Mar 31, 2013
A. Basis for preparation of accounts
The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles in India ("GAAP") under the historical cost convention on an accrual basis and in compliance with the provisions of the Companies Act, 1956 and the mandatory Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government in consultation with the National Advisory Committee on Accounting Standards. The Accounting Policies have been consistently applied by the company and are consistent with those used in previous year.
Accounting Policies not specifically referred to otherwise are consistent with the generally accepted accounting principles followed by the company.
b. Fixed Assets and Depreciation
Fixed Assets are stated at cost less accumulated depreciation and any impairment loss where the recoverable amount of the asset is estimated to be lower than its carrying amount. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition for its intended use. Land and Capital Work-in-progress are not depreciated. Other assets are depreciated using the Straight Line Method, at the following rates;
- Buildings - 1.63%
- Computers - 16.21%
- Office Equipments - 13.91%
- Vehicles - 9.50%
- Furniture - 6.33%
- Plant & Machinery - 4.75%
Assets acquired under finance lease are depreciated on a Straight Line Method over the lease term. Where there is a reasonable certainty that the company shall obtain ownership of the assets at the end of the lease term, such assets are depreciated at the rates prescribed under Schedule XIV to the Companies Act, 1956.
When assets are disposed or retired, their cost and accumulated depreciation are removed from the financial statements. Gain or Loss arising from the disposal of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the asset and is recognized in the income statement for the relevant year.
c. Impairment of Assets
As at each balance sheet date, the carrying amount of assets is tested for impairment so as to determine:
(i) the provision for impairment loss, if any, required; or
(ii) the reversal, if any, required of impairment loss recognized in previous periods.
Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount.
Recoverable amount is determined:
(i) in the case of an individual asset, at the higher of the net selling price and the value in use;
(ii) in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unit''s net selling price and the value in use.
(Value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life)
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments and are carried at lower of cost and fair value determined on an individual investment basis whereas all other investments are classified as long term investments and are carried at cost except provision for diminution in value is made to recognize a decline other than temporary as specified in Accounting Standard (AS-13) on "Accounting for Investments"
(i) Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.
(ii) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over the lease term.
(i) Construction materials, Raw Materials, components, stores and spares are valued at lower of cost calculated on First in First Out Basis (FIFO) or Net Realisable Value. Costs comprise of all direct costs incurred in bringing the inventories to their present location.
(ii) Contract Work in Progress are valued at Lower of Cost or Net Realisable Value. Cost includes direct materials, labour, construction expenses & other related overheads.
g. Trade Receivables
Trade Receivables are stated at their nominal value or discount value, as reduced by appropriate allowances for estimated irrecoverable amounts, if any.
Interest-bearing loans and overdrafts are recorded at the proceeds received. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis to the Statement of Profit and Loss using effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
i. Trade payables
Trade payables are stated at their nominal value.
j. Revenue Recognition
Revenue is recognised based on the nature of activity when consideration can be reasonably measured and there exists reasonable certainty of its recovery.
(i) Revenue from construction/project related activity is recognised as follows:
- Cost plus Contracts: Contract revenue is determined by adding the aggregate cost plus proportionate margin as agreed with the customer.
Percentage of completion is determined as a proportion of cost incurred-to-date to the total estimated contract cost. Full Provision is made for any loss in the period in which it is foreseen. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer. Where the outcome of the contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred. Contract costs are recognised as expenses in the period in which they are incurred.
(ii) Rent: Revenue is recognised on accrual basis.
(iii) Interest: Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.
(iv) Scrap sales are accounted upon realization.
(v) Other items of income are accounted as and when the right to receive arises.
k. Employee Benefits
Salaries, social security contributions, paid annual leave, bonuses are recognised as an expense in the year when the employees have rendered their services to the company. Sick leave is recognised when the absence occurs.
The company contributes to an employee provident fund for the benefit of its employees. The Company charges the cost of such contributions as incurred.
Provision for gratuity is made on the basis of Management Estimates as against actuarial valuation carried up to FY 2012
Provision for leave encashment is made on the basis of Management Estimates as against actuarial valuation carried up to FY 2012.
l. Borrowing costs
Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred.
m. Foreign Currency Translations
(i) Conversion - All monetary items denominated in foreign currency are reflected at the closing exchange rates prevailing on the Balance Sheet date; the resultant exchange differences are recognized in the Statement of Profit and Loss. 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.
(ii) Initial Recognition - Income and Expenditure items involving foreign exchange are translated at the exchange rate prevailing on the dates of transaction.
(iii) Exchange Differences - Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss for the year.
n. Taxes on Income
(i) Current Tax: Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.
(ii) Deferred Tax: Deferred Tax is recognised on timing differences being the difference between the taxable incomes and accounting incomes that originate in one year and are capable of reversal in one or more subsequent years. Deferred tax assets are recognised only if there is a reasonable certainty of their realization.
o. Use of Estimates
The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management''s best knowledge of current events and actions the Company may undertake in future, actual results ultimately may differ from the estimates. Any revision to accounting estimates is recognised prospectively in future periods.
p. Expenditure and provisions
Expenses are accounted on accrual basis and provisions are made for all known losses and liabilities.
A provision is recognised when an enterprise has a present obligation as a result of past event; 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.
q. Segment Reporting policies
The main business of the Company is construction of residential and commercial properties, operating and maintaining infrastructure facilities and all other related activities which revolve around the main business and as such there are no separate reportable segments as specified in Accounting Standard (AS-17) on "Segment Reporting". The Company is primarily operating in India, which is considered as a single geographical segment.