutive equity shares are adjusted for the bonus shares and the sub-division of shares, if any.

n) Contingent Liabilities

Contingent liabilities are determined on the basis of available information and are disclosed by way of a note to the accounts.


Mar 31, 2013

A) Method of Accounting

The financial statements are based on historical cost convention on an accrual basis (except otherwise stated), in accordance with Generally Accepted Accounting Principles (GAAP) and in compliance with the accounting standards notified in the Companies (Accounting Standards) Rules, 2006 and relevant Provisions of the Companies Act, 1956. The Company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the revised schedule VI to the Act, based on the nature of work and the time between the acquisition of assets for processing and their realization in cash and cash equivalents.

b) Use of Accounting Estimates

The preparation of the financial statements in conformity with GAAP requires the management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amounts of income and expenses during the year of account. Examples of such estimates include contract costs expected to be incurred to complete construction contracts, provision for doubtful debts, income taxes and future obligations under employee retirement benefit plans.

Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

c) Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprise of purchase price, freight, non-refundable duties, taxes and any other cost attributable to bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready for its intended use. Assets retired from active use and held for disposal are stated at their estimated net realizable values or net book values, whichever is lower.

Capital work in Progress comprises advances paid to acquire fixed assets and the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.

d) Impairment

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment of assets. If any indication of such impairment exists, the recoverable amount of such assets is estimated and impairment is recognized if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

e) Investments

Current investments are carried at lower of cost and fair value. Long-term investments are stated at cost. Provision for diminution in value is made to recognize a decline other than temporary in the value of such investments.

f) Depreciation/Amortization

Depreciation is provided on the basis of the straight-line method as per rates prescribed in Schedule XIV of the Companies Act, 1956 on the original cost of the Fixed Assets except the following which are depreciated based on useful life determined by the management:

The premium, being the cost of leasehold land, is amortized over the lease period.

Assets costing less than Rupees five thousand individually are fully depreciated in the year of purchase.

Technical Know-how is amortized over a period of five years in equal installments.

g) Borrowing Costs:

Borrowing costs that are attributable to the acquisition and construction of a qualifying asset are capitalized as a part of the cost of such assets till such time the asset is ready for its intended use. A qualifying asset is one that requires substantial period of time to get ready for its intended use. Other borrowing costs are recognized as an expense in the year in which they are incurred.

h) Inventories:

Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other anticipated losses, if any. Cost of manufactured goods and Work-in-Progress include related overheads incurred in bringing the inventories to their present location and condition and excise duty paid/payable.

i) Revenue Recognition:

Contracts Revenue

Contract Revenue is recognized by reference to the stage of completion of the contract activity at the reporting date of the financial statements on the basis of percentage of completion method.

The stage of completion of contracts is measured by reference to the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract.

An expected loss on the construction contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.

Price escalation and other claims and/or, variation in the contract work are included in contract revenue only when negotiations have reached an advanced stage such that it is probable that the customer will accept the claim; and the amount that is probable will be accepted by the customer can be measured reliably.

Incentive payments, as per customer-specified performance standards, are included in contract revenue only when the contract is sufficiently advanced and that it is probable that the specified performance standards will be met and the amount of the incentive payment can be measured reliably.

Others

In the case of other contracts, sales and profits are accounted for on the basis of actual work done on the contracts / dispatch of items.

Foreign Currency Transactions

a. The reporting currency of the Company is Indian Rupee.

b. Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing rate.

c. Exchange differences that arise on settlement of monetary items or on reporting of monetary items at each balance sheet date at the closing date are recognized as income or expense in the period in which they arise.

j) Employee Benefits

i) Gratuity

The company provides for obligation towards Gratuity, a defined benefit plan, covering eligible employees on the basis of an actuarial valuation using the projected unit credit method as at the year end. In case of funded defined plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the net obligation. Further, for certain employees, contributions are made to the fund administered by the management.

ii) Superannuation

Contributions made under a scheme of Life Insurance Corporation of India are charged to the profit and loss account.

iii) Leave Encashment

Liability for leave encashment is provided on the basis of actuarial valuation using the projected unit credit method as on the Balance Sheet date. Actuarial Gain/Losses, if any, are immediately recognized in the Profit and Loss account.

iv) Provident Fund

The contribution towards Provident Fund is made to the Statutory Authorities/ fund administered by the management and is charged to the profit and loss account.

k) Provisions and Contingencies

A provision is recognized when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Contingent liabilities are disclosed by way of a note to the accounts.

l) Income Taxes

Tax Expenses for the year comprises both current tax and deferred tax. Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and quantified using the tax rates and law enacted or substantively enacted by the reporting date. Where there is an unabsorbed depreciation or carry forward loss, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

m) Earnings Per Share

Basic earnings per share is calculated by dividing the net earnings after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For calculating diluted earnings per share, the number of shares comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of shares, if any which would have been used in the conversion of all dilutive potential equity shares. The number of shares and potentially dilutive equity shares are adjusted for the bonus shares and the sub-division of shares, if any.

n) Contingent Liabilities

Contingent liabilities are determined on the basis of available information and are disclosed by way of a note to the accounts.


Mar 31, 2011

A) Method of Accounting

The financial statements are based on historical cost convention (except for revaluation of certain Fixed Assets), in accordance with Generally Accepted Accounting Principles (GAAP) and in compliance with the accounting standards notified under Section 211 (3C) of the Companies Act, 1956 and the other Provisions of the Companies Act, 1956.

The Company follows mercantile system of accounting and recognises income and expenditure on accrual basis.

b) Use of Accounting Estimates

The preparation of the financial statements in conformity with GAAP requires the management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amounts of income and expenses during the year of account. Examples of such estimates include contract costs expected to be incurred to complete construction contracts, provision for doubtful debts, income taxes and future obligations under employee retirement benefit plans. Actual results could differ from those estimates.

c) Fixed Assets

Fixed Assets are stated at cost of acquisition/revaluation less accumulated depreciation, amortization and impairment losses, if any. Cost is inclusive of duties and taxes (net of Cenvat and other Credits), incidental expenses, erection/commissioning expenses and interest up to the date the qualifying asset is put to use.

Capital work in Progress comprises advances paid to acquire fixed assets and the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.

d) Investments

Current investments are carried at lower of cost and fair value. Long-term investments are stated at cost. Provision for diminution in value is made to recognise a decline other than temporary in the value of such investments.

e) Depreciation/Amortization

Depreciation is provided on the basis of the straight-line method as per rates prescribed in Schedule XIV of the Companies Act, 1956 on the original cost of the Fixed Assets except the following which are depreciated based on useful life determined by the management:

Particulars Rate

(i) Buildings (including company-owned flats) 1.64% /1.67%/20%

(ii) Factory Buildings(Revaluation amount) 3.34%/8.33%

(iii) Plant & Machinery

Diesel generating sets, welding machines etc. 25%

Air Conditioners 20%

Office Equipments 20%

Motor Vehicles 20%

Laboratory Equipments 10%/20%

Other items 10%/20%

(iv) Furniture and Fittings 10%

In the case of certain assets where depreciation is calculated on revalued cost the portion related to the revalued amount is adjusted against Revaluation Reserve.

The premium, being the cost of leasehold land, is amortised over the lease period.

Assets costing less than Rupees Five thousand individually are fully depreciated in the year of purchase.

Technical Know-how is amortised over a period of five years in equal installments.

f) Borrowing Costs:

Borrowing costs that are attributable to the acquisition and construction of a qualifying asset are capitalised as a part of the cost of such assets till such time the asset is ready for its intended use. A qualifying asset is one that requires substantial period of time to get ready for its intended use. Other borrowing costs are recognized as an expense in the year in which they are incurred.

g) Inventories:

Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other anticipated losses, if any. Cost of manufactured goods and Work-in-Progress include related overheads incurred in bringing the inventories to their present location and condition and excise duty paid/payable.

h) Revenue Recognition:

i) Long-term Contracts

Contract Revenue is recognized by reference to the stage of completion of the contract activity at the reporting date of the financial statements on the basis of percentage of completion method.

The stage of completion of contracts are measured by reference to the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract.

An expected loss on the construction contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.

Price escalation and other claims and/or, variation in the contract works are included in contract revenue only when negotiations have reached an advanced stage such that it is probable that the customer will accept the claim; and the amount that is probable will be accepted by the customer can be measured reliably.

Incentive payments, as per customer-specified performance standards, are included in contract revenue only when the contract is sufficiently advanced and that it is probable that the specified performance standards will be met and the amount of the incentive payment can be measured reliably.

ii) Others

In the case of other contracts, sales and profits are accounted for on the basis of actual work done on the contracts / dispatch of items.

(iii) Manufactured Goods

Revenue from sale of manufactured goods is recognized when substantial risks and rewards are transferred to the buyer under terms of contract.

i) Provisions and Contingencies

A provision is recognised when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Contingent liabilities are disclosed by way of a note to the accounts.

j) Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transactions. Monetary items denominated in foreign currency and outstanding at the balance sheet date are translated at the exchange rate prevailing on the balance sheet date. Exchange differences on foreign exchange transactions are recognised in the profit and loss account.

k) Employee Benefits

i) Gratuity

The company provides for obligation towards Gratuity, a defined benefit plan, covering eligible employees on the basis of an actuarial valuation using the projected unit credit method as at the year end. In case of funded defined plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the net obligation. Further, for certain employees, contributions are made to the fund administered by the management.

ii) Superannuation

Contributions made under a scheme of Life Insurance Corporation of India are charged to the profit and loss account.

iii) Leave Encashment

Liability for leave encashment is provided on the basis of actuarial valuation using the projected unit credit method as on Balance Sheet date. Actuarial Gain/Losses, if any, are immediately recognized in the Profit and Loss account.

iv) Provident Fund

The contribution towards Provident Fund is made to the Statutory Authorities/ fund administered by the management and is charged to the profit and loss account.

l) Impairment

The carrying values of assets of the cash-generating units at each balance sheet date are reviewed for impairment. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.

m) Income-Tax

Tax Expenses for the year comprises both current tax and deferred tax. Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and quantified using the tax rates and law enacted or substantively enacted by the reporting date. Where there is an unabsorbed depreciation or carry forward loss, 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. Deferred tax assets are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

n) Earnings Per Share

Basic earnings per share is calculated by dividing the net earnings after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For calculating diluted earnings per share, the number of shares comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of shares, if any which would have been used in the conversion of all dilutive potential equity shares. The number of shares and potentially dilutive equity shares are adjusted for the bonus shares and the sub-division of shares, if any.

o) Contingent Liabilities

Contingent liabilities are determined on the basis of available information and are disclosed by way of a note to the accounts.


Mar 31, 2010

A) Method of Accounting

The financial statements are based on historical cost convention (except for revaluation of certain Fixed Assets), in accordance with Generally Accepted Accounting Principles (GAAP) and in compliance with the accounting standards notified under Section 211 (3C) of the Companies Act, 1956 and the other provisions of the Companies Act, 1956.

The Company follows mercantile system of accounting and recognises income and expenditure on accrual basis.

b) Use of Accounting Estimates

The preparation of the financial statements in conformity with GAAP requires the management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amounts of income and expenses during the year of account. Examples of such estimates include contract costs expected to be incurred to complete construction contracts, provision for doubtful debts, income taxes and future obligations under employee retirement benefit plans. Actual results could differ from those estimates.

c) Fixed Assets

Fixed Assets are stated at cost of acquisition/revaluation less accumulated depreciation, amortization and impairment losses, if any. Cost is inclusive of duties and taxes (net of Cenvat and other Credits), incidental expenses, erection/ commissioning expenses and interest up to the date the qualifying asset is put to use.

Capital work in Progress comprises advances paid to acquire fixed assets and the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.

d) Investments

Current investments are carried at lower of cost and fair value. Long-term investments are stated at cost. Provision for diminution in value is made to recognise a decline other than temporary in the value of such investments.

e) Depreciation/Amortization

Depreciation is provided on the basis of the straight-line method as per rates prescribed in Schedule XIV of the Companies Act, 1956 on the original cost of the Fixed Assets except the following which are depreciated based on useful life determined by the management:

In the case of certain assets where depreciation is calculated on revalued cost and the portion related to the revalued amount is adjusted against Revaluation Reserve.

The premium, being the cost of leasehold land, is amortised over the lease period.

Assets costing less than Rupees five thousand individually are fully depreciated in the year of purchase.

Technical Know-how is amortised over a period of five years in equal installments.

f) Borrowing Costs:

Borrowing costs that are attributable to the acquisition and construction of a qualifying asset are capitalised as a part of the cost of such assets till such time the asset is ready for its intended use. A qualifying asset is one that requires substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the year in which they are incurred.

g) Inventories:

Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other anticipated losses, if any. Cost of manufactured goods and Work-in-Progress include related overheads incurred in bringing the inventories to their present location and condition and excise duty paid/payable.

h) Revenue Recognition:

i) Long-term Contracts

Contract Revenue is recognized by reference to the stage of completion of the contract activity at the reporting date of the financial statements on the basis of percentage of completion method.

The stage of completion of contracts is measured by reference to the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract.

An expected loss on the construction contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.

Price escalation and other claims and/or, variation in the contract work are included in contract revenue only when negotiations have reached an advanced stage such that it is probable that the customer will accept the claim; and the amount that is probable will be accepted by the customer can be measured reliably.

Incentive payments, as per customer-specified performance standards, are included in contract revenue only when the contract is sufficiently advanced and that it is probable that the specified performance standards will be met and the amount of the incentive payment can be measured reliably.

ii) Others

In the case of other contracts, sales and profits are accounted for on the basis of actual work done on the contracts / dispatch of items.

(iii) Manufactured Goods

Revenue from sale of manufactured goods is recognized when substantial risks and rewards are transferred to the buyer under terms of contract.

i) Provisions and Contingencies

A provision is recognised when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Contingent liabilities are disclosed by way of a note to the accounts.

j) Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transactions. Monetary items denominated in foreign currency and outstanding at the balance sheet date are translated at the exchange rate prevailing on the balance sheet date. Exchange differences on foreign exchange transactions are recognised in the profit and loss account.

k) Employee Benefits

i) Gratuity

The company provides for obligation towards Gratuity, a defined benefit plan, covering eligible employees on the basis of an actuarial valuation using the projected unit credit method as at the year end. In case of funded defined plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the net obligation. Further, for certain employees, contributions are made to the fund administered by the management.

ii) Superannuation

Contributions made under a scheme of Life Insurance Corporation of India are charged to the profit and loss account.

iii) Leave Encashment

Liability for leave encashment is provided on the basis of actuarial valuation using the projected unit credit method as on the Balance Sheet date. Actuarial Gain/Losses, if any, are immediately recognized in the Profit and Loss account.

iv) Provident Fund

The contribution towards Provident Fund is made to the Statutory Authorities/ fund administered by the management and is charged to the profit and loss account.

l) Impairment

The carrying values of assets of the cash-generating units at each balance sheet date are reviewed for impairment. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.

m) Income-Tax

Tax Expenses for the year comprises both current tax and deferred tax. Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and quantified using the tax rates and law enacted or substantively enacted by the reporting date. Where there is an unabsorbed depreciation or carry forward loss, 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. Deferred tax assets are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

n) Earnings Per Share

Basic earnings per share is calculated by dividing the net earnings after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For calculating diluted earnings per share, the number of shares comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of shares, if any which would have been used in the conversion of all dilutive potential equity shares. The number of shares and potentially dilutive equity shares are adjusted for the bonus shares and the sub-division of shares, if any.

o) Contingent Liabilities

Contingent liabilities are determined on the basis of available information and are disclosed by way of a note to the accounts.

 
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