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Accounting Policies of PNC Infratech Ltd. Company

Mar 31, 2015

1.1. Basis of preparation of financial statements:

These financial statements has been prepared to comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rules, 2006 notified by the Central Government in exercise of the power conferred under sub- section (1) (a) of section 642 and the relevant provisions of the Companies Act, 1956, and as specified under section 133 of Companies Act 2013, read with rule 7 of Companies (Accounts) Rules, 2014. The Financial statements have been prepared on a going concern basis under the historical cost convention on accrual basis. The Company follows the accounting policies consistently unless otherwise stated.

During the year ended 31 March 2015, the Schedule III notified under the Companies Act, 2013 has become applicable to the Company for the preparation and presentation of its financial statements, Accordingly appropriate re-classifications/ adjustments have been made in the Financial Statements wherever required, by re-classification of the corresponding items of income, expenses, assets and liabilities, in order to bring them in line with the presentation and recognition as per the audited financial statements of the Company.

1.2. Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that effect the reported balances of assets and liabilities and disclosures of contingents liabilities at the date of financial statements and results of operations during the reporting period. Although these estimates are based upon management's basic knowledge of current events and actions, actual results could differ from these estimates. Differences between actual results and estimates are recognized in the year in which the results are shown / materialized.

1.3. Fixed assets and capital work in progress:

Tangible Assets

Tangible fixed assets are stated at cost less depreciation and impairment losses, if any. Cost includes cost of acquisitions or construction including incidental expenses thereto and other attributable cost of bringing the assets to its working condition for the intended use and is net of recoverable duty / tax credits.

Intangible Assets

Intangible assets are stated at cost of acquisition net of accumulated amortization and impairment losses if any.

Intangible Assets under development

Expenditure related to and incurred during development of Assets are included under "Intangible assets under development". The same will be transfer to the respective assets on its completion.

Capital Work in progress

Capital work in progress comprises of expenditure, direct or indirect incurred on assets which are yet to be brought into working condition for its intended use.

1.4. Depreciation & amortization:

Pursuant to notification of The Companies Act 2013, during the current year, the company has changed the useful life of assets as prescribed in said Act, which were earlier as per the rates prescribed in Schedule XIV of Companies Act, 1956. Depreciation of Fixed Assets is provided on straight line method (other than specified Plant & Machinery which are depreciated on written down value basis) based on useful life stated in schedule II to the Companies Act 2013, and is on pro-rata basis for addition and deletions. In case of Plant & Machinery as per technical estimate, (excluding Cranes & Earthmoving Equipments), the useful life is more than as stated in Schedule II.

Intangible assets are amortized on straight line method over the expected duration of benefits not exceeding 10 years. The period of amortization is decided in accordance with the Accounting Standard (AS -26) "Intangible Assets".

Assets of value up to Rs.5000 are depreciated in full in the year of purchase.

1.5. Cash & cash equivalents:

Cash & cash equivalents comprise of cash at bank and cash-in-hand. The Company consider all highly liquid investments which are subject to an insignificant risk of change in value with an original maturity of three months or less from date of purchase to be cash equivalent.

1.6. Revenue Recognition:

Construction contract: Contract revenue is recognized under percentage of completion method. The Stage of Completion is determined on the basis of certified completion of physical proportion of the contract work.

Revenue related claims are accounted in the year in which arbitration award is awarded / settled or accepted by customer or there is a tangible evidence of acceptance received.

Other sales are accounted on dispatch of material and exclude applicable sales tax/VAT and are net of discount.

Revenue from Joint Venture contract is accounted for net of joint venture share, under turnover, in these financial statements. Agency charges, if any, are accounted on receipt basis as other operating income.

1.7. Other Income:

Interest income is generally recognized on a time proportion basis by considering the outstanding amount and applicable rate.

In the absence of ascertainment with reasonable certainty the quantum of accruals in respect of claims recoverable, the same is accounted for on receipt basis. Income from investments is accounted for on accrual basis when the right to receive income is established.

Income from dividend is recognized when the right to received is established.

1.8. Inventories:

The stock of raw material, stores, spares and embedded goods, and fuel is valued at lower of cost or net realizable value. Cost is computed on first in first out basis.

Work-in- progress is valued at the item rate contracts in case of completion of activity by project department, in case where the Work in progress is not on item rate contract stage then item rate contract are reduced by estimated margin or estimated cost of completion and/or estimated cost necessary to make the items rates equivalent to Stage of Work-in- progress.

1.9. Investments:

Long term investments are stated at cost and diminution in carrying amount, other than temporary, is written down / provided for.

Current investments which are acquired to be disposed off / liquidated within one year of the date of acquisition are valued at lower of cost and fair market value.

1.10. Accounting For Leases:

Finance Lease is recognized as an asset and liability to the lessor at fair value at the inception of the lease.

Leases in which a significant portion of the risk and rewards of ownership are retained by the lesser are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit & Loss on a straight-line basis over the period of lease; or any other appropriate basis.

1.11. Employee Benefits:

Expenses and liabilities in respect of employee benefits are recorded in accordance with Accounting Standards (AS-15) "Employee Benefits"

Post employment benefit plans (Unfunded)

Provident Fund: The contribution to provident fund is in the nature of defined contribution plan. The Company makes contribution to statutory provident fund in accordance with the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The contribution paid or payable is recognized as an expense in the period in which services are rendered.

Gratuity: Gratuity is in the nature of defined benefit plan. The cost is determined using the projected unit credit method with actuarial valuation being carried at cash at each Balance Sheet date by an independent actuary. The retirement benefits obligation recognized in the Balance Sheet represent the present value of defined benefit obligation as adjusted for recognized past service cost. Actuarial gains and losses are recognized in full in the Statement of Profit & Loss for the period in which they occur.

Other long term employee benefits (unfunded)

The cost of long term employee benefits is determined using project unit credit method and is present value of related obligation, determined by actuarial valuation done on Balance Sheet date by an independent actuary. The unrecognized past service cost and actuarial gain & losses are recognised immediately in the Statement of Profit & Loss in which they occur.

Short term employee benefits:

The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the period in which the employee render the service.

1.12. Transactions in foreign currencies:

(i) Initial Recognition:

All transaction in respect of foreign currencies are recorded at exchange rate prevailing on the date of the transactions.

(ii) Conversion:

All monetary assets and liabilities in foreign currency are restated at the end of accounting period, using closing rate.

(ii) Exchange difference:

Exchange differences on restatement/settlements of monetary items are recognized in the Statement of Profit & Loss.

1.13. Borrowing costs:

Borrowing costs that are attributed to the acquisition or construction of qualifying assets are capitalized as a part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

1.14. Segment Reporting:

The Company's operations pre-dominantly consist of infrastructure development and construction, hence it operates in one business segment, Thus, the reporting requirement of Accounting Standard (AS-17) Segment Reporting are not applicable.

1.15. Earnings per share:

The Company reports basic and diluted earnings per share in accordance with Accounting Standard (AS-20).

Basic earning per share is computed by dividing the net profit for the year attributable to the equity share holder by the weighted average number of equity shares outstanding during the year.

Diluted earning per share is computed by dividing the net profit for the year, adjusted for the effects of dilutive potential equity share, attributable to the equity share holders by the weighted average number of the equity shares and dilutive potential equity share outstanding during the year except where the results are anti dilutive.

1.16. 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 determined as an amount of tax payable in respect of taxable income for the year in accordance with the Income Tax Act, 1961.

The deferred tax for timing difference between the book and tax profit for the year is accounted using the tax rate and laws that have been enacted or substantively enacted as on the Balance Sheet date in accordance with 'Accounting Standard (AS- 22) Accounting for taxes on income'.

1.17. Impairment of assets:

The carrying amount of assets, other than inventories is reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists the recoverable amount of assets is estimated. The recoverable amount is greater of asset's net selling price and value in use which is determined based on the estimated future cash flow discounted to their present value. An impairment loss is recognized whenever the carrying amount of assets or its cash generating unit exceeds its recoverable amount.

1.18. Miscellaneous Expenditures

Preliminary Expenses and pre private equity expenses are being written off in five year from commencement of operation and year of expenses respectively.

Pre IPO expenses to be adjusted from the security premium reserve of proposed issue.

1.19. Claims & Counter Claims

Claims and counter claims including under arbitrations are accounted for on their final settlement/ Award. Contract related claims are recognized when there is a reasonable certainty.

1.20. Provisions, Contingent liabilities and contingent assets:

Provisions are recognized for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that outflow of reasons embodying economic benefits will be required to settle the obligation.

When it is not probable and amount can not be estimated reliably than it is disclosed as contingent liabilities unless the probability of outflow of reasons embodying economic benefits is remote. Possible obligations whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events are also disclosed as contingent liabilities unless the probability of outflow of resource embodying economic benefit is remote.

Oct 21, 4:01 pm
Oct 21, 4:14 pm
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