Mar 31, 2018
1. Significant accounting policies
(a) Basis of preparation
(i) Compliance with Ind AS
These financial statements have been prepared and comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 ("the Act"), read together with the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.
(ii) Basis of measurement
These financial statements have been prepared on an accrual and historical cost basis, except for the following:
- certain financial assets and liabilities (including derivative instruments) that are measured at fair value;
- certain items of property, plant and equipments which have been fair valued on the transition date
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
(iii) The net worth of the Company has deteriorated further as at March 31, 2018 and there are delays/ defaults in repayments of dues to its lenders. In view of the above, the Company has submitted a proposal to its lenders for restructuring of its debt. Restructuring is essential for the company''s ability to continue as a going concern and ability to realise its assets and discharge the liabilities in the normal course of business. The restructuring proposal is under active consideration by the lenders as per the latest RBI guidelines. Subsequently, the Company will obtain mandatory approvals from other stakeholders. The management is confident of favourable restructuring within stipulated timeframe and also getting the necessary approvals. Additionally, to improve operational efficiencies, the Company is taking various measures, including monetizing its identified assets as avenues of raising funds. The management is confident that with the above measures, the Company would be able to generate sustainable cash flow, discharge its short term and long-term liabilities and improve its net worth through profitable operations and continue as a going concern. In view of the above, these financial statements have been prepared on a going concern basis.
(b) Property, plant and equipment
Property, plant and equipment, excluding freehold land, but including capital work-in-progress are stated at cost, less accumulated depreciation and impairment losses, if any. Freehold land is carried at historical cost. The cost includes the purchase price and expenditure that is directly attributable to bringing the asset to its working condition for the intended use.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repair and maintenance are charged to the statement of profit and loss during the reporting period in which they are incurred.
The Company adjusts exchange differences arising on translation/settlement of long-term foreign currency monetary items pertaining to the acquisition of a depreciable asset to the cost of the asset and depreciates the same over the remaining life of the asset. In accordance with Ministry of Corporate Affairs ("MCA") circular dated August 09, 2012, exchange differences adjusted to the cost of tangible assets are total differences, arising on long-term foreign currency monetary items pertaining to the acquisition of a depreciable asset, for the period. In other words, the Company does not differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange differences.
Depreciation method, estimated useful lives and derecognition
Depreciation is calculated using the straight-line method to allocate the cost, net of the residual values, over the estimated useful lives as follows:
The property, plant and equipment acquired under finance leases, including assets acquired under sale and lease back transactions, is depreciated over the shorter of the asset''s useful life and the lease term, if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use thereof. Any gain or loss arising on de-recognition of the assets, measured as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in the statement of profit and loss when the asset is derecognized.
The useful lives, residual values and method of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively.
(c) Intangible assets
Intangible assets are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and impairment losses, if any.
Development expenditures are recognized as an intangible asset when the Company is able to demonstrate:
- the technical feasibility of completing the intangible asset so that the asset will be available for use
- its intention to complete and its ability and intention to use or sell the asset
- how the asset will generate future economic benefits
- the availability of resources to complete the asset
- the ability to measure reliably the expenditure during development
The Company amortizes intangible assets with finite lives using the straight-line method over the period of licenses or based on the nature and estimated useful economic life, i.e., six years, whichever is lower.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
The amortization period and the method is reviewed at each financial year end and adjusted prospectively.
(d) Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company''s CGU to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year. To estimate cash flow projections beyond periods covered by the most recent budgets/ forecasts, the Company extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the products, industries or countries in which the Company operates, or for the market in which the asset is used.
Impairment losses of continuing operations, including impairment on inventories, are recognized in the statement of profit and loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been, had no impairment loss been recognized. Such reversal is recognized in the statement of profit and loss.
(e) Investment properties
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as an investment property. Investment properties are measured initially at cost, including related transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and impairment, if any.
Subsequent expenditure is capitalized to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are expensed when incurred.
Investment properties are depreciated using the straight-line method over their estimated useful lives, i.e., 60 years.
Investment properties are derecognized either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de-recognition.
(f) Sale and lease back transactions
If a sale and leaseback transaction results in a finance lease, the profit or loss, i.e., excess or deficiency of sale proceeds over the carrying amounts is deferred and amortized over the lease term in proportion to the depreciation of the leased asset. The unamortized portion of the profit is classified under "Other liabilities" in the financial statements.
If a sale and leaseback transaction results in an operating lease, profit or loss is recognized immediately in case the transaction is established at fair value. If the sale price is below fair value, the loss is recognized immediately except that, if the loss is compensated by future lease payments at below market price, it is deferred and amortized in proportion to the lease payments over the period for which the asset is expected to be used. If the sale price is above fair value, the profit is deferred and amortized over the period for which the asset is expected to be used.
(g) Leases
Where the Company is the lessee
Lease where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on the borrowing costs (see note 2.(l)).
A leased asset is depreciated on a straight-line basis over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life or the lease term of the asset.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee, are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increase.
Where the Company is the lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Lease income from operating lease is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are classified in the balance sheet based on their nature.
(h) Inventories
Project materials are valued at lower of cost and net realizable value. Cost includes cost of purchase and other costs incurred in bringing the materials to their present location and condition. Cost is determined on weighted average basis.
Scrap is valued at net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
(i) Unbilled revenue (work-in-progress)
Unbilled revenue (work-in-progress) is valued at net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
(j) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are exclusive of taxes or duties collected on behalf of third parties. The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that the economic benefits will flow to the Company and specific criteria, as described below, are met for each of the Company''s activities.
i) Contract revenue associated with long term construction contracts is recognized as revenue by reference to the stage of completion of the contract at the balance sheet date. The stage of completion of project is determined by the proportion that contracts costs incurred for the work performed up to the balance sheet date bear to the estimated total contract costs. However, profit is not recognized unless there is reasonable progress on the contract. If total cost of a contract, based on technical and other estimates, is estimated to exceed the total contract revenue, the foreseeable loss is provided for. The effect of any adjustment arising from revisions to estimates is included in the statement of profit and loss of the year in which revisions are made. Contract revenue earned in excess of billing is classified as "Unbilled revenue (work-in-progress)" and billing in excess of contract revenue is classified under "Other liabilities" in the financial statements. Claims on construction contracts are included based on Management''s estimate of the probability that they will result in additional revenue, they are capable of being reliably measured, there is a reasonable basis to support the claim and that such claims would be admitted either wholly or in part. The Company assesses the carrying value of various claims periodically, and makes adjustments for any unrecoverable amount arising from the legal and arbitration proceedings that they may be involved in from time to time. Insurance claims are accounted for on acceptance/settlement with insurers.
ii) Revenue from long term construction contracts executed in unincorporated joint ventures under work sharing arrangements is recognized on the same basis as similar contracts independently executed by the Company. Revenue from unincorporated joint ventures under profit sharing arrangements is recognized to the extent of the Company''s share in unincorporated joint ventures.
iii) Revenue from hire charges is accounted for in accordance with the terms of agreements with the customers.
iv) Revenue from management services is recognized pro-rata over the period of the contract as and when the services are rendered.
v) Rental income arising from operating leases on investment properties is generally accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss. These are accounted for otherwise where the payments to the lessor are structured to increase in line with expected general inflation, to compensate for the expected inflationary cost increases.
vi) Interest income from debt instruments is recognized using the effective interest rate method (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the EIR, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in other income in the statement of profit and loss.
vii) Dividend income is recognized when the Company''s right to receive the payment is established, which is generally when shareholders of the investee approve the dividend.
viii) Export Benefit under the Duty Free Credit Entitlements is recognized in the statement of profit and loss, when right to receive license as per terms of the scheme is established in respect of exports made and there is no significant uncertainty regarding the ultimate collection of the export proceeds.
ix) Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods.
(k) Borrowing costs
Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that are incurred in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
(l) Foreign currencies
i) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (âthe functional currency''). The financial statements are presented in Indian Rupee (INR), which is Company''s functional and presentation currency.
ii) Transaction and balances
Transactions in foreign currencies are initially recorded in the functional currency using the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Exchange differences resulting from the settlement or translation of such transactions are generally recognized in profit or loss, except the following:
a. Exchange differences are deferred in equity if they are attributable to part of the net investment in a foreign operation. They are recognized initially in other comprehensive income (OCI) and reclassified to statement of profit and loss on disposal of the net investment, as part of gain or loss on disposal.
b. Exchange differences arising on long-term foreign currency monetary items (recognized upto 31 March 2016), related to acquisition of a depreciable asset are capitalized and depreciated over the remaining useful life of the asset.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognized in OCI or profit or loss are also recognized in OCI or profit or loss, respectively).
iii) Translation of foreign operations
The results and financial position of foreign operations that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- Assets and liabilities are translated at the closing rate of exchange at the reporting date,
- Income and expenses are translated at quarterly average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transaction), and
- All resulting exchange differences are recognized in OCI.
On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is recognized in profit or loss.
Cumulative currency translation differences for all foreign operations are deemed to be zero at the date of transition, i.e. 01 April 2015. Gain or loss on a subsequent disposal of any foreign operation excludes translation differences that arose before the date of transition but comprises only translation differences arising after the transition date.
(m) Financial instruments
Financial Instruments (assets and liabilities) are recognized when the Company becomes a party to a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, other than those designated as fair value through profit or loss (FVTPL), are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in statement of profit and loss.
A. Financial assets
(i) Subsequent measurement
Subsequent measurement depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its financial assets.
- Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost using the Effective Interest Rate (EIR) method. The EIR amortisation is included in other income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss.
- Fair value through other comprehensive income (FVTOCI): The Company has investments which are not held for trading. The Company has elected an irrevocable option to present the subsequent changes in fair values of such investments in other comprehensive income. Amounts recognized in OCI are not subsequently reclassified to the statement of profit and loss.
- Fair value through profit and loss (FVTPL):
FVTPL is a residual category for financial assets in the nature of debt instruments. Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss. This category also includes derivative financial instruments, if any, entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.
(ii) Impairment of financial assets
The Company applies Ind AS 109 for recognizing impairment losses using Expected Credit Loss (ECL) model. Impairment is recognized for all financial assets subsequent to initial recognition, other than financial assets in FVTPL category. The impairment losses and reversals are recognized in statement of profit and loss.
(iii) De-recognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or the same are transferred.
B. Financial liabilities
(i) Subsequent measurement
There are two measurement categories into which the Company classifies its financial liabilities.
- Amortised cost: After initial recognition, interest-bearing borrowings and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
- Financial liabilities at FVTPL: Financial liabilities are classified as FVTPL when the financial liabilities are held for trading or are designated as FVTPL on initial recognition. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
(ii) De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires
C. Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis or to realise the assets and settle the liabilities simultaneously.
(n) Fair value measurement
The fair value of an asset or liability is measured using the assumption that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Where fair value is based on quoted prices from active market.
Level 2 - Where fair value is based on significant direct or indirect observable market inputs.
Level 3 - Where fair value is based on one or more significant input that is not based on observable market data.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfer is required between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole)
(a) on the date of the event or change in circumstances or
(b) at the end of each reporting period.
(o) Employee benefits
Short-term obligations
Liabilities for salaries and wages, including non-monetary benefits, that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized up to the end of the reporting period and are measured at the amounts expected to be paid on settlement of such liabilities. The liabilities are presented as current employee benefit obligations in the balance sheet.
Other long-term employee benefit obligations
The liabilities for earned and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in Other Comprehensive Income.
The obligations are presented as current liabilities in the balance sheet since the Company does not have an unconditional right to defer the settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Post-employment obligations
The Company operates the following post-employment schemes:
- Defined benefit plans in the form of gratuity, and
- Defined contribution plans such as provident fund and pension fund
Gratuity obligations
The Company operates a defined benefit gratuity plan for employees employed in India. The Company has obtained group gratuity scheme policies from Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited to cover the gratuity liability of these employees. The difference in the present value of the defined benefit obligation and the fair value of plan assets at the end of the reporting period is recognized as a liability or asset, as the case may be, in the balance sheet. The defined benefit obligation is calculated annually on the basis of actuarial valuation using the projected unit credit method.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in the employee benefit expense in the statement of profit and loss.
Re-measurements gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in OCI.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
Defined contribution plans
The Company makes contribution to statutory provident fund and pension funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
Employee benefits in overseas locations
In overseas branches and unincorporated joint venture operation, provision for retirement and other employee benefits are recognized as prescribed in the local labour laws of the respective country, for the accumulated period of service at the end of the financial year.
(p) Income taxes
Income tax comprises current income tax and deferred tax. The income tax expense or credit for the year is the tax payable on the current year''s taxable income, based on the applicable income tax rate for each jurisdiction where the Company operates, adjusted by changes in deferred tax assets and liabilities attributed to temporary differences and to unused tax losses.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the tax authorities, using the tax rates and tax laws that are enacted or substantively enacted, at the reporting date in the countries where the Company operates and generate taxable income.
Deferred tax is provided using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates and tax laws that have been enacted or substantively enacted by the end of reporting period and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses, only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set-off current tax assets against liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognized in the statement of profit or loss, except to the extent that it relates to items recognized in OCI or directly in equity. In this case, the tax is recognized in OCI or directly in equity, respectively.
(q) Segment reporting
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
(r) Earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to equity shareholders by the weighted average number of equity shares outstanding during the financial year, adjusted for the events such as bonus issue, share split or otherwise that have changed the number of equity shares outstanding without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the profit or loss attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
(s) Share-based payments
Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions). The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. The fair value of the options granted is recognized as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the option granted:
- including any market performance conditions (e.g., the Company''s share price),
- excluding the impact of any service and non-market performance vesting conditions (e.g., profitability, sales growth targets and remaining and employee of the entity over a specified time period), and
- including the impact of any non-vesting conditions (e.g., the requirement for employees to save or holding shares for a specific period of time).
The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
(t) Cash and cash equivalents
Cash and cash equivalents, for the purposes of cash flow statement, comprise cash on hand, demand deposits, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(u) Dividends
The Company recognized a liability for the amount of any dividend declared when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorized when it is approved by the shareholders.
(v) Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. A disclosure is made for a contingent liability when there is a:
a) possible obligation, the existence of which will be confirmed by the occurrence/non-occurrence of one or more uncertain events, not fully with in the control of the Company;
b) present obligation, where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
c) present obligation, where a reliable estimate cannot be made.
(w) Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the effect of the time value of money is expected to be material, provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as interest expense.
(x) Operating cycle
The operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents and the management considers this to be the project period.
(y) Measurement of EBITDA
As permitted by the Guidance Note on the Division II of Schedule III to the Companies Act, 2013, the Company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. In its measurement, the Company does not include depreciation and amortization expense, finance costs and tax expense.
3. (a) Significant accounting judgements, estimates and assumptions:
The preparation of financial statements requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future period.
Critical estimates and judgements
In applying the accounting policies, following are the items/ areas that involved a higher degree of judgement or complexity and which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.
Fair valuation of unlisted securities:
The fair value of financial instruments that are not traded in an active market is determined using internationally accepted valuation principles. The inputs to these valuations are taken from observable markets wherever possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as discount rates, liquidity risk, credit risk, earning growth factors and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Revenue recognition:
The Company uses the percentage-of-completion method (POCM) in accounting for its long term construction contracts. Use of POCM requires the Company to estimate the total cost to complete a contract. Changes in the factors underlying the estimation of the total contract cost could affect the amount of revenue recognized.
Impairment of financial assets:
The Company basis the impairment provisions for financial assets on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculations, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
Impairment of non-financial assets:
Non-financial assets are reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). The recoverable amount is sensitive to inputs like discount rate, expected future cash-inflows and growth rate used for extrapolation purposes.
Defined benefit plan (employee benefits):
The cost of defined benefit gratuity plan and other employee benefits and the present value of the defined benefit obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increase and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Taxes:
Deferred tax assets are recognized for unused tax losses and unabsorbed depreciation to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax asset that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
The Company neither has any taxable temporary difference nor any tax planning opportunities available that could support the recognition of unused tax losses and unabsorbed depreciation as deferred tax assets. On this basis, the Company has accounted for deferred tax assets on temporary differences, including unabsorbed depreciation and business losses, for which it is reasonably certain that future taxable income would be generated.
b) Recent accounting pronouncements:
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.
Ind AS 115- Revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers. The standard permits two possible methods of transition:
Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors.
Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)- The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018. The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant.
Mar 31, 2015
(a) Changes in accounting policy
Depreciation on fixed assets
Till the year ended March 31, 2014, Schedule XIV to the Companies Act,
1956, prescribed requirements concerning depreciation of fixed assets.
From the current year, effective April 01,2014, Schedule XIV has been
replaced by Schedule II to the 2013 Act. The applicability of Schedule
II has resulted in the following changes related to depreciation of
fixed assets. Unless stated otherwise, the impact mentioned for the
current year is likely to hold good for future years also.
- Useful lives/ depreciation rates
Considering the applicability of Schedule II, the Company has
re-estimated useful lives and residual values of all its fixed assets.
The management believes that depreciation rates currently used fairly
reflect its estimate of the useful lives and residual values of fixed
assets.
The Company has used transitional provisions of Schedule II to adjust
the impact arising on its first application. If an asset has nil
remaining useful life on the date of Schedule II becoming effective,
i.e., April 01,2014, its carrying amount, after retaining residual
value, if any, has been charged to the opening balance in the statement
of profit and loss. The carrying amount of other assets, i.e., assets
whose remaining useful life is not nil on April 01,2014, is depreciated
over their remaining useful life.
Had the Company continued to use the earlier policy of depreciating
fixed asset, the loss for the current year would have been lower by Rs.
55.10 crores (net of taxes), statement of profit and loss and asset
revaluation reserve at the beginning of the current year would have
been higher by Rs. 25.41 crores (net of taxes) and Rs. 1.15 crores
respectively and the fixed assets would correspondingly have been
higher by Rs. 93.94 crores.
- Component accounting
The Company was previously not identifying components of fixed assets
separately for depreciation purposes; rather, a single useful life/
depreciation rate was used to depreciate each item of fixed asset. Now,
the Company identifies and determines separate useful life for each
major component of the fixed asset, if they have useful life that is
materially different from that of the remaining asset. However, this
change in accounting policy did not have any material impact on
financial statements of the Company.
- Depreciation on assets costing less than Rs. 5,000
The Company was previously charging depreciation at the rate of 100%
per annum on assets costing less than Rs. 5,000. As per the revised
policy, the Company is depreciating such assets over their useful life
as assessed by the management. The management has decided to apply the
revised accounting policy prospectively from accounting periods
commencing on or after April 01,2014.
The change in accounting for depreciation of assets costing less than
Rs. 5,000 did not have any material impact on financial statements of
the Company for the current year.
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in the
outcomes requiring an adjustment to the carrying amounts of assets or
liabilities in future periods.
(c) Tangible fixed assets
Tangible assets, except a piece of land and few items of plant and
equipment acquired before March 31,1998, are stated at cost, less
accumulated depreciation and impairment losses, if any. The cost
comprises the purchase price, borrowing costs, if capitalization
criteria are met, and directly attributable cost of bringing the asset
to its working condition for the intended use. Each part of an item of
property, plant and equipment with a cost that is significant in
relation to the total cost of the item is depreciated separately. When
significant parts of fixed assets are required to be replaced at
intervals, the Company recognizes such parts as individual assets with
specific useful lives and depreciates them accordingly. Likewise, when
a significant inspection is performed, its cost is recognized in the
carrying amount of the fixed assets as a replacement if the recognition criteria are satisfied. Any trade discounts and rebates are deducted in arriving at the purchase price.
During the year ended March 31, 1998, the Company revalued certain
plant and equipment. These plant and equipment are measured at fair
value less accumulated depreciation and impairment losses, if any
recognized after the date of the revaluation. During the year ended
March 31, 2002, the Company revalued a piece of land at fair value. In
case of revaluation of tangible assets, any revaluation surplus is
credited to the asset revaluation reserve, except to the extent that it
reverses a revaluation decrease of the same asset previously recognized
in the statement of profit and loss, in which case the increase is
recognized in the statement of profit and loss. A revaluation deficit
is recognized in the statement of profit and loss, except to the extent
that it offsets an existing surplus on the same asset recognized in the
asset revaluation reserve.
Subsequent expenditure related to an item of tangible asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing tangible assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
The Company adjusts exchange differences arising on
translation/settlement of long-term foreign currency monetary items
pertaining to the acquisition of a depreciable asset to the cost of the
asset and depreciates the same over the remaining life of the asset. In
accordance with Ministry of Corporate Affairs ("MCA") circular
dated August 09, 2012, exchange differences adjusted to the cost of
tangible assets are total differences, arising on long-term foreign
currency monetary items pertaining to the acquisition of a depreciable
asset, for the period. In other words, the Company does not
differentiate between exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to
the interest cost and other exchange differences.
Gains or losses arising from de-recognition of tangible assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
(d) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and impairment
losses, if any.
Gains or losses arising from de-recognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
(e) Depreciation on tangible fixed assets and amortization of
intangible assets
i) Depreciation on fixed assets is calculated on straight-line basis
using the rate arrived at based on the useful lives estimated by the
management. The Company has used the following lives to provide
depreciation on its fixed assets.
Useful lives estimated by
Asset Description the management (years)
Factory buildings 30
Other buildings 60
Plant and equipment 3 - 20
Furniture, fixtures and
office equipments 3 - 20
Vehicles 3 - 10
ii) Leasehold land, except for leasehold land which is under perpetual
lease, is amortized on a straight line basis over the period of lease,
i.e., 30 years.
iii) Assets acquired under sale and lease back are depreciated on a
straight line basis over the period of lease.
iv) Intangible assets are amortized on a straight line basis, based on
the nature and useful economic life of the assets as estimated by the
management. The summary of amortization policies applied to the
Company's intangible assets is as below:
a) Software of project division is amortized over the period of
licenses or six years, whichever is lower.
b) Software of an unincorporated joint venture is amortized over the
period of license or three years, whichever is lower.
(f) Impairment of tangible and intangible assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset's recoverable amount. An asset's recoverable
amount is the higher of an asset's or cash-generating unit's (CGU)
net selling price and its value in use. The recoverable amount is
determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or
groups of assets. Where the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount and the reduction is treated as an
impairment loss and is recognized in the statement of profit
and loss. If at the balance sheet date there is an indication that a
previously assessed impairment loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at the recoverable
amount subject to a maximum of depreciated historical cost and loss is
accordingly reversed in the statement of profit and loss.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the
risks specific to the asset. In determining net selling price, recent
market transactions are taken into account, if available. If no such
transactions can be identified, an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company's cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long term growth
rate is calculated and applied to project future cash flows after the
fifth year.
After impairment, depreciation/amortization is provided on the revised
carrying amount of the asset over its remaining useful life.
(g) Sale and lease back transactions
If a sale and leaseback transaction results in a finance lease, the
profit or loss, i.e., excess or deficiency of sale proceeds over the
carrying amounts is deferred and amortized over the lease term in
proportion to the depreciation of the leased asset. The unamortized
portion of the profit is classified under "Other liabilities" in
the financial statements.
If a sale and leaseback transaction results in an operating lease,
profit or loss is recognized immediately in case the transaction is
established at fair value. If the sale price is below fair value, any
profit or loss is recognized immediately except that, if the loss is
compensated by future lease payments at below market price, it is
deferred and amortized in proportion to the lease payments over the
period for which the asset is expected to be used. If the sale price is
above fair value, the excess over the fair value is deferred and
amortized over the period for which the asset is expected to be used.
(h) Leases
Where the Company is the lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the inception of the lease term at the lower of the
fair value of the leased property and present value of the minimum
lease payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance charges are recognized as finance costs in the statement of
profit and loss. Lease management fees, legal charges and other initial
direct costs are capitalized.
A leased asset is depreciated on a straight-line basis over the useful
life of the asset. However, if there is no reasonable certainty that
the Company will obtain the ownership by the end of the lease term, the
capitalized asset is depreciated on a straight-line basis over the
shorter of the estimated useful life of the asset or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
Where the Company is the lessor
Leases in which the Company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating lease. Assets subject to operating leases are included in
tangible assets. Lease income on an operating lease is recognized in
the statement of profit and loss on a straight-line basis over the
lease term. Initial direct costs such as legal, brokerage, etc. and
subsequent costs, including depreciation, incurred in earning the lease
income are recognized as an expense in the statement of profit and
loss.
(i) Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties. If an investment is acquired, or
partly acquired, by the issue of shares or other securities, the
acquisition cost is the fair value of the securities issued. If an
investment is acquired in exchange for another asset, the acquisition
is determined by reference to the fair value of the asset given up or
by reference to the fair value of the investment acquired, whichever is
more clearly evident.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
(j) Inventories
Inventories are valued as follows:
i) Project Materials (excluding scaffoldings): Lower of cost and net
realizable value. Cost is determined on weighted average basis.
ii) Scaffoldings (included in Project Materials): Cost less
amortization/charge based on their useful life, which is estimated at
seven years.
iii) Scrap: Net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(k) Unbilled revenue (work-in-progress)
Unbilled revenue (Work-in-progress) is valued at net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(l) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognized:
i) Contract revenue associated with long term construction contracts is
recognized as revenue by reference to the stage of completion of the
contract at the balance sheet date. The stage of completion of project
is determined by the proportion that contracts costs incurred for the
work performed up to the balance sheet date bear to the estimated total
contract costs. However, profit is not recognized unless there is
reasonable progress on the contract. If total cost of a contract, based
on technical and other estimates, is estimated to exceed the total
contract revenue, the foreseeable loss is provided for. The effect of
any adjustment arising from revisions to estimates is included in the
statement of profit and loss of the year in which revisions are made.
Contract revenue earned in excess of billing has been classified as
"Unbilled revenue (work-in-progress)" and billing in excess of
contract revenue has been classified as "Other liabilities" in the
financial statements. Claims on construction contracts are included
based on Management's estimate of the probability that they will
result in additional revenue, they are capable of being reliably
measured, there is a reasonable basis to support the claim and that
such claims would be admitted either wholly or in part. The Company
assesses the carrying value of various claims periodically, and makes
provisions for any unrecoverable amount arising from the legal and
arbitration proceedings that they may be involved in from time to time.
Insurance claims are accounted for on acceptance/settlement with
insurers.
ii) Revenue from long term construction contracts executed in
unincorporated joint ventures under work sharing arrangements is
recognized on the same basis as similar contracts independently
executed by the Company. Revenue from unincorporated joint ventures
under profit sharing arrangements is recognized to the extent of the
Company's share in unincorporated joint ventures.
iii) Revenue from hire charges is accounted for in accordance with the
terms of agreements with the customers.
iv) Revenue from management services is recognized pro- rata over the
period of the contract as and when the services are rendered.
v) Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
vi) Dividend income is recognized when the Company's right to receive
dividend is established by the reporting date.
vii) Export Benefit under the Duty Free Credit Entitlements is
recognized in the statement of profit and loss, when right to receive
license as per terms of the scheme is established in respect of exports
made and there is no significant uncertainty regarding the ultimate
collection of the export proceeds.
viii) Revenue from sale of goods is recognized when all the significant
risks and rewards of ownership of the goods have been passed to the
buyer, which usually coincides with delivery of the goods.
ix) The Company collects service tax and value added taxes (VAT) on
behalf of the Government and, therefore, these are not economic
benefits flowing to the Company. Hence, they are excluded from
revenue.
(m) Borrowing costs
Borrowing cost includes interest and amortization of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition or
construction of an asset that necessarily takes a substantial period of
time to get ready for its intended use are capitalized as part of the
cost of the respective asset. All other borrowing costs are expensed in
the period they are incurred.
(n) Foreign currency transactions and translations
i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non- monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate prevailing at the date when such value was determined.
iii) Exchange differences
The Company accounts for exchange differences arising on
translation/settlement of foreign currency monetary items as below:
a. Exchange differences arising on a monetary item that, in substance,
forms part of the Company's net investment in a non-integral foreign
operation is accumulated in the foreign currency translation reserve
until the disposal of the net investment. On the disposal of such net
investment, the cumulative amount of the exchange differences, which
have been deferred and which relate to that investment is recognized as
income or as expenses in the same period in which the gain or loss on
disposal is recognized.
b. Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a tangible asset are capitalized and
depreciated over the remaining useful life of the asset.
c. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized over the remaining life
of the concerned monetary item.
d. All other exchange differences are recognized as income or as
expenses in the period in which they arise.
For the purpose of b and c above, the Company treats a foreign monetary
item as "long-term foreign currency monetary item", if it has a
term of 12 months or more at the date of its origination. In accordance
with MCA circular dated August 09, 2012, exchange differences for this
purpose, are total differences arising on long-term foreign currency
monetary items for the period. In other words, the Company does not
differentiate between exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to
the interest cost and other exchange difference.
iv) Forward exchange contracts entered into to hedge foreign currency
risk of an existing asset/liability
The exchange differences arising on forward contracts to hedge foreign
currency risk of an underlying asset or liability existing on the date
of the contract are recognized in the statement of profit and loss of
the period in which the exchange rates change, based on the difference
between:
a. foreign currency amount of a forward contract translated at the
exchange rates at the reporting date, or the settlement date where the
transaction is settled during the reporting period, and
b. the same foreign currency amount translated at the latter of the
date of the inception of the contract and the last reporting date, as
the case may be.
The premium or discount on all such contracts arising at the inception
of each contract is amortised as expense or income over the life of the
contract.
Any profit or loss arising on cancellation or renewal of forward
foreign exchange contracts is recognised as income or expense for the
year upon such cancellation or renewal.
Forward exchange contracts entered to hedge the foreign currency risk
of highly probable forecast transactions and firm commitments are
marked to market at the balance sheet date, if such mark to market
results in exchange loss. Such exchange loss is recognised in the
statement of profit and loss immediately. Any gain is ignored and not
recognised in the financial statements, in accordance with the
principles of prudence enunciated in Accounting Standard 1- Disclosure
of Accounting Policies.
v) Translation of integral and non integral foreign operations
The Company classifies all its foreign operations as either "integral
foreign operations" or "non- integral foreign operations".
The financial statements of an integral foreign operation are
translated as if the transactions of the foreign operation have been
those of the Company itself.
The assets and liabilities of non-integral foreign operations are
translated into the reporting currency at the exchange rate prevailing
at the reporting date. Items of statement of profit and loss are
translated at exchange rates prevailing at the dates of transactions or
weighted average quarterly rates, where such rates approximate the
exchange rate at the date of transaction. The exchange differences
arising on translation are accumulated in the "Foreign currency
translation reserve". On disposal of a non-integral foreign
operation, the accumulated foreign currency translation reserve
relating to that foreign operation is recognized in the statement of
profit and loss.
When there is a change in the classification of a foreign operation,
the translation procedures applicable to the revised classification are
applied from the date of the change in the classification.
(o) Employee benefits
i) The Company makes contribution to statutory provident fund and
pension funds in accordance with Employees' Provident Funds and
Miscellaneous Provisions Act, 1952, which is a defined contribution
plan. The Company has no obligation, other than the contribution
payable to respective funds. The Company recognizes contribution
payable to respective funds as expenditure, when an employee renders
the related service. If the contribution payable to the scheme for
service received before the balance sheet date exceeds the contribution
already paid, the deficit payable to the scheme is recognized as a
liability after deducting the contribution already paid. If the
contribution already paid exceeds the contribution due for services
received before the balance sheet date, then excess is recognized as an
asset to the extent that the pre-payment will lead to, for example, a
reduction in future payment or a cash refund.
ii) Gratuity liability is a defined benefit obligation. The Company has
obtained an insurance policy under group gratuity scheme with Life
Insurance Corporation of India/ ICICI Prudential Life Insurance Company
Limited to cover the gratuity liability of the employees of project
division and amount paid/payable in respect of present value of
liability for past services is charged to the statement of profit and
loss on the basis of actuarial valuation on the projected unit credit
method made at the end of each financial year. Actuarial gains/losses
are recognized in the statement of profit and loss in full in the
period in which they occur.
iii) In respect to overseas branches and unincorporated joint venture
operations, provision for retirement and other employee benefits are
made on the basis prescribed in the local labour laws of the respective
country, for the accumulated period of service at the end of the
financial year.
iv) Accumulated leave, which is expected to be utilized within the next
12 months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date. The Company treats accumulated leave
expected to be carried forward beyond twelve months, as long-term
employee benefit for measurement purposes. Such long-term
compensated absences are provided for based on the actuarial valuation
using the projected unit credit method at the year-end. Actuarial
gains/losses are immediately taken to the statement of profit and loss
and are not deferred. The Company presents the entire leave as a
current liability in the balance sheet, since it does not have an
unconditional right to defer its settlement for 12 months after the
reporting date.
(p) Income taxes
Tax expense comprises current and deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the Company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized directly in
shareholders' funds is recognized in shareholders' funds and not in
the statement of profit and loss.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences of earlier years. Deferred tax
is measured using the tax rates and tax laws enacted or substantively
enacted at the reporting date. Deferred income tax relating to items
recognized directly in shareholders' funds is recognized in
shareholders' funds and not in the statement of profit and loss.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, deferred tax
assets are recognized only if there is virtual certainty supported by
convincing evidence that they can be realized against future taxable
profits.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write- down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set-off current tax assets against
current tax liabilities and the deferred tax assets and deferred taxes
relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the Company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and disclosed as "Minimum alternate tax
credit entitlement". The Company reviews the "Minimum alternate tax
credit entitlement" asset at each reporting date and writes down the
asset to the extent the Company does not have convincing evidence that
it will pay normal tax during the specified period.
(q) Accounting for joint ventures
Accounting for joint ventures undertaken by the Company has been done
as follows:
Type of Joint Accounting treatment
Venture
Jointly controlled Company's share of revenue, operations
expenses, assets and liabilities are
included in the financial statements as
Revenues, Expenses, Assets and
Liabilities respectively.
Jointly controlled Company's investment in joint entities
ventures is reflected as investment and
accounted for in accordance with para
2.1(i) above.
(r) Segment reporting Identification of segments
The Company's operating businesses are organized and managed
separately according to the nature of products and services provided,
with each segment representing a strategic business unit that offers
different products and serves different markets. The analysis of
geographical segments is based on the areas in which major operating
divisions of the Company operate.
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocable to any business segment.
Segment accounting policies
The Company prepares its segment information in conformity
with the accounting policies adopted for preparing and presenting the
financial statements of the Company as a whole.
(s) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. The
weighted average number of equity shares outstanding during the year is
adjusted for the events of bonus issue and share split.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
(t) Employee stock compensation cost
Measurement and disclosure of the employee share-based payment plans is
done in accordance with the Securities and Exchange Board of India
(Share Based Employee Benefits) Regulations, 2014 and the Guidance Note
on Accounting for Employee Share-based Payments, issued by the
Institute of Chartered Accountants of India (ICAI). The Company
measures compensation cost relating to employee stock options using the
intrinsic value method. Compensation expense is amortized over the
vesting period of the option on a straight line basis.
(u) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
(v) Derivative instruments
In accordance with the ICAI announcement, derivative contracts, other
than foreign currency forward contracts covered under Accounting
Standard 1 1- The Effects of Changes in Foreign Exchange Rates, are
marked to market on a portfolio basis, and the net loss, if any, after
considering the offsetting effect of gain on the underlying hedged item
is charged to the statement of profit and loss. Net gain, if any, after
considering the offsetting effect of loss on the underlying hedged
item, is ignored.
(w) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. A disclosure is made
for a contingent liability when there is a:
a) possible obligation, the existence of which will be confirmed by the
occurrence/non-occurrence of one or more uncertain events, not fully
with in the control of the Company;
b) present obligation, where it is not probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation;
c) present obligation, where a reliable estimate cannot be made.
[x) Provisions
A provision is recognized when the Company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on best estimate required to settle the obligation at the reporting
date. These estimates are reviewed at each reporting date and adjusted
to reflect the current best estimates.
(y) Operating cycle
The operating cycle is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents and the
management considers this to be the project period.
(z) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. In its
measurement, the Company does not include depreciation and amortization
expense, finance costs and tax expense.
Mar 31, 2013
(a) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in the
outcomes requiring an adjustment to the carrying amounts of assets or
liabilities in future periods.
(b) Tangible fixed assets
tangible assets, except a piece of land and few plant and equipment
items acquired before March 31, 1998, are stated at cost, net off
accumulated depreciation and accumulated impairment losses, if any. the
cost comprises the purchase price, borrowing costs if capitalisation
criteria are met and directly attributable cost of bringing the asset
to its working condition for the intended use. Any trade discounts and
rebates are deducted in arriving at the purchase price.
During the year ended March 31, 1998, the Company revalued certain
plant and equipment items. these plant and equipment items are measured
at fair value less accumulated depreciation and impairment losses, if
recognised after the date of the revaluation. During the year ended
March 31, 2002, the Company revalued a piece of land at fair value. In
case of revaluation of tangible assets, any revaluation surplus is
credited to the revaluation reserve, except to the extent that it
reverses a revaluation decrease of the same asset previously recognised
in the statement of profit and loss, in which case the increase is
recognised in the statement of profit and loss. A revaluation deficit
is recognised in the statement of profit and loss, except to the extent
that it offsets an existing surplus on the same asset recognised in the
asset revaluation reserve.
Subsequent expenditure related to an item of tangible asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing tangible assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
the Company adjusts exchange differences arising on
translation/settlement of long-term foreign currency monetary items
pertaining to the acquisition of a depreciable asset to the cost of the
asset and depreciates the same over the remaining life of the asset. In
accordance with Ministry of Corporate Affairs circular dated August 09,
2012, exchange differences adjusted to the cost of tangible assets are
total differences, arising on long-term foreign currency monetary items
pertaining to the acquisition of a depreciable asset, for the period.
In other words, the Company does not differentiate between exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost and other exchange
difference.
Gains or losses arising from de-recognition of tangible assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
(c) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Gains or losses arising from de-recognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
(d) Depreciation on tangible fixed assets and amortization of
intangible assets.
i) Depreciation on tangible assets is calculated on a straight-line
basis, at the rates prescribed under Schedule XIV to the Companies Act,
1956, (except to the extent stated in paras (ii) and (iii) below),
which are based on the estimated useful life of the assets. In respect
of the revalued assets, the difference between the depreciation
calculated on the revalued amount and that calculated on the original
cost is recouped from the Asset Revaluation Reserve.
ii) Depreciation on the following tangible assets of the Project
division is charged on straight line basis, at the rates based on the
useful life of the assets as estimated by the management, which are
either equal to or higher than the rates prescribed under Schedule XIV
to the Companies act, 1956:
iii) Depreciation on the following fixed assets of some overseas
branches and unincorporated joint venture is charged on straight line
basis, at the rates based on useful life of the assets as estimated by
the management, which are higher than the rates prescribed under
Schedule XIV to the Companies act, 1956:
iv) Leasehold land is amortised on a straight line basis over the
period of lease i.e. 30 years, except for leasehold land which is under
perpetual lease.
v) Individual assets costing upto Rs. 5,000 are depreciated @100%.
vi) Leasehold improvements (included under furniture, fixtures and
office equipments) are depreciated on a straight line basis over the
period of lease or estimated useful life of six years, whichever is
lower.
vii) Intangible assets are amortized on a straight line basis, based on
the nature and useful economic life of the assets as estimated by the
management. The summary of amortization policies applied to the
Company''s intangible assets is as below:
a) Software of project division is amortized over the period of
licenses or six years, whichever is lower.
b) Software of an unincorporated joint venture is amortized over the
period of license or three years, whichever is lower.
(e) Impairment of tangible and intangible assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset''s recoverable amount. an asset''s recoverable
amount is the higher of an asset''s or cash-generating unit''s (CGU)
net selling price and its value in use. The recoverable amount is
determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or
groups of assets. Where the carrying amount of an asset or CGu exceeds
its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. In determining
net selling price, recent market transactions are taken into account,
if available. If no such transactions can be identified, an appropriate
valuation model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company''s cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long term growth
rate is calculated and applied to project future cash flows after the
fifth year.
after impairment, depreciation/amortization is provided on the revised
carrying amount of the asset over its remaining useful life.
(f) Leases
Where the Company is the lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the inception of the lease term at the lower of the
fair value of the leased property and present value of the minimum
lease payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance charges are recognised as finance costs in the statement of
profit and loss. Lease management fees, legal charges and other initial
direct costs are capitalized.
a leased asset is depreciated on a straight-line basis over the useful
life of the asset or the useful life envisaged in Schedule XIV to the
Companies Act, 1956, whichever is lower. However, if there is no
reasonable certainty that the Company will obtain the ownership by the
end of the lease term, the capitalized asset is depreciated on a
straight-line basis over the shorter of the estimated useful life of
the asset, the lease term or the useful life envisaged in Schedule XIV
to the Companies Act, 1956.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
Where the Company is the lessor
Leases in which the Company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating lease. Assets subject to operating leases are included in
fixed assets. Lease income on an operating lease is recognized in the
statement of profit and loss on a straight-line basis over the lease
term. Costs, including depreciation are recognized as an expense in the
statement of profit and loss. Initial direct costs such as legal costs,
brokerage costs etc. are recognized immediately in the statement of
profit and loss.
(g) Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties. If an investment is acquired, or
partly acquired, by the issue of shares or other securities, the
acquisition cost is the fair value of the securities issued. If an
investment is acquired in exchange for another asset, the acquisition
is determined by reference to the fair value of the asset given up or
by reference to the fair value of the investment acquired, whichever is
more clearly evident.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
(h) Inventories
Inventories are valued as follows:
i) Project Materials (excluding scaffoldings): Lower of cost and net
realizable value. Cost is determined on weighted average basis.
ii) Scrap: Net realizable value.
iii) Scaffoldings (included in Project Materials): Cost less
amortization/charge based on their useful life, which is estimated at
seven years.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(i) Unbilled revenue (Work-in-progress)
Unbilled revenue (Work-in-progress) is valued at Net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
i) Contract revenue associated with long term construction contracts is
recognized as revenue by reference to the stage of completion of the
contract at the balance sheet date. The stage of completion of project
is determined by the proportion that contracts costs incurred for the
work performed up to the balance sheet date bear to the estimated total
contract costs. However, profit is not recognized unless there is
reasonable progress on the contract. If total cost of a contract, based
on technical and other estimates, is estimated to exceed the total
contract revenue, the foreseeable loss is provided for. The effect of
any adjustment arising from revisions to estimates is included in the
statement of profit and loss of the year in which revisions are made.
Contract revenue earned in excess of billing has been classified as
"Unbilled revenue (work-in-progress)" and billing in excess of
contract revenue has been classified as "Other current liabilities"
in the financial statements. Claims on construction contracts are
included based on Management''s estimate of the probability that they
will result in additional revenue, they are capable of being reliably
measured, there is a reasonable basis to support the claim and that
such claims would be admitted either wholly or in part. The Company
assesses the carrying value of various claims periodically, and makes
provisions for any unrecoverable amount arising from the legal and
arbitration proceedings that they may be involved in from time to time.
Insurance claims are accounted for on acceptance/settlement with
insurers. The Company collects service tax and value added taxes (VAT)
on behalf of the Government and, therefore, these are not economic
benefits flowing to the Company. Hence, they are excluded from revenue.
ii) Revenue from long term construction contracts executed in
unincorporated joint ventures under work sharing arrangements is
recognized on the same basis as similar contracts independently
executed by the Company. Revenue from unincorporated joint ventures
under profit sharing arrangements is recognized to the extent of the
Company''s share in unincorporated joint ventures.
iii) Revenue from hire charges is accounted for in accordance with the
terms of agreements with the customers.
iv) Rental income from assets given under operating leases is
recognized in the statement of profit and loss on a straight line basis
over the term of the lease.
v) Revenue from Management services is recognised pro- rata over the
period of the contract as and when the services are rendered. The
Company collects service tax on behalf of the Government and,
therefore, it is not an economic benefit flowing to the Company. Hence,
it is excluded from revenue.
vi) Interest income is recognised on a time proportion basis taking
into account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
vii) Dividend income is recognized when the Company''s'' right to
receive dividend is established by the reporting date.
viii) Export Benefit under the Duty Free Credit Entitlements is
recognized in the statement of profit and loss, when right to receive
license as per terms of the scheme is established in respect of exports
made and there is no significant uncertainty regarding the ultimate
collection of the export proceeds.
ix) Revenue from sale of goods is recognised when all the significant
risks and rewards of ownership of the goods have been passed to the
buyer, usually on delivery of the goods.
(k) Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition or
construction of an asset that necessarily takes a substantial period of
time to get ready for its intended use are capitalized as part of the
cost of the respective asset. All other borrowing costs are expensed in
the period they are incurred.
(l) Foreign currency translation
Foreign currency transactions and balances
i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are carried at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
iii) Exchange differences
the Company accounts for exchange differences arising on
translation/settlement of foreign currency monetary items as below:
a. Exchange differences arising on a monetary item that, in substance,
forms part of the Company''s net investment in a non-integral foreign
operation is accumulated in the foreign currency translation reserve
until the disposal of the net investment. On the disposal of such net
investment, the cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognized as
income or as expenses in the same period in which the gain or loss on
disposal is recognized.
b. Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalized and
depreciated over the remaining useful life of the asset.
c. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
translation Difference Account" and amortized over the remaining life
of the concerned monetary item.
d. All other exchange differences are recognized as income or as
expenses in the period in which they arise.
For the purpose of b and c above, the Company treats a foreign monetary
item as "long-term foreign currency monetary item", if it has a
term of 12 months or more at the date of its origination. In accordance
with MCA circular dated August 09, 2012, exchange differences for this
purpose, are total differences arising on long- term foreign currency
monetary items for the period. In other words, the Company does not
differentiate between exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to
the interest cost and other exchange difference.
iv) Forward exchange contracts entered into to hedge foreign currency
risk of an existing asset/liability the exchange differences arising on
forward contracts to hedge foreign currency risk of an underlying asset
or liability existing on the date of the contract are recognised in the
statement of profit and loss of the period in which the exchange rates
change, based on the difference between:
a. foreign currency amount of a forward contract translated at the
exchange rates at the reporting date, or the settlement date where the
transaction is settled during the reporting period, and
b. the same foreign currency amount translated at the latter of the
date of the inception of the contract and the last reporting date, as
the case may be.
The premium or discount on all such contracts arising at the inception
of each contract is amortised as expense or income over the life of the
contract.
Any profit or loss arising on cancellation or renewal of forward
foreign exchange contracts is recognised as income or expense for the
year upon such cancellation or renewal.
Forward exchange contracts entered to hedge the foreign currency risk
of highly probable forecast transactions and firm commitments are
marked to market at the balance sheet date if such mark to market
results in exchange loss. Such exchange loss is recognised in the
statement of profit and loss immediately. Any gain is ignored and not
recognised in the financial statements, in accordance with the
principles of prudence enunciated in accounting Standard 1- Disclosure
of accounting Policies.
v) Translation of integral and non integral foreign operations
The Company classifies all its foreign operations as either "integral
foreign operations" or "non- integral foreign operations".
The financial statements of an integral foreign operation are
translated as if the transactions of the foreign operation have been
those of the Company itself.
The assets and liabilities of a non-integral foreign operation are
translated into the reporting currency at the exchange rate prevailing
at the reporting date. Items of statement of profit and loss are
translated at exchange rates prevailing at the dates of transactions or
weighted average quarterly rates, where such rates approximate the
exchange rate at the date of transaction. The exchange differences
arising on translation are accumulated in the foreign currency
translation reserve. On disposal of a non-integral foreign operation,
the accumulated foreign currency translation reserve relating to that
foreign operation is recognized in the statement of profit and loss.
When there is a change in the classification of a foreign operation,
the translation procedures applicable to the revised classification are
applied from the date of the change in the classification.
(m) Employee benefits
i) The Company makes contribution to statutory provident fund and
pension funds in accordance with Employees Provident Fund and
Miscellaneous Provisions Act, 1952 which is a defined contribution
plan. The Company has no obligation, other than the contribution
payable to respective funds. The Company recognizes contribution
payable to respective funds as expenditure, when an employee renders
the related service. If the contribution payable to the scheme for
service received before the balance sheet date exceeds the contribution
already paid, the deficit payable to the scheme is recognized as a
liability after deducting the contribution already paid. If the
contribution already paid exceeds the contribution due for services
received before the balance sheet date, then excess is recognized as an
asset to the extent that the pre-payment will lead to, for example, a
reduction in future payment or a cash refund.
ii) Gratuity liability is a defined benefit obligation. The Company has
taken an insurance policy under group gratuity scheme with Life
Insurance Corporation of India/ ICICI Prudential Life Insurance Company
Limited to cover the gratuity liability of the employees of project
division and amount paid/payable in respect of present value of
liability for past services is charged to the statement of profit and
loss on the basis of actuarial valuation on the projected unit credit
method made at the end of each financial year. Actuarial gains/losses
are recognised in full in the period in which they occur in the
statement of profit and loss.
iii) In respect to overseas branches and unincorporated joint venture
operations, provision for retirement and other employee benefits are
made on the basis prescribed in the local labour laws of the respective
country, for the accumulated period of service at the end of the
financial year.
iv) Accumulated leave, which is expected to be utilized within the next
12 months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date. The Company treats accumulated leave
expected to be carried forward beyond twelve months, as long-term
employee benefit for measurement purposes. Such long-term compensated
absences are provided for based on the actuarial valuation using the
projected unit credit method at the year-end. Actuarial gains/losses
are immediately taken to the statement of profit and loss and are not
deferred. The Company presents the entire leave as a current liability
in the balance sheet, since it does not have an unconditional right to
defer its settlement for 12 months after the reporting date.
(n) Income taxes
Tax expense comprises 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 Income Tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the Company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised directly in
shareholders'' funds is recognised in shareholders'' funds and not in
the statement of profit and loss.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences of earlier years. Deferred tax
is measured using the tax rates and tax laws enacted or substantively
enacted at the reporting date. Deferred income tax relating to items
recognised directly in shareholders'' funds is recognised in
shareholders'' funds and not in the statement of profit and loss.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write- down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set-off current tax assets against
current tax liabilities and the deferred tax assets and deferred taxes
relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the Company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement."
The Company reviews the "MAT credit entitlement" asset at each
reporting date and writes down the asset to the extent the Company does
not have convincing evidence that it will pay normal tax during the
specified period.
(o) Accounting for joint ventures
Accounting for joint ventures undertaken by the Company has been done
as follows:
(p) Segment reporting
Identification of segments
The Company''s operating businesses are organized and managed
separately according to the nature of products and services provided,
with each segment representing a strategic business unit that offers
different products and serves different markets. The analysis of
geographical segments is based on the areas in which major operating
divisions of the Company operate.
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(q) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. The
weighted average number of equity shares outstanding during the year is
adjusted for the events of bonus issue and share split.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
(r) Employee stock compensation cost
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
Accounting for Employee Share-based Payments, issued by the Institute
of Chartered Accountants of India (ICAI). the Company measures
compensation cost relating to employee stock options using the
intrinsic value method. Compensation expense is amortized over the
vesting period of the option on a straight line basis.
(s) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
(t) Derivative instruments
In accordance with the ICAI announcement, derivative contracts, other
than foreign currency forward contracts covered under Accounting
Standard 11- the Effects of Changes in Foreign Exchange Rates, are
marked to market on a portfolio basis, and the net loss, if any, after
considering the offsetting effect of gain on the underlying hedged item
is charged to the statement of profit and loss. Net gain, if any, after
considering the offsetting effect of loss on the underlying hedged
item, is ignored.
(u) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. A disclosure is made
for a contingent liability when there is a:
a) possible obligation, the existence of which will be confirmed by the
occurrence/non-occurrence of one or more uncertain events, not fully
with in the control of the Company;
b) present obligation, where it is not probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation;
c) present obligation, where a reliable estimate cannot be made.
(v) Provisions
A provision is recognized when the Company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on best estimate required to settle the obligation at the
reporting date. these estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
(w) Operating cycle
the operating cycle is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents and the
same is considered as project period.
(x) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. In its
measurement, the Company does not include depreciation and amortization
expense, finance costs and tax expense.
Mar 31, 2012
(a) Change in accounting policy Presentation and disclosure of financial
statements
During the year ended March 31, 2012, the revised Schedule VI notified
under the Companies Act 1956, has become applicable to the Company, for
preparation and presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it has significant impact on presentation and disclosures made in the
financial statements. The Company has also reclassified the previous
year figures in accordance with the requirements applicable in the
current year.
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in the
outcomes requiring an adjustment to the carrying amounts of assets or
liabilities in future periods.
(c) Tangible assets
Tangible assets, except a piece of land and few plant & machinery
items, are stated at cost, net off accumulated depreciation and
accumulated impairment losses, if any. The cost comprises the purchase
price, borrowing costs if capitalisation criteria are met and directly
attributable cost of bringing the asset to its working condition for
the intended use.
During the year ended March 31, 1998, the Company revalued its few
plant and machinery items. These plant and machinery items are measured
at fair value less accumulated depreciation and impairment losses, if
recognised after the date of the revaluation. In case of revaluation of
tangible assets, any revaluation surplus is credited to the
revaluation reserve, except to the extent that it reverses a
revaluation decrease of the same asset previously recognised in the
statement of profit and loss, in which case the increase is recognised
in the statement of profit and loss. A revaluation deficit is
recognised in the statement of profit and loss, except to the extent
that it offsets an existing surplus on the same asset recognised in the
asset revaluation reserve.
During the year ended March 31, 2002, the Company revalued a piece of
land. This land is measured at fair value less accumulated depreciation
and impairment losses, if recognised after the date of the revaluation.
In case of revaluation of tangible assets, any revaluation surplus is
credited to the revaluation reserve, except to the extent that it
reverses a revaluation decrease of the same asset previously recognised
in the statement of profit and loss, in which case the increase is
recognised in the statement of profit and loss. A revaluation deficit
is recognised in the statement of profit and loss, except to the extent
that it offsets an existing surplus on the same asset recognised in the
asset revaluation reserve.
Subsequent expenditure related to an item of tangible asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing tangible assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
From accounting periods commencing on or after December 07, 2006, the
Company adjusts exchange differences arising on translation/ settlement
of long-term foreign currency monetary items pertaining to the
acquisition of a depreciable asset to the cost of the asset and
depreciates the same over the remaining life of the asset.
Gains or losses arising from de-recognition of fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
(d) Depreciation on tangible assets
i) Depreciation on tangible assets is calculated on a straight- line
basis, at the rates prescribed under Schedule XIV to the Companies Act,
1956, (except to the extent stated in paras (ii) and (iii) below),
which are based on the estimated useful life of the assets. In respect
of the revalued assets, the difference between the depreciation
calculated on the revalued amount and that calculated on the original
cost is recouped from the Asset Revaluation Reserve.
ii) Depreciation on the following tangible assets of the Project
division is charged on straight line basis, at the rates based on the
useful life of the assets as estimated by the management, which are
either equal to or higher than the rates prescribed under Schedule XIV
to the Companies Act, 1956:
Asset Description Depreciation Rate
Plant and machinery 4.75% to 11.31%
Furniture, fixtures and office equipments 4.75% to 25.00%
Vehicles 9.50% to 25.00%
iii) Depreciation on the following fixed assets of some overseas
branches and unincorporated joint venture is charged on straight line
basis, at the rates based on useful life of the assets as estimated by
the management, which are higher than the rates prescribed under
Schedule XIV to the Companies Act, 1956:
iv) Leasehold land is amortised on a straight line basis over the
period of lease i.e. 30 years, except for leasehold land which is under
perpetual lease.
v) Individual assets costing upto Rs. 5,000 are depreciated @100% in
the year of purchase.
vi) Leasehold improvements (included under furniture, fixtures and
office equipments) are depreciated on a straight line basis over the
period of lease or estimated useful life of six years, whichever is
lower.
(e) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible assets are amortized on a straight line basis, based on the
nature and useful economic life of the assets as estimated by the
management. The summary of amortization policies applied to the
Company's intangible assets is as below:
(i) Software of project division is amortized over the period of
licenses or six years, whichever is lower.
(ii) Software of an unincorporated joint venture is amortized over the
period of license or three years, whichever is lower.
(f) Preoperative Expenditure pending allocation
Expenditure directly relating to construction activity is capitalised.
Indirect expenditure incurred during construction period is capitalised
as part of indirect construction cost to the extent to which the
expenditure is indirectly related to the construction or is incidental
thereto. Other indirect expenditure (including borrowing cost) incurred
during the construction period, which is not related to the
construction activity nor is incidental thereto, is charged to the
statement of profit and loss.
All direct capital expenditure on expansion are capitalised. As regards
indirect expenditure on expansion, only that portion is capitalised
which represents the marginal increase in such expenditure involved as
a result of capital expansion. Both direct and indirect expenditure are
capitalised only if they increase the value of the asset beyond its
original standard of performance.
(g) Impairment of tangible and Intangible assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset's recoverable amount. An asset's recoverable
amount is the higher of an asset's or cash-generating unit's (CGU)
net selling price and its value in use. The recoverable amount is
determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or
groups of assets. Where the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. In determining
net selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company's cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long term growth
rate is calculated and applied to project future cash flows after the
fifth year.
After impairment, depreciation/amortization is provided on the revised
carrying amount of the asset over its remaining useful life.
(h) Leases Where the Company is the lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalised at the inception of the lease term at the lower of the
fair value of the leased property and present value of the minimum
lease payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance charges are recognised as finance costs in the statement of
profit and loss. Lease management fees, legal charges and other initial
direct costs are capitalised.
A leased asset is depreciated on a straight-line basis over the useful
life of the asset or the useful life envisaged in Schedule XIV to the
Companies Act, 1956, whichever is lower. However, if there is no
reasonable certainty that the company will obtain the ownership by the
end of the lease term, the capitalised asset is depreciated on a
straight-line basis over the shorter of the estimated useful life of
the asset, the lease term or the useful life envisaged in Schedule XIV
to the Companies Act, 1956.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
Where the Company is the lessor
Leases in which the Company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating lease. Assets subject to operating leases are included in
fixed assets. Lease income on an operating lease is recognized in the
statement of profit and loss on a straight-line basis over the lease
term. Costs, including depreciation are recognized as an expense in the
statement of profit and loss. Initial direct costs such as legal costs,
brokerage costs etc. are recognized immediately in the statement of
profit and loss.
(i) Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties. If an investment is acquired, or
partly acquired, by the issue of shares or other securities, the
acquisition cost is the fair value of the securities issued. If an
investment is acquired in exchange for another asset, the acquisition
is determined by reference to the fair value of the asset given up or
by reference to the fair value of the investment acquired, whichever is
more clearly evident.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis. Long-
term investments are carried at cost. However, provision for diminution
in value is made to recognize a decline other than temporary in the
value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of Profit and Loss.
(j) Inventories Inventories are valued as follows:
i) Project Materials (excluding scaffoldings): Lower of cost and net
realizable value. Cost is determined on weighted average basis.
ii) Scrap: Net realizable value.
iii) Work in progress - projects: Net realisable value
iv) Scaffoldings (included in Project Materials): Cost less
amortization/ charge based on their useful life, which is estimated at
seven years.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(k) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
i) Contract revenue associated with long term construction contracts is
recognized as revenue by reference to the stage of completion of the
contract at the balance sheet date. The stage of completion of project
is determined by the proportion that contracts costs incurred for the
work performed up to the balance sheet date bear to the estimated total
contract costs. However, profit is not recognized unless there is
reasonable progress on the contract. If total cost of a contract, based
on technical and other estimates, is estimated to exceed the total
contract revenue, the foreseeable loss is provided for. The effect of
any adjustment arising from revisions to estimates is included in the
statement of profit and loss of the year in which revisions are made.
Contract revenue earned in excess of billing has been reflected under
"Inventories" and billing in excess of contract revenue has been
reflected under "Other Current Liabilities" in the financial
statements. The revenue on account of extra claims and the expenditure
on account of liquidated damages on construction contracts are
accounted for based on Management's estimate of the probability that
such claims would be admitted either wholly or in part (Refer Note 45
and 46). Insurance claims are accounted for on acceptance/ settlement
with insurers. The Company collects service tax and value added taxes
(VAT) on behalf of the Government and, therefore, these are not
economic benefits flowing to the Company. Hence, they are excluded
from revenue.
ii) Revenue from long term construction contracts executed in
unincorporated joint ventures under work sharing arrangements is
recognized on the same basis as similar contracts independently
executed by the Company. Revenue in unincorporated joint ventures under
profit sharing arrangements is recognized to the extent of the
Company's share in unincorporated joint ventures.
iii) Revenue from hire charges is accounted for in accordance with the
terms of agreements with the customers.
iv) Rental income from assets given under operating leases is
recognized in the statement of profit and loss on a straight line basis
over the term of the lease.
v) Revenue from Management services is recognised pro-rata over the
period of the contract as and when services are rendered. The Company
collects service tax on behalf of the Government and, therefore, it is
not an economic benefit flowing to the Company. Hence, it is excluded
from revenue.
vi) Interest income is recognised on a time proportion basis taking
into account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
vii) Dividend income is recognized when the Company's' right to
receive dividend is established by the reporting date.
viii) Export Benefit under the Duty Free Credit Entitlements is
recognized in the statement of profit and loss , when right to receive
license as per terms of the scheme is established in respect of exports
made and there is no significant uncertainty regarding the ultimate
collection of the export proceeds.
ix) Revenue from sale of goods is recognised when the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the goods.
(l) Borrowing Costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition or
construction of an asset that necessarily takes a substantial period of
time to get ready for its intended use are capitalized as part of the
cost of the respective asset. All other borrowing costs are expensed in
the period they occur.
(m) Foreign currency translation
i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are carried at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
iii) Exchange differences
From accounting periods commence on or after December 07, 2006, the
Company accounts for exchange differences arising on translation/
settlement of foreign currency monetary items as below:
1. Exchange differences arising on a monetary item that, in substance,
forms part of the Company's net investment in a non- integral foreign
operation is accumulated in the foreign currency translation reserve
until the disposal of the net investment. On the disposal of such net
investment, the cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognized as
income or as expenses in the same period in which the gain or loss on
disposal is recognized.
2. Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalized and
depreciated over the remaining useful life of the asset. For this
purpose, the Company treats a foreign monetary item as "long-term
foreign currency monetary item", if it has a term of 12 months or
more at the date of its origination.
3. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized over the remaining life
of the concerned monetary item.
4. All other exchange differences are recognized as income or as
expenses in the period in which they arise.
iv) Forward exchange contracts entered into to hedge foreign currency
risk of an existing asset/ liability
The premium or discount arising at the inception of forward exchange
contracts is amortised and recognised as an expense/ income over the
life of the contract. Exchange differences on such contracts, except
the contracts which are long term foreign currency monetary items, are
recognised in the statement of profit and loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of such forward exchange contract is also recognised as income
or as expense for the year. Any gain/ loss arising on forward contracts
which are long term foreign currency monetary items is recognised in
accordance with paragraph 2 and 3 as mentioned above.
v) Translation of integral and non integral foreign operations
The Company classifies all its foreign operations as either "integral
foreign operations" or "non- integral foreign operations".
The financial statements of an integral foreign operation are
translated as if the transactions of the foreign operation have been
those of the Company itself.
The assets and liabilities of a non-integral foreign operation are
translated into the reporting currency at the exchange rate prevailing
at the reporting date. Items of statement of profit and loss are
translated at exchange rates prevailing at the dates of transactions or
weighted average quarterly rates, where such rates approximate the
exchange rate at the
date of transaction. The exchange differences arising on translation
are accumulated in the foreign currency translation reserve. On
disposal of a non-integral foreign operation, the accumulated foreign
currency translation reserve relating to that foreign operation is
recognized in the statement of profit and loss.
When there is a change in the classification of a foreign operation,
the translation procedures applicable to the revised classification are
applied from the date of the change in the classification.
(n) Retirement and other employee benefits
i) Retirement benefits in the form of provident and pension funds are
defined contribution schemes and contributions are charged to the
statement of profit and loss for the year when the contributions to the
respective funds are due. There are no other obligations other than the
contribution payable to the respective funds.
ii) Gratuity liability is a defined benefit obligation. The Company has
taken an insurance policy under group gratuity scheme with Life
Insurance Corporation of India / ICICI Prudential Life Insurance
Company Limited to cover the gratuity liability of the employees of
project division and amount paid / payable in respect of present value
of liability for past services is charged to the statement of profit
and loss on the basis of actuarial valuation on the projected unit
credit method made at the end of each financial year. Actuarial
gains/losses are recognised in full in the period in which they occur
in the statement of profit and loss.
iii) In respect to overseas branches and unincorporated joint venture
operations, provision for retirement and other employees benefits are
made on the basis prescribed in the Local Labour Laws of the respective
country, for the accumulated period of service at the end of the
financial year.
iv) Accumulated leave, which is expected to be utilized within the next
12 months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date. The Company treats accumulated leave
expected to be carried forward beyond twelve months, as long-term
employee benefit for measurement purposes. Such long-term compensated
absences are provided for based on the actuarial valuation using the
projected unit credit method at the year- end. Actuarial gains/losses
are immediately taken to the statement of profit and loss and are not
deferred. The Company presents the entire leave as a current liability
in the balance sheet, since it does not have an unconditional right to
defer its settlement for 12 months after the reporting date.
(o) Income taxes
Tax expense comprises 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 Income Tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the Company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences of earlier years. Deferred tax
is measured using the tax rates and tax laws enacted or substantively
enacted, at the reporting date.
* Capitalized as preoperative expenses (refer note 27)
Mar 31, 2011
1. Basis of preparation
These abridged financial statements have been prepared in accordance
with the requirements of Rule 7A of the Companies (Central
Government's) General Rules and Forms, 1956 and clause 32 of the
Listing Agreement. These abridged financial statements have been
prepared on the basis of the complete set of financial statements for
the year ended March 31, 2011.
2. [11(a)] The following note has been referred to by the Auditors in
their report on the complete set of financial statements dated May 30,
2011:
The Company had executed certain projects for some customers in earlier
years. These customers have withheld amounts aggregating to Rs. 725,128
thousand (Previous year Rs. 587,863 thousand) on account of liqudated
damages and other deductions, which are being carried as sundry
debtors. Some of these customers had also not certified the final
bills amounting to Rs. Nil (Previous year Rs. 31,455 thousand), which
are being carried forward under Work in Progress inventory. The Company
has also filed certain claims against these customers. The Company has
gone into arbitration/ legal proceedings against these customers for
recovery of amounts withheld as liquidated damages & other deductions
and for claims lodged by the Company. Pending outcome of arbitration/
legal proceedings, amounts withheld for liquidated damages & other
deductions are being carried forward as recoverable. The Company has
been legally advised that there is no justification in imposition of
liquidated damages and other deductions by these customers and hence
the above amounts are considered good of recovery.
3. [31] On certain projects which are completely executed/ nearing
com- pletion, the Company has unbilled work-in-progress inventory of
Rs. 10,846,042 thousand. Further, Rs. 1,449,754 thousand are withheld
by these customers on account of liquidated damages and other
deductions. The Company is of the view that the unbilled work in
progress will be billed after completion of some pending work/
completion of certain pending formalities. Also, it is of the view that
there is no justification in imposition of liquidated damages and
other deductions by these customers. Accordingly, the above amounts are
considered good of recovery.
4. [17] The Company has an investment in the equity and preference
capital amounting to Rs. 2,997,139 thousand in its subsidiary at
Singapore and has loans & advances outstanding amounting to Rs.
13,290,431 thousand as at March 31, 2011 from the said subsidiary. The
subsidiary has accumulated losses of Rs. 8,081,096 thousand as at March
31, 2011. However, the subsidiary is holding certain strategic
investments. Consider- ing the intrinsic value of the investments held
by the subsidiary, based on the valuation carried out by an independent
valuer, and also considering the long term business plan of the
subsidiary including the forecasts of profitability of operations, the
company is of the view that there is no per- manent diminution in the
value of investment and accordingly, no provision is considered
necessary in the financial statements at this stage on the above
account.
5. [18] The following note has been referred to by the Auditors in
their report on the complete set of financial statements dated May 30,
2011:
The Company's branch at Libya has fixed assets (net) and current
assets aggregating to Rs. 9,909,622 thousand as at March 31, 2011 in
relation to certain projects being executed in that country. The Branch
has also received advances from customers of Rs. 5,133,940 thousand
against bank guarantee outstanding of Rs. 6,046,331 thousand. Due to
civil and political disturbances and unrest in Libya, the work on all
the projects has stopped, the resources have been demobilised and
necessary intimation has been given to the customers. The Company has
also filed the details of the outstanding assets with the Ministry of
External Affairs, Government of India. Pending the outcome of the
uncertainty, the aforesaid amounts are being carried forward as
realizable.
6. [26] On March 17, 2010, On March 17, 2010, the Company was
subjected to a search and seizure operation under Section 132 and
survey under Section 133A of the Income Tax Act, 1961. During the
search and seizure operation, statements of Company's officials were
recorded in which they were made to offer some unaccounted income of
the Company for the financial year 2009-10. The Company is of the view
that the above state- ments were made under undue mental pressure and
physical exhaustion and it has retracted the above statements
subsequently. The Company has filed fresh returns of income for
Assessment years 2004-05 to 2009-10 in pursuance of the notices dated
August 25, 2010 from the Income Tax department and the assessment
proceedings are going on. In view of the above, tax liability, if any,
that may arise on this account is presently unas- certainable.
7. [29] The under mentioned note has been referred to by the Auditors
in their report on the complete set of financial statements dated May
30, 2011:
The Company had during the previous year accounted for a claim of Rs.
2,430,300 thousand (Previous year Rs. 2,430,300 thousand) on Heera
Redevelopment Project (HRP) with Oil and Natural Gas Corporation
Limited, based upon management's assessment of cost over-run arising
due to design changes and consequent changes in the scope of work on
As per our Report on the abridged financial statements of even date
a project and had also not accounted for liquidated damages amounting
to Rs. 654,891 thousand (Previous year Rs. 654,891 thousand) deducted
by the customer since it is of the view that the delay in execution of
the project is attributable to the customer. Further, there are other
debtors outstand- ing of Rs. 844,527 thousand and unbilled work in
progress inventory of Rs. 1,603,397 thousand relating to the said
project as at March 31, 2011. The Company has initiated arbitration
proceedings against the customer during the year. The management, based
on the expert inputs, is confident of recovery of amounts exceeding
the recognized claim and waiver of liquidated damages and is also confi
dent of recovery of other debtors and unbilled work in progress
inventory.
8. [30] The under mentioned note has been referred to by the Auditors
in their report on the complete set of financial statements dated May
30, 2011:
The Company had during the year accounted for claims of Rs. 897,346
thousand on two contracts, based upon management's assessment of cost
over-run arising due to delay in supply of free issue material by the
customer, changes in scope of work and /or price escalation of materi-
als used in the execution of the projects. The management, based on its
assessment, is confident of recovery of amounts exceeding the
recognized claims.
Mar 31, 2010
(a) Basis of preparation
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006, (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis
except in case of certain fixed assets for which revaluation had been
carried out. The accounting policies have been consistently applied by
the Company and are consistent with those used in the previous year.
(b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon managementÃs best
knowledge of current events and actions, actual results could differ
from these estimates.
(c) Fixed assets
Fixed assets are stated at cost (or revalued amounts, as the case may
be), less accumulated depreciation and impairment losses, if any. Cost
comprises the purchase price and any attributable cost of bringing the
asset to its working condition for its intended use. Borrowing costs
relating to acquisition / construction of fixed assets which takes
substantial period of time to get ready for its intended use are also
included to the extent they relate to the period till such assets are
ready to put to use.
In respect of accounting periods commencing on or after December 07,
2006, exchange differences arising on reporting of the long-term
foreign currency monetary items at rates different from those at which
they were initially recorded during the period, or reported in the
previous financial statements, are added to or deducted from the cost
of the asset and are depreciated over the balance life of the asset, if
these monetary items pertain to the acquisition of a depreciable fixed
asset.
(d) Depreciation / Amortization
i) Depreciation is provided using the straight line method, at the
rates prescribed under Schedule XIV to the Companies Act, 1956, (except
to the extent stated in paras (ii), (iii), (iv) and (viii) below),
which are based on the estimated useful lives of the assets. In respect
of the revalued assets, the difference between the depreciation
calculated on the revalued amount and that calculated on the original
cost, is recouped from the Revaluation Reserve Account.
v) Leasehold land is amortised over the lease period except for
leasehold land, which is under perpetual lease.
vi) Individual assets costing upto Rs 5,000 are depreciated @100% in
the year of purchase.
vii) Leasehold improvements are depreciated over the period of the
lease or estimated useful life of six years whichever is lower.
viii) Depreciation on CompanyÃs share of following fixed assets of an
unincorporated joint venture is provided on straight-line method at the
following rates, based on their useful lives as estimated by the
management of the joint venture:
ix) Intangibles
Different softwares used by the Company are amortized on a straight
line basis based on the nature and estimated useful lives of these
softwares as estimated by the management as mentioned below:
(i) Softwares of project division are amortized over the period of
license or six years whichever is lower.
(ii) Softwares of Internet Service Division are amortized over the
period of license or five years whichever is lower.
(iii) Softwares of an unincorporated joint venture are amortized over
the period of license or three years whichever is lower.
(e) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal / external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assetÃs net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
ii. After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
(f) Leases
Where the Company is the lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the finance
charges and reduction of the lease liability based on the implicit rate
of return. Finance charges are charged directly against income. Lease
management fees, legal charges and other initial direct costs are
capitalized.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an
expense in the Profit and Loss Account on a straight line basis over
the lease term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Profit and Loss Account on a straight-line
basis over the lease term. Costs, including depreciation are recognized
as an expense in the Profit and Loss Account. Initial direct costs such
as legal costs, brokerage costs etc. are recognized immediately in the
Profit and Loss Account.
(g) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of such investments.
(h) Inventories
Inventories are valued as follows:
i) Project Materials (excluding scaffoldings): - Lower of cost or net
realizable value. Cost is determined on weighted average basis.
ii) Scrap: -Net realizable value.
iii) Work in Progress- Projects: -Net realizable value.
iv) Scaffoldings (included in Project Materials): Cost less
amortization/charge based on their useful life, which is estimated at
seven years.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(i) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
i) Contract revenue associated with long term construction contracts is
recognized as revenue and expenses respectively by reference to the
stage of completion of the contract at the balance sheet date. The
stage of completion of project is determined by the proportion that
contracts costs incurred for work performed up to the balance sheet
date bear to the estimated total contract costs. However, profit is not
recognized unless there is reasonable progress on the contract. If
total cost of a contract, based on technical and other estimates, is
estimated to exceed the total contract revenue, the foreseeable loss is
provided for. The effect of any adjustment arising from revisions to
estimates is included in the income statement of the year in which
revisions are made. Contract revenue earned in excess of billing has
been reflected under ÃInventoryà and billing in excess of contract
revenue has been reflected under ÃCurrent Liabilitiesà in the balance
sheet. The revenue on account of extra claims and the expenditure on
account of liquidated damages on construction contracts are accounted
for at the time of acceptance/ settlement by the customers due to
uncertainties attached thereto. Similarly, insurance claims are
accounted for on settlement with insurers.
ii) Revenue from long term construction contracts executed in joint
ventures under work sharing arrangements is recognized on the same
basis as similar contracts independently executed by the Company.
Revenue in joint ventures under profit sharing arrangements is
recognized to the extent of the CompanyÃs share in joint ventures.
iii) Internet Service revenues comprise of revenues from registration,
installation and provision of Internet services. Registration fee and
installation charges are recognized on the admission of customer and
completion of services respectively. Service revenue from Internet
access is recognized pro-rata, calculated on the basis of provision of
services or time duration of contract, as may be applicable.
iv) Revenue from hire charges is accounted for in accordance with the
terms of agreements with the customers.
v) Rental income from assets given under operating leases is recognized
in the profit and loss account on a straight line basis over the term
of the lease.
vi) Interest revenue is accounted for on a time proportion basis taking
into account the amount outstanding and the rate applicable.
vii) Dividend revenue is recognized when the shareholdersà right to
receive payment is established by the balance sheet date. Dividend from
subsidiaries is recognised even if same are declared after the balance
sheet date but pertains to period on or before the date of balance
sheet as per the requirement of schedule VI of the Companies Act, 1956.
viii) Export Benefit under the Duty Free Credit Entitlements is
accounted for in the year of export, wherever there is certainty of its
realisation.
ix) Sale of Goods: Revenue is recognised when the significant risk and
rewards of ownership of the goods have passed to the buyer.
(j) Borrowing Costs
Borrowing costs directly attributable to the acquisition and
construction of an asset that necessarily takes a substantial period of
time to get ready for its intended use are capitalized as part of the
cost of the respective asset. All other borrowing costs are expensed in
the year they occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the borrowing of funds
(k) Foreign currency
) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency, are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency, are reported using the exchange rates that existed
when the values were determined.
ii) Exchange Differences
Exchange differences arising on a monetary item that, in substance,
form part of the companyÃs net investment in a non-integral foreign
operation is accumulated in a foreign currency translation reserve in
the financial statements until the disposal of the net investment, at
which time they are recognised as income or as expenses.
Exchange differences, in respect of accounting periods commencing on or
after December 07, 2006, arising on reporting of long-term foreign
currency monetary items at rates different from those at which they
were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, are added to or deducted from the cost of
the asset and are depreciated over the balance life of the asset, and
in other cases, are accumulated in a ÃForeign Currency Monetary Item
Translation Difference Accountà in the CompanyÃs financial statements
and amortized over the balance period of such long-term asset/liability
but not beyond accounting period ending on or before March 31, 2011.
Exchange differences arising on the settlement of monetary items not
covered above, or on reporting such monetary items of the company at
rates different from those at which they were initially recorded during
the year, or reported in previous financial statements, are recognized
as income or as expenses in the year in which they arise.
v) Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year. However, exchange difference in respect of accounting period
commencing on or after December 07, 2006 arising on the forward
exchange contract undertaken to hedge the long term foreign currency
monetary item, in so far as they relate to the acquisition of
depreciable capital asset, are added to or deducted from the cost of
asset and in other cases, are accumulated in ÃForeign Currency Monetary
Item Translation Difference Accountà and amortised over the balance
period of such long term asset / liability but not beyond accounting
period ending on or before March 31, 2011.
v) Translation of integral and non integral foreign operations
The financial statements of an integral foreign operation are
translated as if the transactions of the foreign operation have been
those of the Company itself.
In translating the financial statements of a non-integral foreign
operation for incorporation in financial statements, the assets and
liabilities, both monetary and non-monetary, of the non-integral
foreign operation are translated at the closing rate; income and
expense items of the non- integral foreign operation are translated at
exchange rates at the dates of the transactions; and all resulting
exchange differences are accumulated in a foreign currency translation
reserve until the disposal of the net investment.
On the disposal of a non-integral foreign operation, the cumulative
amount of the exchange differences which have been deferred and which
relate to that operation are recognized as income or as expenses in the
same period in which the gain or loss on disposal is recognized.
When there is a change in the classification of a foreign operation,
the translation procedures applicable to the revised classification are
applied from the date of the change in the classification.
(l) Retirement and other employee benefits
i) Retirement benefits in the form of provident and pension funds are
defined contribution schemes and contributions are charged to Profit
and Loss Account of the year when the contributions to the respective
funds are due. There are no obligations other than the contribution
payable to the respective funds.
ii) Gratuity liability is a defined benefit obligation. The Company has
taken an insurance policy under group gratuity scheme with Life
Insurance Corporation of India (LIC) / ICICI Prudential Life Insurance
Company Limited (ICICI) to cover the gratuity liability of the
employees of project division and amount paid / payable in respect of
present value of liability for past services is charged to the Profit
and Loss Account on the basis of actuarial valuation on the projected
unit credit method made at the end of the financial year. In respect of
employees of Internet Service Division, gratuity liability is accrued
and provided for on the basis of an actuarial valuation on the
projected unit credit method made at the end of the financial year.
iii) In respect to overseas operation, provision for employees end of
service benefits is made on the basis prescribed in the Local Labour
Law of the respective country, for the accumulated period of service at
the end of the financial year.
iv) Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation at the end of the financial year. The actuarial
valuation is done as per projected unit credit method.
v) Actuarial gains/losses are immediately taken to Profit and Loss
Account and are not deferred.
(m) Income taxes
Tax expense comprises of current, deferred and fringe benefit tax.
Current income tax and fringe benefit tax is measured at the amount
expected to be paid to the tax authorities in accordance with the
Income Tax Act, 1961 enacted in India and in the overseas branches, as
per the respective tax laws. Deferred income tax reflects the impact of
current year timing 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 across various countries of
operation are not set off against each other as the Company does not
have a legal right to do so.
Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized. In
situations where the Company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profits.
At each balance sheet date, the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain as the case may be,
that sufficient future taxable income will be available.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in Guidance Note issued
by the Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the profit and loss account and shown as
MAT Credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to
the effect that Company will pay normal Income Tax during the
specified period.
(n) Accounting for joint ventures
Accounting for joint ventures undertaken by the Company has been done
as follows:
Type of Joint Venture Accounting Treatment
Jointly Controlled Operations Companys share of revenues, expenses,
assets and liabilities are included
in the financial
statements as Revenues, Expenses,
Assets and Liabilities respectively
Jointly Controlled Entities Companys investment in joint ventures
is reflected as investment and
accounted for in
accordance with para (2(g)) above.
(o) Segment reporting policies Identification of segments
The Companys operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Unallocated items
Includes general corporate income and expense items not allocated to
any business segment.
Segment Policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole
(p) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting year. The weighted
average number of equity shares outstanding during the reported years
are adjusted for the events of bonus issue and share split.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
(q) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
(r) Employee Stock Options
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
Accounting for Employee Share-based Payments, issued by the Institute
of Chartered Accountants of India (ICAI). The Company measures
compensation cost relating to employee stock options using the
intrinsic value method. Compensation expense is amortized over the
vesting period of the option on a straight line basis.
(s) Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
(t) Derivative Instruments
As per the Institute of Chartered Accountants of India announcement,
derivative contracts, other than those covered under Accounting
Standard 11 - The Effects of Changes in Foreign Exchange Rates, are
marked to market on a portfolio basis, and the net loss after
considering the offsetting effect on the underlying hedge item is
charged to the income statement. Net gains are ignored.