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Accounting Policies of Pratibha Industries Ltd. Company

Mar 31, 2015

Company overview

Pratibha Industries limited ('the Company') is one of a fastest growing Infrastructure Company in India. The Company undertakes infrastructure projects, which includes designing, engineering and execution/ construction of complex & integrated water transmission & distribution projects, water treatment plants, elevated and underground reservoirs, mass housing projects, commercial complexes, pre-cast design & construction, road construction and urban infrastructure.

A. Basis of preparation of Financial Statements

The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 2013.

B. Use of estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Any difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. Operating cycle for current and non-current classification

Operating cycle for the business activities of the Company covers the duration of the specific project/ contract / project line/service including the defect liability period, wherever applicable and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective lines of business. For non- project related assets and liabilities, operating cycle is 12 months.

D. Fixed Assets

Fixed Assets are stated at cost net of recoverable taxes, less accumulated depreciation. All costs including finance costs, exchange differences, arising in respect of foreign currency loans or other liabilities incurred and expenses incidental to acquisition and installation attributable to fixed assets till the date of readiness of their use are capitalized. Fixed assets purchased in foreign currency are recorded at the actual rupee cost incurred.

Subsequent expenditures related to an item of Tangible Asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization / depletion. All costs, including finance costs, exchange differences and expenses incidental to acquisition and installation attributable to the intangible assets are capitalized.

e. Depreciation & Amortization

Depreciation is provided based on useful life of the assets and based on method as prescribed in Schedule II to the Companies Act, 2013 except in respect of Construction Equipment category. For Construction Equipment category, estimated useful life of assets is taken different from the useful life indicated in Schedule II to the Companies Act, 2013, it is based on technical advice and after taking into account the nature of the assets, their estimated usage, their operating conditions, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support.

Computer software is amortized over a period of five years.

F. Foreign Currency transactions: Indian operation

a) Foreign exchange transactions are recorded at the prevailing rate on the date of the transaction.

b) Monetary items are restated at the exchange rate prevailing on the date of balance sheet.

c) Non-monetary items are stated at historical cost.

d) Gains or losses arising out of remittance / conversion at the year-end are credited / debited to the profit and loss account for the year.

e) Gains & losses in respect of foreign exchange contracts are recognized as income or expenses over the life of the contract.

Foreign operation

a) Income and expenses other than depreciation costs are translated at the rate prevailing on the date of transaction.

b) Monetary assets and liabilities are restated at the rate prevailing on the date of balance sheet.

c) Fixed Assets are translated at exchange rates on the date of transaction and depreciation on fixed asset is translated at the exchange rate used for translating underlying fixed asset.

d) Gains or losses arising out of remittance / conversion at the year-end are credited / debited to the profit and loss account for the year.

G. Investments

a) Current investments are carried at the lower of cost and quoted/fair value, computed category wise.

b) Long term investments are stated at cost. Provision for diminution in the value of long- term investments is made only if such a decline is other than temporary in the opinion of the management.

h. Inventories

Cost of inventories comprise of all cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition. The weighted average method is being followed for arriving at cost.

a) Raw materials are valued at lower of cost or net realizable value.

b) Project and construction-related work-in-progress is valued at cost till such time the outcome of the job cannot be ascertained reliably and at realizable value thereafter. Site mobilization expenditure of incomplete contracts is stated at cost.

c) Stores, Spares and Fuel are carried at cost.

d) Purchase goods and raw materials in transit are carried at cost.

e) Finished goods are valued at cost or net realizable value whichever is lower.

I. Revenue Recognition

a) Construction Contract Sales:

The Company follows the percentage completion method, on the basis of physical measurement of work actually completed at the balance sheet date, taking into account the contractual price and revision thereto by estimating total revenue and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done. Profit is recognized and taken as the revenue of the year only when the work on the contract has progressed to a reasonable extent. Foreseeable losses are accounted for as and when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration.

b) Claim for Extra Work and Escalation:

The Company's claim for extra work and escalation in rates relating to execution of contracts are accounted as income in the year of receipt of arbitration award or acceptance by client or evidence of acceptance received.

c) Revenues from construction/project related activity and contracts executed in Joint ventures under work-sharing arrangement [being jointly controlled operations, in terms of Accounting Standard (AS) 27 "Financial Reporting of Interest in Joint Ventures"] is accounted as and when the same is determined by the joint ventures. Revenue from services rendered to such joint ventures is accounted on accrual basis.

d) Sales recognition:

1. Sales are accounted net of excise duty, Sales Tax, Discount, Returns and Rejections. Sales are recognized on dispatch of material from the warehouse of the Company.

2. Scrap Sales are accounted net of excise duty, Sales Tax, Discount, Returns and Rejections. Scrap Sales are recognized on dispatch of material from the warehouse of the Company.

e) Input VAT credit not utilized against current year's Output VAT liability is available for either refund or set-off in future. Therefore, all the purchase & expense transactions involving VAT are accounted net of tax to the extent tax is recoverable and the balance in Value added tax account is included under the head recoverable from Tax department under Short term Loans and Advances.

f) Input Cenvat Credit not utilized against current year's Cenvat liability is available set-off in future. Therefore, all the purchase & expense transactions involving Cenvat are accounted net of tax to the extent tax is recoverable and the balance in Cenvat account is included under the head recoverable from Tax department under Short term Loans and Advances.

g) Profit or loss on sale of assets is recognized on transfer of title from the Company and is determined as the difference between the sale price and carrying value of the assets.

h) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Interest income is accrued at applicable interest rate.

i) Other incomes are accounted on accrual basis except Dividend, which recognized when right to receive is established.

J. Service tax & Sales tax on Works Contracts

Where the Company has contractual right to claim equal amounts regarding the said liability from the clients, the same is not charged as expenditure.

Where the ultimate liability would be on the Company, the same is accounted for provisionally as per the information and the final adjustment for the same would be done as and when the demand from concerned authorities is made on the Company.

K. Employee Benefits

Contribution to defend contribution scheme such as Provident Fund, Employees Pension Scheme, is charged to the Profit & Loss Account as incurred.

Defend benefit plans like gratuity are determined based on actuarial valuation carried out by an independent actuary at the balance sheet date using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit, and measures each unit separately to build up final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defend benefit plans, is based on the market yields on government securities at the balance sheet date. Actuarial gains and losses are recognized immediately in the profit and loss account. The Company has taken comprehensive policy from the Life Insurance Corporation of India for its Gratuity liability.

Expenses on training, recruitment are charged to revenue in the year of incurrence.

Expenditure on leave travel concession to employees is recognized in the year of a ailment due to uncertainties of accrual.

Leave encashment is provided on actual basis.

l. provision for Current & Deferred taxes

Tax expenses comprise of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of the Income-tax Act, 1961. Deferred income taxes reflects the impact of current year time differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off.

Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

M. Borrowing Costs

Borrowing costs directly attributable and identifiable to the acquisition and construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. All other borrowings costs are expensed out.

n. Provisions, Contingent liabilities & Contingent Assets

The Company creates a provision when there is present obligation because of a past event that will probably result in the outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

o. Leases

Lease arrangements, where the risk and rewards incidental to the ownership of asset substantially vests with the lessor are recognized as operating lease. Lease payments under operating leases are recognized as an expense in the Profit and Loss Account. Assets leased out under operating leases are capitalized. Rental income is recognized on accrual basis over the lease term.

p. Segment Accounting

a) Segment accounting policies

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

i. Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter-segment revenue.

ii. Expenses that are directly identifiable with/ allocable to segments are considered for determining the Segment Result. Expenses, which relate to the Company as a whole and not allocable to segments are included under "Unallocable Corporate Expenditure".

iii. Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income".

iv. Segment result includes margins on inter- segment transactions, which are reduced in arriving at the profit before tax of the Company.

v. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.

(b) Inter-segment transfer pricing

Segment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.

Q. Earnings per share

A basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.


Mar 31, 2014

A. Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

B. Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Any difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. Operating cycle for current and non-current classification

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

D. Fixed Assets

Fixed Assets are stated at cost net of recoverable taxes, less accumulated depreciation. All costs including finance costs, exchange differences, arising in respect of foreign currency loans or other liabilities incurred and expenses incidental to acquisition and installation attributable to fixed assets till the date of readiness of their use are capitalized. Fixed assets purchased in foreign currency are recorded at the actual rupee cost incurred.

Capital work-in-progress is stated at the amount expended upto the date of Balance Sheet including Preoperative expenditure.

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization / depletion. All costs, including finance costs, exchange differences and expenses incidental to acquisition and installation attributable to the intangible assets are capitalized.

E. Depreciation & Amortization

Depreciation on fixed assets have been provided on Straight Line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

Computer software is amortized over a period of five years.

F. Foreign Currency Transactions Indian Operation

a) Foreign exchange transactions are recorded at the prevailing rate on the date of the transaction.

b) Monetary items are restated at the exchange rate prevailing on the date of balance sheet.

c) Non monetary items are stated at historical cost.

d) Gains or losses arising out of remittance / conversion at the year-end are credited / debited to the profit and loss account for the year.

e) Gains & losses in respect of foreign exchange contracts are recognized as income or expenses over the life of the contract.

Foreign Operation

a) Income and expenses other than depreciation costs are translated at the rate prevailing on the date of transaction.

b) Monetary assets and liabilities are restated at the rate prevailing on the date of balance sheet.

c) Fixed Assets are translated at exchange rates on the date of transaction and depreciation on fixed asset is translated at the exchange rate used for translating underlying fixed asset.

d) Gains or losses arising out of remittance/ conversion at the year-end are credited/debited to the Profit and loss account for the year.

As on 31st March 2014, there is no Mark-to-Market loss on account of derivative forward exchange contract.

G. Investments

a) Current investments are carried at the lower of cost and quoted/fair value, computed category wise.

b) Long term investments are stated at cost. Provision for diminution in the value of long- term investments is made only if such a decline is other than temporary in the opinion of the management.

H. Inventories

Cost of inventories comprise of all cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition. The FIFO method is being followed for arriving at cost.

a) Raw materials are valued at lower of cost or net realizable value.

b) Work-in-progress (other than project and construction-related) at lower of cost including related overheads or net realizable value. Project and construction-related work-in-progress at cost till such time the outcome of the job cannot be ascertained reliably and at realizable value thereafter. Site mobilization expenditure of incomplete contracts is stated at cost.

c) Stores, spares and Fuel are carried at cost.

d) Purchase goods and raw materials in transit are carried at cost.

e) Finished goods are valued at cost or net realizable value whichever is lower.

I. Revenue Recognition

a) Construction Contract Sales

The Company follows the percentage completion method, on the basis of physical measurement of work actually completed at the balance sheet date, taking into account the contractual price and revision thereto by estimating total revenue and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done. Profit is recognized and taken as the revenue of the year only when the work on the contract has progressed to a reasonable extent. Foreseeable losses are accounted for as and when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration.

b) Claim for Extra Work and Escalation:

The Company''s claim for extra work and escalation in rates relating to execution of contracts are accounted as income in the year of receipt of arbitration award or acceptance by client or evidence of acceptance received.

c) Revenues from construction/project related activity and contracts executed in Joint ventures under work-sharing arrangement [being jointly controlled operations, in terms of Accounting Standard (AS) 27 "Financial Reporting of Interest in Joint Ventures"] is accounted as and when the same is determined by the joint ventures. Revenue from services rendered to such joint ventures is accounted on accrual basis.

d) Sales recognition:

1. Sales are accounted net of excise duty, Sales Tax, Discount, Returns and Rejections. Sales are recognized on dispatch of material from the factory of the Company.

2. Export Sales are recognized on dispatch of material from the premises of the Company irrespective of the date of shipping document.

3. Scrap Sales are accounted net of excise duty, Sales Tax, Discount, Returns and Rejections. Scrap Sales are recognized on dispatch of material from the factory of the Company.

e) Input VAT credit not utilized against current year''s Output VAT liability is available for either refund or set-off in future. Therefore, all the purchase & expense transactions involving VAT are accounted net of tax to the extent tax is recoverable and the balance in Value added tax account is included under the head recoverable from Tax department under Short term Loans and Advances.

f) Input Cenvat Credit not utilized against current year''s Cenvat liability is available set-off in future. Therefore, all the purchase & expense transactions involving Cenvat are accounted net of tax to the extent tax is recoverable and the balance in Cevant account is included under the head recoverable from Tax department under Short term Loans and Advances.

g) Profit on sale of investment is recognized on transfer of title from the Company and is determined as the difference between the sale price and carrying value of the Investment.

h) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Interest income is accrued at applicable interest rate.

i) Export Benefits / incentives and other incomes are accounted on accrual basis except Dividend, which recognized when right to receive is established.

J. Service Tax & Sales Tax on Works Contracts

Where the Company has contractual right to claim equal amounts regarding the said liability from the clients, the same is not charged as expenditure.

Where the ultimate liability would be on the Company, the same is accounted for provisionally as per the information and the final adjustment for the same would be done as and when the demand from concerned authorities is made on the Company.

K. Employee Benefits

Contribution to defined contribution scheme such as Provident Fund, Employees Pension Scheme, is charged to the Profit & Loss Account as incurred.

Defined benefit plans like gratuity are determined based on actuarial valuation carried out by an independent actuary at the balance sheet date using the projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit and measures each unit separately to build up final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yields on government securities at the balance sheet date. Actuarial gains and losses are recognized immediately in the profit and loss account. The Company has taken comprehensive policy from the Life Insurance Corporation of India for its Gratuity liability.

Expenses on training, recruitment are charged to revenue in the year of incurrence.

Expenditure on leave travel concession to employees is recognized in the year of availment due to uncertainties of accrual.

Leave encashment is provided on actual basis. Expenditure on leave travel concession to employees is recognized in the year of availment.

L. Provision for Current & Deferred Taxes

Tax expenses comprise of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with provisions of the Income tax Act, 1961. Deferred income taxes reflects the impact of current year time differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off.

Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

M. Borrowing Costs

Borrowing costs directly attributable and identifiable to the acquisition and construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. All other borrowings costs are expensed out.

N. Provisions, Contingent Liabilities & Contingent Assets

The Company creates a provision when there is present obligation because of a past event that will probably result in the outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

O. Leases

Lease arrangements, where the risk and rewards incidental to the ownership of asset substantially vests with the lessor are recognized as operating lease. Lease payments under operating leases are recognized as an expense in the Profit and Loss Account. Assets leased out under operating leases are capitalized. Rental income is recognized on accrual basis over the lease term.

P. Segment Accounting

a) Segment accounting policies

Segment accounting policies are in line with the accounting Policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

i. Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter-segment revenue.

ii. Expenses that are directly identifiable with/ allocable to segments are considered for determining the Segment Result. Expenses, which relate to the Company as a whole and not allocable to segments are included under

"Unallocable Corporate Expenditure".

iii. Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income".

iv. Segment result includes margins on inter- segment transactions, which are reduced in arriving at the Profit before tax of the Company.

v. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities

that relate to the Company as a whole and not allocable to any segment.

b) Inter-segment transfer pricing

Segment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.

2.2 Terms/Rights attached to equity shares

Equity shares are having a par value of Rs.2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

The Board of Directors in their meeting held on 27th May 2014, proposed final dividend of Rs.0.20 per share. The proposal is subject to approval of shareholders at next Annual General Meeting to be held. The total appropriation for the year ended March 31, 2014 amounted to Rs.236.46 Lakh including corporate dividend tax of Rs.34.35 Lakh.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per the records of the Company, including its register of shareholders/members and other declaration received from shareholders regarding beneficial interest, the above shareholding represents both legal and benificial ownership of shares.

2.4 Company has neither issued any bonus shares nor any shares (apart from conversion of Compulsorily Convertible Participatory Preference Shares during previous year) pursuant to contract without payment being received in cash during preceding five years. It has also not bought back any shares during these years.

4.1. Foreign Currency Loans are repayable in 4 to 6 year from the date of loan at interest rates ranging from 1.25% p.a. to 5.15% p.a. Above loans are secured by first charges on specific assets financed by the lender. Further, loans are guaranteed by the personal guarantees of promoter directors of the Company.

4.2. Rupee Loans from banks are repayable in 3 to 5 years at interest rates ranging from 10.20% p.a. to 13.75% p.a. Above loans are secured by first charges on specific assets financed by the lender. Further, loans are guaranted by the personal guarantees of promoter directors of the Company.

4.3. Rupee Loans from Financial Institutions are repayable in 3 years to 4 year from the date of loan at interest rates ranging from 12.25% p.a. to 14.00% p.a. Above loans are secured by first charges on specific assets financed by the lender. Further, loans are guaranted by the personal guarantees of promoter directors of the Company.

4.4. Fixed Deposit from Public are repayable in 2 years to 3 years from the date of deposit at an interest rates ranging from 11.50% p.a. to 12.50% p.a. These deposits are unsecured in nature.

6.1. Rupee loan taken from various banks at interest rates ranging from 10.20% p.a. to 13.75% p.a. Above loans are secured against: i) first charge by hypothecation of current assets (other than those specifically charged to other banks), namely stock of raw materials, work-in-progress and receivables; ii) First charge on the gross block (other

than those specifically charged to other banks); iii) Project specific current assets; and iv) Personal guarantees of Promoter-Directors of the Company

6.2. Fixed Deposit from Public are repayable within an year from the date of deposit at an interest rate of 11.50% p.a. & 11.75% p.a. These deposits are unsecured in nature.

7.1 Bank balances in Current accounts and Term Deposit (including with maturity more than12 months # Note 13) as on March 31, 2014 and March 31, 2013 include restricted balances of Rs.13,178.74 Lakh and X7,910.03 Lakh, respectively. The restrictions are primarily on account of Bank balances held as margin money deposits against guarantees, as collateral security, unclaimed dividends and as investment in liquid assets for Public deposits maturity.

7.2 The deposits maintained by the Company with banks and financial institutions comprise of time deposits, which can be withdrawn by the Company at any point without prior notice.


Mar 31, 2013

A. Basis of Preparation of Financial Statements:

The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

B. Use of Estimates:

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Any difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. Operating cycle for current and non-current classification:

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

D. Fixed Assets:

Fixed Assets are stated at cost net of recoverable taxes, less accumulated depreciation. All costs including finance costs, exchange differences, arising in respect of foreign currency loans or other liabilities incurred and expenses incidental to acquisition and installation attributable to fixed assets till the date of readiness of their use are capitalized. Fixed assets purchased in foreign currency are recorded at the actual rupee cost incurred.

Capital Work-In-Progress is stated at the amount expended upto the date of Balance Sheet including pre-operative expenditure.

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization / depletion. All costs, including finance costs, exchange differences and expenses incidental to acquisition and installation attributable to the intangible assets are capitalized.

E. Depreciation & Amortization:

Depreciation on fixed assets have been provided on Straight Line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

Computer software is amortized over a period of five years.

F. Foreign Currency Transactions:

Indian Operation:

a) Foreign exchange transactions are recorded at the prevailing rate on the date of the transaction.

b) Monetary items are restated at the exchange rate prevailing on the date of balance sheet.

c) Non-monetary items are stated at historical cost.

d) Gains or losses arising out of remittance / conversion at the year-end are credited / debited to the profit and loss account for the year.

e) Gains & losses in respect of foreign exchange contracts are recognized as income or expenses over the life of the contract.

Foreign Operation:

a) Income and expenses other than depreciation costs are translated at the rate prevailing on the date of transaction.

b) Monetary assets and liabilities are restated at the rate prevailing on the date of balance sheet.

c) Fixed Assets are translated at exchange rates on the date of transaction and depreciation on fixed asset is translated at the exchange rate used for translating underlying fixed asset.

d) Gains or losses arising out of remittance / conversion at the year-end are credited / debited to the profit and loss account for the year.

As on 31st March 2013, there is no Mark-to-Market loss on account of derivative forward exchange contract.

G. Investments:

a) Current investments are carried at the lower of cost and quoted/fair value, computed category wise.

b) Long term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

H. Inventories:

Cost of inventories comprise of all cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition. The FIFO method is being followed for arriving at cost.

a) Raw materials are valued at lower of cost or net realizable value.

b) Work-in-progress (other than project and construction-related) at lower of cost including related overheads or net realizable value. Project and construction-related work-in-progress at cost till such time the outcome of the job cannot be ascertained reliably and at realizable value thereafter. Site mobilization expenditure of incomplete contracts is stated at cost.

c) Stores, Spares and Fuel are carried at cost.

d) Purchase goods and raw materials in transit are carried at cost.

e) Finished goods are valued at cost or net realizable value whichever is lower.

I. Revenue Recognition:

a) Construction Contract Sales:

The Company follows the percentage completion method, on the basis of physical measurement of work actually completed at the balance sheet date, taking into account the contractual price and revision thereto by estimating total revenue and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done. Profit is recognized and taken as the revenue of the year only when the work on the contract has progressed to a reasonable extent. Foreseeable losses are accounted for as and when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration.

b) Claim for Extra Work and Escalation:

The Company''s claim for extra work and escalation in rates relating to execution of contracts are accounted as income in the year of receipt of arbitration award or acceptance by client or evidence of acceptance received.

c) Revenues from construction/project related activity and contracts executed in Joint ventures under work-sharing arrangement [being jointly controlled operations, in terms of Accounting Standard (AS) 27 "Financial Reporting of Interest in Joint Ventures”] is accounted as and when the same is determined by the joint ventures. Revenue from services rendered to such joint ventures is accounted on accrual basis.

d) Sales recognition:

1. Sales are accounted net of excise duty, Sales Tax, Discount, Returns and Rejections. Sales are recognized on dispatch of material from the factory of the Company.

2. Export Sales are recognized on dispatch of material from the premises of the Company irrespective of the date of shipping document.

3. Scrap Sales are accounted net of excise duty, Sales Tax, Discount, Returns and Rejections. Scrap Sales are recognized on dispatch of material from the factory of the Company.

e) Input VAT credit not utilized against current year''s Output VAT liability is available for either refund or set-off in future. Therefore, all the purchase & expense transactions involving VAT are accounted net of tax to the extent tax is recoverable and the balance in Value added tax account is included under the head recoverable from Tax department under Short term Loans and Advances.

f) Input Cenvat Credit not utilized against current year''s Cenvat liability is available set-off in future. Therefore, all the purchase & expense transactions involving Cenvat are accounted net of tax to the extent tax is recoverable and the balance in Cevant account is included under the head recoverable from Tax department under Short term Loans and Advances.

g) Profit on sale of investment is recognized on transfer of title from the Company and is determined as the difference between the sale price and carrying value of the Investment.

h) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Interest income is accrued at applicable interest rate.

i) Export Benefits / incentives and other incomes are accounted on accrual basis except Dividend, which recognized when right to receive is established.

J. Service Tax & Sales Tax on Works Contracts:

Where the Company has contractual right to claim equal amounts regarding the said liability from the clients, the same is not charged as expenditure.

Where the ultimate liability would be on the Company, the same is accounted for provisionally as per the information and the final adjustment for the same would be done as and when the demand from concerned authorities is made on the Company.

K. Employee Benefits:

Contribution to defined contribution scheme such as Provident Fund, Employees Pension Scheme is charged to the Profit & Loss Account as incurred.

Defined benefit plans like gratuity are determined based on actuarial valuation carried out by an independent actuary at the balance sheet date using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit and measures each unit separately to build up final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yields on government securities at the balance sheet date. Actuarial gains and losses are recognized immediately in the profit and loss account. The Company has taken comprehensive policy from the Life Insurance Corporation of India for its Gratuity liability.

Expenses on training and recruitment are charged to revenue in the year of incurrence.

Expenditure on leave travel concession to employees is recognized in the year of availment due to uncertainties of accrual.

Leave encashment is provided on actual basis. Expenditure on leave travel concession to employees is recognized in the year of availment.

L. Provision for Current & Deferred Taxes:

Tax expenses comprise of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of the Income-tax Act, 1961. Deferred income taxes reflects the impact of current year time differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off.

Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

M. Borrowing Costs:

Borrowing costs directly attributable and identifiable to the acquisition and construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. All other borrowings costs are expensed out.

N. Provisions, Contingent Liabilities & Contingent Assets:

The Company creates a provision when there is present obligation because of a past event that will probably result in the outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

O. Leases:

Lease arrangements, where the risk and rewards incidental to the ownership of asset substantially vests with the lessor are recognized as operating lease. Lease payments under operating leases are recognized as an expense in the Profit and Loss Account. Assets leased out under operating leases are capitalized. Rental income is recognized on accrual basis over the lease term.

P. Segment Accounting:

a) Segment accounting policies:

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

i. Segment revenue includes sales and other income directly identifiable with/ allocable to the segment including inter- segment revenue.

ii. Expenses that are directly identifiable with/allocable to segments are considered for determining the Segment Result. Expenses, which relate to the Company as a whole and not allocable to segments are included under "Unallocable Corporate Expenditure”.

iii. Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income”.

iv. Segment result includes margins on inter- segment transactions, which are reduced in arriving at the profit before tax of the Company.

v. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.

b) Inter-segment transfer pricing:

Segment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.


Mar 31, 2012

A. Basis of Preparation of Financial Statements:

The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

B. Use of Estimates:

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Any difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. Fixed Assets

Fixed Assets are stated at cost, net of recoverable taxes, less accumulated depreciation. All costs including finance costs, exchange differences, arising in respect of foreign currency loans or other liabilities incurred, and expenses incidental to acquisition and installation attributable to fixed assets till the date of readiness of their use are capitalized. Fixed assets purchased in foreign currency are recorded at the actual rupee cost incurred. There has been no revaluation of fixed assets during the year.

Capital Work-In-Progress is stated at the amount expended upto the date of Balance Sheet including preoperative expenditure.

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization / depletion. All costs, including finance costs, exchange differences and expenses incidental to acquisition and installation attributable to the intangible assets are capitalized.

D. Depreciation & Amortization

Depreciation on fixed assets have been provided on Straight Line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

Computer software is amortized over a period of five years.

E. Foreign Currency Transactions:

Indian Operation:

a)Foreign exchange transactions are recorded at the prevailing rate on the date of the transaction.

b) Monetary items are restated at the exchange rate prevailing on the date of balance sheet.

c) Non monetary items are stated at cost.

d) Gains or losses arising out of remittance / conversion at the year-end are credited / debited to the profit and loss account for the year.

e) Gains & losses in respect of foreign exchange contracts are recognized as income or expenses over the life of the contract.

Foreign Operation:

f) Income and expenses other than depreciation costs are translated at the rate prevailing on the date of transaction.

g) Monetary assets and liabilities are restated at the rate prevailing on the date of balance sheet.

h) Fixed Assets are translated at exchange rates on the date of transaction and depreciation on fixed asset is translated at the exchange rate used for translating underlying fixed asset.

As on 31st March 2012, there is no Mark-to-Market loss on account of derivative forward exchange contract.

F. Investments:

a) Current investments are carried at the lower of cost and quoted/fair value, computed category wise.

b) Long term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

G. Inventories:

Cost of inventories comprise of all cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition. The FIFO method is being followed for arriving at cost.

a) Raw materials are valued at lower of cost or net realizable value.

b) The value of contracts, irrespective of whether the progress of work is below or at the reasonable extent is valued at estimated cost consisting of the costs that relate directly and that which can be allocated to the specific contract.

c) Work-in-progress (other than project and construction- related) at lower of cost including related overheads or net realizable value. Project and construction-related work-in- progress at cost till such time the outcome of the job cannot be ascertained reliably and at realizable value thereafter. Site mobilization expenditure of incomplete contracts is stated at cost.

d) Stores, Spares and Fuel are carried at cost.

e) Purchase goods and raw materials in transit are carried at cost

f) Finished goods are valued at cost or net realizable value whichever is lower.

H. Revenue Recognition:

a) Construction Contract Sales:

The Company follows the percentage completion method, on the basis of physical measurement of work actually completed at the balance sheet date, taking into account the contractual price and revision thereto by estimating total revenue and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done. Profit is recognized and taken as the revenue of the year only when the work on the contract has progressed to a reasonable extent. Foreseeable losses are accounted for as and when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration.

b) Claim for Extra Work and Escalation:

The Company's claim for extra work and escalation in rates relating to execution of contracts are accounted as income in the year of receipt of arbitration award or acceptance by client or evidence of acceptance received.

c) Sales recognition:

1. Sales are accounted net of excise duty, Sales Tax, Discount, Returns and Rejections. Sales are recognized on dispatch of material from the factory of the company.

2. Export Sales are recognized on dispatch of material from the premises of the Company irrespective of the date of shipping document.

3. Input VAT credit not utilized against current year's Output VAT liability is available for either refund or set-off in future. Therefore, all the purchase & expense transactions involving VAT are accounted net of tax to the extent tax is recoverable and the balance in Value added tax account is included under the head recoverable from Tax department under Short term Loans and Advances.

d) Profit on sale of investment is recognized on transfer of title from the company and is determined as the difference between the sale price and carrying value of the Investment.

e) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

f) Export Benefits / incentives, interest and other incomes are accounted on accrual basis except Dividend, which is accounted in the year of receipt.

g) Dividend income is recognized when right to receive is established.

I. Service Tax & Sales Tax on Works Contracts:

Where the Company has contractual right to claim equal amounts regarding the said liability from the clients, the same is not charged as expenditure.

Where the ultimate liability would be on the Company, the same is accounted for provisionally as per the information and the final adjustment for the same would be done as and when the demand from concerned authorities is made on the company.

J. Employee Benefits:

Contribution to defined contribution scheme such as Provident Fund, Employees Pension Scheme, is charged to the Profit & Loss Account as incurred.

Defined benefit plans like gratuity are determined based on actuarial valuation carried out by an independent actuary at the balance sheet date using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit, and measures each unit separately to build up final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yields on government securities at the balance sheet date. Actuarial gains and losses are recognized immediately in the profit and loss account. The Company has taken comprehensive policy from the Life Insurance Corporation of India for its Gratuity liability.

Expenses on training, recruitment are charged to revenue in the year of incurrence.

Expenditure on leave travel concession to employees is recognized in the year of availment due to uncertainties of accrual.

Leave encashment is provided on actual basis. Expenditure on leave travel concession to employees is recognized in the year of availment.

K. Provision for Current & Deferred Taxes:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961. Deferred tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

L. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. All other borrowings costs are expensed out.

M. Provisions, Contingent Liabilities & Contingent Assets:

The company creates a provision when there is present obligation because of a past event that will probably result in the outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

N. Leases:

Lease arrangements, where the risk and rewards incidental to the ownership of asset substantially vests with the lessor are recognized as operating lease. Lease payments under operating leases are recognized as an expense in the Profit and Loss Account. Assets leased out under operating leases are capitalized. Rental income is recognized on accrual basis over the lease term.

O. Segment Accounting

a) Segment accounting policies

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

1. Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter-segment revenue.

ii. Expenses that are directly identifiable with/allocable to segments are considered for determining the Segment Result. Expenses, which relate to the Company as a whole and not allocable to segments are included under "Unallocable Corporate Expenditure".

iii. Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income".

iv. Segment result includes margins on inter-segment transactions, which are reduced in arriving at the profit before tax of the Company.

v. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.

(b) Inter-segment transfer pricing

Segment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.

The company has two classes of shares, namely Equity Shares & Compulsorily Convertible Participatory Preference Shares.

Terms/Rights attached to equity shares

Equity shares are having a par value of Rs 2 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.


Mar 31, 2010

A. Basis of Preparation of Financial Statements

The financial statements ore prepared to comply with the requirement of the Companies Act, 1 956, guidelines issued by the Securities and Exchange Board of India (SEBI) and Generally Accepted Accounting Principles (GAAP) in India under historical cost convention. GAAP comprise of mandatory accounting standards as specified by the Companies (Accounting Standard Rules), 2006 issued by the Central Government and the relevant provisions of The Companies Act, 1 956 to the extent applicable.

The presentation of financial statements in accordance with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual results could differ from these estimates. Any difference between the actual results and estimates are recognized in the period in which the results are known / materialized,

B. Fixed Assets and depreciation

Fixed Assets are stated at cost less accumulated depreciation. Cost includes inward freights, duties and taxes to the extent credit is not available and incidental expenses incidental to acquisition and installation. Fixed assets purchased in foreign currency are recorded at the actual rupee cost incurred. Cost of fixed assets also includes exchange differences arising, for period upto the date of readiness of their use, in respect of foreign currency loans or other liabilities incurred for the purpose of its acquisition. There has been no revaluation of fixed assets and no assets have been acquired on hire purchase basis during the period.

Capital-Work-ln-Progress is stated at the amount expended upto the date of Balance Sheet including preoperative expenditure.

Cost of Software includes license fees, cost of implementation and system integration and capitalized as intangible assets in the year in which the relevant software is put to use.

Depreciation on fixed assets have been provided on Straight Line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1 956. For addition and disposals, depreciation is provided on pro-rata for the year of use.

Computer software is amortized over a period of five years.

C. Foreign Currency Transactions

Indian Operation:

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

b) All Monetary assets and monetary liabilities are converted at the exchange rate prevailing on the date of balance sheet.

c) Gains or losses arising out of remittance / conversion at the year-end are credited / debited to the profit and loss account for the year.

d) Gains & losses in respect of foreign exchange contracts are recognized as income or expenses over the life of the contract.

Foreign Branch Office Operation

e) Income and expenses other than depreciation costs are translated at the rate prevailing on the date of transaction.

f) Foreign Currency denominated monetary assets and liabilities are translated at the rate prevailing on the balance sheet.

g) Fixed Assets are translated at exchange rates on the date of transaction and depreciation on fixed asset is translated at the exchange rate used for translating underlying fixed asset.

As on 31s1 March 2010, there is no Mark-to-Market loss on account of derivative forward exchange contract.

D. Investments

a) Current investments are carried at the lower of cost and quoted/fair value, computed category wise.

b) Investments, intended to be held for more than a year, from the date of acquisition, are classified as long-term & they are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

E. Inventories

Cost of inventories comprise of all cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition. The FIFO method is being followed,for arriving at cost.

a) Raw materials are valued at lower of cost or net realizable value.

b) The value of contracts, irrespective of whether the progress of work is below or at the reasonable extent is valued at estimated cost consisting of the costs that relate directly and that which can be allocated to the specific contract.

c) Work-in-progress (other than project and construction related) at lower of cost including related overheads or net realizable value. Project and construction- related work-in-progress at cost till such time the outcome of the job cannot be ascertained reliably and at realizable value thereafter. Site mobilization expenditure of incomplete contracts is stated at cost.

d) Stores, spares and Fuel are carried at cost.

e) Purchase goods and raw materials in transit are carried at cost.

f) Finished goods are valued at cost, which includes cost of purchase, cost of conversion and other overhead incurred in bringing the inventory to its present location and condition.

F. Revenue Recognition:

a) Construction Contract Sales:

The Company follows the percentage completion method, on the basis of physical measurement of work actually completed at the balance sheet date, taking into account the contractual price and revision thereto by estimating total revenue and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done. Profit is recognized and taken as the revenue of the year only when the work on the contract has progressed to a reasonable extent. Foreseeable losses are accounted for as and when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration.

b) Claim for Extra Work and Escalation:

The Companys claim for extra work and escalation in rates relating to execution of contracts are accounted as income in the year of receipt of arbitration award or acceptance by client or evidence of acceptance received.

c) Sales recognition:

1. Sales are accounted net of excise duty, Sales Tax, Discount, Returns and Rejections. Sales are recognized on dispatch of material from the factory of the company.

2. Export Sales are recognized on dispatch of material from the premises of the Company irrespective of the date of shipping document.

3. Input VAT credit not utilized against current years Output VAT liability is available for either refund or set-off in future. Therefore, all the transactions involving VAT are accounted net of tax and the balance in Value added tax account is included under the head recoverable from Tax department under Loans and Advances.

d) Profit on sale of investment is recognized on transfer of title from the company and is determined as the difference between the sale price and carrying value of the Investment.

e) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

f) Export Benefits / incentives, interest and other incomes are accounted on accrual basis except Dividend, which is accounted in the year of receipt.

G. Recognition of Expenditure:

a) Employee Retirement Benefit and other benefits:

Contribution to defined contribution scheme such as Provident Fund, Employees Pension Scheme, are charged to the Profit & Loss Account as incurred.

Defined benefit plans like gratuity are determined based on actuarial valuation carried out by an independent actuary at the balance sheet date using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit, and measures each unit separately to build up final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yields on government securities at the balance sheet date. Actuarial gains and losses are recognized immediately in the profit and loss account. The Company has taken comprehensive policy from the Life Insurance Corporation of India for its Gratuity liability.

Expenses on training, recruitment are charged to revenue in the year of incurrence.

Expenditure on leave travel concession to employees is recognized in the year of availment due to uncertainties of accrual.

Leave encashment is provided on actual basis. Expenditure on leave travel concession to employees is recognized in the year of availment.

b) Taxes on Income:

The amount of current tax is determined as the amount of tax payable in respect of taxable income for the year as per the provisions of the Income Tax Act, 1 961 applicable to the current financial year, in consultation with the tax experts, and in accordance with the "Guidance Note on Accounting of Taxes under section 115JB of the Income Tax Act 1961" issued by ICAI.

Deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income, that originate in one period and are capable of reversal in one or more subsequent periods. The Deferred Tax Liability has arisen only because of Depreciation.

c) Sales Tax on Works Contracts:

Where the Company has contractual right to claim equal amounts regarding the said liability from the clients, the same is hot charged as expenditure.

Where the ultimate liability would be on the Company, the same is accounted for provisionally as per the information and the final adjustment for the same would be done as and when the demand from concerned authorities is made on the company. During the year under review sales tax expenses also include amount paid on account of assessment order received during the year.

H. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. All other borrowings costs are expensed out.

I. Provisions, Contingent Liabilities & Contingent Assets:

The company creates a provision when there is present obligation because of a past event that will probably result in the outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate.

Contingent Liabilities are disclosed when there is a possible obligation or a present obligation 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 resources is remote, no provision or disclosure is made.

Contingent assets are neither recognized nor disclosed in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that inflow of economic benefit will arise, the asset and related income are recognized in the period in which such change occur.

J. Leases:

There are no assets taken on finance lease. Lease arrangements, where the risk and rewards incidental to the ownership of asset substantially vests with the lessor are recognized as operating lease. Lease payments under operating leases are recognized as an expense in the Profit and Loss Account. Assets leased out under operating leases are capitalized. Rental income is recognized on accrual basis over the lease term.

K. Segment Accounting

a) Segment accounting policies

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

i. Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter-segment revenue.

ii. Expenses that are directly identifiable with/ allocable to segments are considered for determining the Segment Result. Expenses, which relate to the Company as a whole and not allocable to segments are included under "Unallocable Corporate Expenditure".

iii. Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income".

iv. Segment result includes margins on inter- segment transactions, which are reduced in arriving at the profit before tax of the Company.

v. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.

(b) Inter-segment transfer pricing

Segment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.



 
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