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Accounting Policies of Prakash Constrowell Ltd. Company

Mar 31, 2015

A. Basis of preparation of Financial Statements

The financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) applicable in India under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards notified pursuant to the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 2013 .

Accounting policies have been consistently applied except where specifically stated in financial statement and notes to accounts of the non-conformity with the relevant Accounting Standard. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

B. System of Accounting

a) The company follows the mercantile system of accounting and recognises income and expenditure on accrual basis.

b) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of change in value in the purchasing power of money.

C. Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles except where specifically stated in financial statement and notes to accounts of the non-conformity with the relevant accounting standard, 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 reported amounts of revenue and expense for the year. The estimates and assumptions used in the accompanying financial statements are based upon management's evaluation of the relevant facts and circumstances as of the date of financial statements. Actual results could differ from those estimates. Any revision to accounting estimates will be recognised prospectively in the current and future periods.

D . Prior Period Items:

Expenses relating to earlier period are debited to profit and loss account, if any. As per information and explanation and records kept by the company, the amount of such expenses and incomes are not fully quantifiable.

E . Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the company are segregated based on the available information.

F. Fixed Assets

a) Fixed assets are stated at cost of acquisition or construction less depreciation. Cost includes the purchase price and all other costs incurred for bringing the assets to its working conditions for intended use.

b) Intangible assets are recorded at the consideration paid for acquisition.

c) All categories of assets costing less than Rs. 5,000/- each and items of soft furnishing are fully depreciated in the year of purchase.

G. Revenue Recognition

Revenue is recognized when it is realized or realizable or earned. Revenue is considered as realized or realizable or earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collect ability is reasonably assured.

a) The revenue from construction contracting activity is recognized by following percentage completion method of accounting as prescribed in Accounting Standard 7 issued by The Institute of Chartered Accountants of India. The stage of completion of a project is determined by the proportion of the contract cost incurred for work performed up to the Balance Sheet date bears to the estimated total contract cost. In the case where the contract revenue or the stage of completion can not be determined reliably, the cost incurred on the contract is carried forward as Work In Progress. Provision for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on current estimates.

b) While recognizing profits on contracts / projects substantially completed, due provision for incomplete work / pending bill etc. and probable cost of defect liability is made. Provision for defect liability is made at the amount equal to the amount of retention money (Security deposit retained) plus the bank guarantee offered for defect liability.

c) In case of Real Estate projects which have commenced as well as the first revenue h as been recognised before 1st April 2012, the company has followed the completion method. While in case of other Real Estate projects company has followed percentage of completion method.

d) Proft/loss from write-off of excess / short provision for defect liability is recognized in the year in which there is unconditional release of retained amount / bank guarantee by the contractee.

e) Scrap is accounted for only on realisation.

f) Incomes from interest are recognised on time proportion basis taking into account the amount outstanding and the rate applicable.

H. Depreciation and Amortization

a) With effect from April 1, 2014, depreciation has been computed and provided on the basis of useful life of fixed assets as specified in Schedule II to the Companies Act, 2013. The depreciation in respect of fixed assets specifically used on a particular work is charged to the contract account of that particular work. The depreciation on other assets is charged to the Profit and Loss Account.

b) Expenses on computer software are recognised as Intangible assets as per the criteria specified in accounting standard 26 "Intangible Assets".

c) Additions to fixed assets individually costing Rs. 5,000 or less are charged to revenue in the year of acquisition.

d) The company has decided to change the method of depreciation for following classes of assets from WDV to SLM:

1. Tower Hoists

2. Generators

3. Mixers

4. Other machinery

5. Shops

I. Investments

Long term investments are stated at cost, while short term investments are stated at cost or net realisable value whichever is lower.

J. Employee Benefits

a) Post Employment Benefits:

i ) Defined Contribution Plan: The Company contributes on a defined basis to Employee's Provident Fund and Employees State Insurance Schemes which are administered by the respective government authorities and has no further obligation beyond making it's contribution which is expensed off in the year to which it pertains.

ii) Defined Benefit Plan: The Company has a defined benefit plan for gratuity covering all of its employees in India. The present value of the obligation under such defined benefit plans is determined based on the independent actuarial valuation.

b) Short Term Employment Benefits:

All the employee benefits payable within twelve months of rendering services are classified as short term benefits. Such benefit includes salaries, wages, bonus etc. and the same are recognised in the period in which the employee renders the relevant services.

K. Borrowing Cost

a) Borrowing costs directly attributable to acquisition, construction or production of qualifying assets till the month in which the asset is ready to use, are capitalized.

b) Other borrowing costs are recognised as expenses in the period in which these are incurred.

L. Segment Reporting

a) Identification of segment: The Company identified the business segments based upon engagement of providing an individual product or service or a group of related products or services.

b) Allocation of common cost: Common costs are allocated to each segment according to the turnover of each segment to the total sales of the company.

c) Unallocated items: corporate assets and liabilities, income and expenses which relate to the company as a whole and are not allocable to segment, have been included under unallocated items.

M. Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the statement of Profit and Loss on a straight-line basis.

N. Earnings Per Share

Earnings per share is calculated by dividing the net profit or loss after tax and prior period adjustments attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

O. Taxes on Income

a) Tax expense comprises both current and deferred tax. Provision for current tax is made on the basis of taxable profit computed for the current accounting period in accordance with Income Tax Act, 1961.

b) Deferred tax resulting from timing difference between book profit and tax profit is accounted for on the concept of prudence, at prevailing or substantially enacted rate of tax to the extent timing differences are expected to crystallise in case of deferred tax liabilities with reasonable certainty and in case of deferred tax assets with reasonable certainty that there would be adequate future taxable income against which deferred tax assets can be realised.

P. Provisions and Contingent Liabilities

The company has recognized necessary provisions when there are present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources and a reliable estimate can be made of the amount of the obligation. Such provisions reflect best estimates based on available information.

However, 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. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.


Mar 31, 2014

A. Basis of preparation of financial statements

The financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) applicable in India under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards notified pursuant to the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956.

Accounting policies have been consistently applied except where specifically stated in financial statement and notes to accounts of the non-conformity with the relevant Accounting Standard. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

B. System of Accounting

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

b) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of change in value in the purchasing power of money.

C. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles except where specifically stated in financial statement and notes to accounts of the non-conformity with the relevant Accounting Standard, 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 reported amounts of revenue and expense for the year. The estimates and assumptions used in the accompanying financial statements are based upon management''s evaluation of the relevant facts and circumstances as of the date of financial statements. Actual results could differ from those estimates. Any revision to accounting estimates will be recognised prospectively in the current and future periods.

D. Prior Period Items:

Expenses relating to earlier period are debited to profit and loss expenses, if any. As per information and explanation and records kept by the company, the amount of such expenses and incomes are not fully quantifiable.

E. Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

F. Fixed Assets

a) Fixed assets are stated at cost of acquisition or construction less depreciation. Cost includes the purchase price and all other costs incurred for bringing the assets to its working conditions for intended use.

b) Intangible assets are recorded at the consideration paid for acquisition.

c) All categories of assets costing less than Rs. 5,000/- each and items of soft furnishing are fully depreciated in the year of purchase.

G. Revenue Recognition

Revenue is recognized when it is realized or realizable or earned. Revenue is considered as realized or realizable or earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collect ability is reasonably assured.

a) The revenue from construction contracting activity is recognized by following percentage completion method of accounting as prescribed in Accounting Standard 7 issued by the Institute of Chartered Accountants of India. The stage of completion of a project is determined by the proportion of the contract cost incurred for work performed up to the Balance Sheet date bears to the estimated total contract cost. In the case where the contract revenue or the stage of completion can not be determined reliably, the cost incurred on the contract is carried forward as Work In Progress. Provision for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on current estimates.

b) While recognizing profits on contracts / projects substantially completed, due provision for incomplete work / pending bill etc. and probable cost of defect liability is made. Provision for defect liability is made at the amount equal to the amount of retention money (Security deposit retained) plus the bank guarantee offered for defect liability.

c) In case of Real Estate projects which have commenced as well as the first revenue has been recognised before lbl April 2012, the company has followed the completion method. While in case of other Real Estate projects company has followed Percentage of completion method.

d) Profit/loss from write-off of excess / short provision for defect liability is recognized in the year in which there is unconditional release of retained amount / bank guarantee by the contractee.

e) Scrap is accounted for only on realisation.

f) Incomes from interest are recognised on time proportion basis taking into account the amount outstanding and the rate applicable.

H. Depreciation and Amortization

a) Depreciation has been provided in the accounts from the date of its installations/use and on written down value method at the rates prescribed in schedule XIV to the Companies Act, 1956. The depreciation in respect of fixed assets specifically used on a particular work is charged to the contract account of that particular work. The depreciation on other assets is charged to the Profit and Loss Account.

b) Expenses on computer software are recognised as Intangible assets as per the criteria specified in Accounting Standard 26 "Intangible Assets".

c) Additions to fixed assets individually costing Rs. 5,000 or less are charged to revenue in the year of acquisition.

I. Effects of Changes in Foreign Exchange Rates

Exchange differences arising on foreign currency transactions are included in the profit and

loss account.

J. Investments

Long term investments are stated at cost, while short term Investments are stated at cost or

net realisable value whichever is lower.

K. Employee Benefits

a) Post Employment Benefits:

i) Defined Contribution Plan: The Company contributes on a defined basis to Employee''s Provident Fund and Employees State Insurance Schemes which are administered by the respective government authorities and has no further obligation beyond making it''s contribution which is expensed off in the year to which it pertains.

ii) Defined Benefit Plan: The Company has a defined benefit plan for gratuity covering all of its employees in India. The present Value of the obligation under such defined benefit plans is determined based on the independent actuarial valuation.

b) Short Term Employment Benefits:

All the employee benefits payable within twelve months of rendering services are classified as short term benefits. Such benefit includes salaries, wages, bonus etc. and the same are recognised in the period in which the employee renders the relevant services.

L. Borrowing Cost

a) Borrowing costs directly attributable to acquisition, construction or production of qualifying assets till the month in which the asset is ready to use, are capitalized.

b) Other borrowing costs are recognised as expenses in the period in which these are incurred.

M. Segment Reporting

a) Identification of segment: The Company identified the business segments based upon engagement of providing an individual product or service or a group of related products or services.

b) Allocation of common cost: Common costs are allocated to each segment according to the turnover of each segment to the total sales of the company.

c) Unallocated items: corporate assets and liabilities, income and expenses which relate to the company as a whole and are not allocable to segment, have been included under unallocated items.

N. Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis.

O. Earnings Per Share

Earnings per share is calculated by dividing the net profit or loss after tax and prior period adjustments attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

P. Taxes on Income

a) Tax expense comprises both current and deferred tax. Provision for current tax is made on the basis of taxable profit computed for the current accounting period in accordance with Income Tax Act, 1961.

b) Deferred tax resulting from timing difference between book profit and tax profit is accounted for on the concept of prudence, at prevailing or substantially enacted rate of tax to the extent timing differences are expected to crystallise in case of deferred tax liabilities with reasonable certainty and in case of deferred tax assets with reasonable certainty that there would be adequate future taxable income against which deferred tax assets can be realised.

Q. Provisions and Contingent Liabilities

The company has recognized necessary provisions when there are present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources and a reliable estimate can be made of the amount of the obligation. Such provisions reflect best estimates based on available information.

However, 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. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

(a) The company has only one class of shares referred to as equity shares having a par value of Rs.l each. Each holder of equity shares is entitled to one vote per share

(b) The reconciliation of the numbers of shares outstanding and amount of share capital as at year end is set out below:


Mar 31, 2013

A. Basis of preparation of financial statements

The financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) applicable in India under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards notified pursuant to the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956.

Accounting policies have been consistently applied except where specifically stated in financial statement and notes to accounts of the non-conformity with the relevant Accounting Standard. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

B. System ofAccounting

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

b) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of change in value in the purchasing power of money.

C. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles except where specifically stated in financial statement and notes to accounts of the non-conformity with the relevant Accounting Standard, 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 reported amounts of revenue and expense for the year. The estimates and assumptions used in the accompanying financial statements are based upon management''s evaluation of the relevant facts and circumstances as of the date of financial statements. Actual results could differ from those estimates. Any revision to accounting estimates will be recognised prospectively in the current and future periods

D. Prior Period Items:

Expenses relating to earlier period are debited to profit and loss expenses, if any. As per information and explanation and records kept by the company, the amount of such expenses and incomes are not fully quantifiable.

E. Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

F. Fixed Assets

a) Fixed assets are stated at cost of acquisition or construction less depreciation. Cost includes the purchase price and all other costs incurred for bringing the assets to its working conditions for intended use.

b) Intangible assets are recorded at the consideration paid for acquisition.

c) All categories of assets costing less than Rs. 5,000/- each and items of soft furnishing are fully depreciated in the year of purchase.

G. Revenue Recognition

Revenue is recognized when it is realized or realizable or earned. Revenue is considered as realized or realizable or earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collect ability is reasonably assured.

a) The revenue from construction contracting activity is recognized by following percentage completion method of accounting as prescribed in Accounting Standard 7 issued by The Institute of Chartered Accountants of India. The stage of completion of a project is determined by the proportion of the contract cost incurred for work performed up to the Balance Sheet date bears to the estimated total contract cost. In the case where the contract revenue or the stage of completion can not be determined reliably, the cost incurred on the contract is carried forward as Work In Progress. Provision for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on current estimates.

b) While recognizing profits on contracts / projects substantially completed, due provision for incomplete work / pending bill etc. and probable cost of defect liability is made. Provision for defect liability is made at the amount equal to the amount of retention money (Security deposit retained) plus the bank guarantee offered for defect liability.

c) In case of Real Estate projects which have commenced as well as the first revenue has been recognised before 1st April 2012, the company has followed the completion method. While in case of other Real Estate projects company has followed Percentage of completion method.

d) Profit/loss from write-off of excess / short provision for defect liability is recognized in the year in which there is unconditional release of retained amount / bank guarantee by the contractee.

e) Scrap is accounted for only on realisation.

f) Incomes from interest are recognised on time proportion basis taking into account the amount outstanding and the rate applicable.

H. Depreciation and Amortization

a) Depreciation has been provided in the accounts from the date of its installations/use and on written down value method at the rates prescribed in schedule XIV to the Companies Act, 1956. The depreciation in respect of fixed assets specifically used on a particular work is charged to the contract account of that particular work. The depreciation on other assets is charged to the Profit and Loss Account.

b) Expenses on computer software are recognised as Intangible assets as per the criteria specified in Accounting Standard 26 "Intangible Assets".

c) Additions to fixed assets individually costing Rs. 5,000 or less are charged to revenue in the year of acquisition.

I. Investments

Long term investments are stated at cost, while short term Investments are stated at cost or net realisable value whichever is lower.

J. Employee Benefits

a) Post Employment Benefits:

i) Defined Contribution Plan: The Company contributes on a defined basis to Employee''s Provident Fund and Employees State Insurance Schemes which are administered by the respective government authorities and has no further obligation beyond making is contribution which is expensed off in the year to which it pertains.

ii) Defined Benefit Plan: The Company has a defined benefit plan for gratuity covering all of its employees in India. The present Value of the obligation under such defined benefit plans is determined based on the independent actuarial valuation.

b) Short Term Employment Benefits:

All the employee benefits payable within twelve months of rendering services are classified as short term benefits. Such benefit includes salaries, wages, bonus etc. and the same are recognised in the period in which the employee renders the relevant services.

K. Borrowing Cost

a) Borrowing costs directly attributable to acquisition, construction or production of qualifying assets till the month in which the asset is ready to use, are capitalized.

b) Other borrowing costs are recognised as expenses in the period in which these are incurred.

L. Segment Reporting

a) Identification of segment: The Company identified the business segments based upon engagement of providing an individual product or service or a group of related products or services.

b) Allocation of common cost: Common costs are allocated to each segment according to the turnover of each segment to the total sales of the company.

c) Unallocated items: corporate assets and liabilities, income and expenses which relate to the company as a whole and are not allocable to segment, have been included under unallocated items.

M. Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis.

N. Earnings Per Share

Earnings per share is calculated by dividing the net profit or loss after tax and prior period adjustments attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

O. Taxes on Income

a) Tax expense comprises both current and deferred tax. Provision for current tax is made on the basis of taxable profit computed for the current accounting period in accordance with Income Tax Act, 1961.

b) Deferred tax resulting from timing difference between book profit and tax profit is accounted for on the concept of prudence, at prevailing or substantially enacted rate of tax to the extent timing differences are expected to crystallise in case of deferred tax liabilities with reasonable certainty and in case of deferred tax assets with reasonable certainty that there would be adequate future taxable income against which deferred tax assets can be realised.

P. Provisions and Contingent Liabilities

The company has recognized necessary provisions when there are present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources and a reliable estimate can be made of the amount of the obligation. Such provisions reflect best estimates based on available information.

However, 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. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

 
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