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Accounting Policies of Sadbhav Engineering Ltd. Company

Mar 31, 2014

A) Basis of Preparation

The Financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

b) Use of accounting Estimates:

The preparation of the financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect reported amount of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amount of income and expenses during the year of account. Example of such estimates includes contract costs expected to be incurred to complete construction contracts, provision for doubtful debts, income taxes etc. Management periodically assesses whether there is an indication that an assets may be impaired and makes provision in the account for any impairment losses estimated. Contingencies are recorded when it is probable that a liabilities will be incurred and the amount can be reasonably estimated. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future result could differ from those estimates and the difference between actual results and the estimates are recognised in the periods in which the results are known / materialise.

c) Inventories:

Stock of material, Spare-parts, Diesel oil is valued at the lower of cost or net realizable value after providing any other losses, where considered necessary. Cost is determined on first-in-first-out basis. Cost includes all the charges in bringing the goods to the point of use, including octroi and other levies, transit insurance and receiving charges.

Work in progress is valued at contract rates.

d) Cash and Cash Equivalent:

Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less from the date of acquisition.

e) Cash Flow Statement:

Cash flows are reported using the indirect method, whereby profit/(loss) before extra-ordinary items and tax is adjusted for the effects of transactions of non-cash nature. The cash flow from operating, investing and financing activities of the Company are segregated based on the available information.

f) Depreciation and Amortisation:

Depreciation is provided for all assets except for vehicles on straight-line method and depreciation on vehicles is provided on written down value method at the rates prescribed in schedule XIV to the Companies Act, 1956.

Depreciation on assets sold, discarded or demolished during the year is being provided at their respective rates on pro-rata up to the date on which such assets are sold, discarded or demolished.

Intangible assets are amortised over their estimated useful life. The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern.Software being Intangible Assets used at Head office and work-shop are amortised over a period of three years and software used at Project sites are amortised over the project completion period.

g) Recognition of contract revenue and expenses:

(i) In case of Item rate contracts Revenue is recognized over the life of the contract using percentage completion method, on the basis of physical measurement of work actually completed at the balance sheet date.

(ii) In the case of lumpsum contracts, revenue is recognized on the completion of milestones as specified in the contract or as identified by the management.

(iii) An expected loss on construction contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.

(iv) Price escalation and other Claims and/or variations in the contract work are included in contract revenue only when:

(a) Negotiations have reached at an advanced stage such that it is probable that customer will accept the claim; and

(b) The amount that is probable will be accepted by the customer can be measured reliably.

(v) Incentive payments, as per customer-specified performance standards, are included in contract revenue only when:

(a) The contract is sufficiently advanced that it is probable that the specified performance standards will be met; and

(b) The amount of the incentive payment can be measured reliably.

(vi) Site mobilization (Camp) Expenditure for site installation is written off over the period of contract in proportion to the value of work done.

(vii) Income and expenses of previous years up to Rs. 500000/- are recognized in the current year as such. However income and expenses over and above Rs. 500000/- of previous year are accounted for as Prior Period item.

h) Other Income:

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

i) Fixed Assets (Tangible / Intangible):

Tangible Fixed Assets are valued at cost less accumulated depreciation. Direct cost is inclusive of all expenditure of capital in nature attributable to bring the fixed assets to working conditions, duties and taxes, incidental expenses including interest relating to acquisition and cost of improvements thereon are capitalized until fixed assets are ready for use. Subsequent expenditure on fixed assets after its purchase/completion is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Intangible Fixed Assets are valued at cost less accumulated amortization/ depletion. Direct cost is inclusive of all expenditure of capital in nature attributable to bring the fixed assets to working conditions, duties and taxes, incidental expenses including interest relating to acquisition and cost of improvements thereon are capitalized until fixed assets are ready for use.

j) Impairment of Assets:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. On such indication, the recoverable amount of the assets is estimated and if such estimation is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. 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 risks specific to the asset.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

k) Foreign Currency Transactions and Translations:

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transactions or rates that closely approximate the rate at the date of the transaction.

Monetary items denominated in foreign currencies at the year-end are restated at year end rates. As the Company has adopted para 46A of AS-11, the exchange differences arising on settlement / restatement of long-term foreign currency monetary items are Capitalised as part of the depreciable fixed assets. If such monetary items do not relate to acquisition of depreciable fixed assets, the exchange difference is amortised over the maturity period/up to the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss. The unamortised exchange difference is carried in the Balance Sheet as "Foreign Currency Monetary Item Translation Difference Account" net of the tax effect thereon, where applicable.

Non monetary foreign currency items are carried at cost.

l) Investments:

Trade Investments are the investments made to enhance the Company''s business interest. Investments are either classified as Current or Non-Current based on the management''s intention at the time of purchase or Investment. Current investments are carried at the lower of cost or quoted / fair value, computed category wise. Non-Current Investments are stated at cost. Provision for diminution in the value of Non-Current investments is made only if such a decline is other than temporary.

m) Employee Benefits:

Contribution to "Defined Contribution Schemes" such as Provident Fund is charged to the profit and loss account as incurred. Provident Fund contribution is made to the Government Administered Provident Fund. Company has no further obligation beyond this contribution charged in financial statement.

Company also provides for Retirement Benefits in the form of Gratuity. Such Benefits are provided for, based on valuation, as at the Balance Sheet date, made by independent actuaries. Company has taken Group Gratuity Policy of L.I.C. of India and Premium paid is recognized as expenses when it is incurred. Actuarial gains and loss in respect of Gratuity are charged to Profit & Loss Account.

Short term employee benefits including leave are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related services are rendered.

In respect of employee stock options, the excess of fair price on the date of grant over the exercise price is recognized as deferred compensation cost amortised over the vesting period.

n) Employee Share Based payment:

The Company has constituted Employee Stock Option Plan - 2008. Employee Stock Option granted on 4th October, 2010 is accounted under ''Fair Value Method'' stated in the Guidance Note on Employee Share Based Payments issued by the Institute of Chartered Accountants of India.

o) Borrowing Costs:

Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Cost in connection with the borrowing of the funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan.

Borrowing Costs directly attributable and identifiable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. A qualifying asset is one that required substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Profit & Loss Account as period costs.

p) Earning per share (EPS):

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of Equity Shares outstanding during the year.

For the purpose of calculating diluted earning per share, the net profit for the year attributable to equity shareholders and the weighted average number of Equity Shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

q) Income Taxes:

Tax Expenses comprise Current Tax and Deferred Tax.

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in a year is charged to statement of profit and loss as current Tax. The company recognizes MAT Credit available as an assets only when & 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, the said assets 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 assets to the extent the company does not have convincing evidence that it will pay normal tax during the specified period.

Deferred Tax is recognized on timing difference being the differences between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. In situation where the company has unabsorbed depreciation or carry forward losses, all Deferred Tax Assets subject to the consideration of prudence are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized. The tax effect is calculated on the accumulated timing difference at the year end based on the tax rates and laws enacted or substantially enacted on Balance Sheet date.

r) Provisions:

A provision is recognized 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.

s) Contingent Liabilities & contingent assets:

Contingent liabilities are not provided for and are disclosed by way of notes. Contingent assets are neither recognized nor disclosed in the financial statement.

t) Recognition of receipt on joint venture contracts:

In case of Construction Contracts received in the name of joint ventures the income and expenditure are included in financial statements of the company to the extent of share of the company in the joint ventures.

u) Derivative Contracts:

The Company enters into derivative contracts in the nature of foreign currency swaps, currency options, and forward contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions in foreign currency. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign Currency Transactions and Translations.

All the derivative contracts are marked-to-market and losses are recognised in the Statement of Profit and Loss. Gains arising on the same are not recognised until realised on grounds of prudence.

v) Insurance Claims:

Insurance claims are accounted for on the basis of claims admitted/expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

w) Service Tax Input Credit:

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing/utilizing the credits.

x) Operating Cycle:

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

y) General:

Accounting policies not specifically referred to are consistent with generally accepted accounting principles.


Mar 31, 2013

A) Basis of Preparaton

The Financial statements of the Company have been prepared in accordance with the Generally Accepted Accountng Principles in India (Indian GAAP) to comply with the Accountng Standards notfed under the Companies (Accountng Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The fnancial statements have been prepared on accrual basis under the historical cost conventon. The accountng policies adopted in the preparaton of the fnancial statements are consistent with those followed in the previous year.

b) Use of accountng Estmates:

The preparaton of the fnancial statements in conformity with Indian GAAP requires management to make estmates and assumptons that afect reported amount of assets and liabilites and disclosures relatng to contngent liabilites as at the reportng date of the fnancial statements and amount of income and expenses during the year of account. Example of such estmates includes contract costs expected to be incurred to complete constructon contracts, provision for doubtul debts, income taxes etc. Management periodically assesses whether there is an indicaton that an assets may be impaired and makes provision in the account for any impairment losses estmated. Contngencies are recorded when it is probable that a liabilites will be incurred and the amount can be reasonably estmated. The management believes that the estmates used in preparaton of the fnancial statements are prudent and reasonable. Future result could difer from those estmates and the diference between actual results and the estmates are recognised in the periods in which the results are known / materialise.

c) Inventories:

Stock of material, Spare-parts, Diesel oil is valued at the lower of cost or net realizable value afer providing any other losses, where considered necessary. Cost is determined on frst-in-frst-out basis. Cost includes all the charges in bringing the goods to the point of use, including octroi and other levies, transit insurance and receiving charges.

Work in progress is valued at contract rates.

d) Cash and Cash Equivalent:

Cash and cash equivalents for the purpose of cash fow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less from the date of acquisiton.

e) Cash Flow Statement

Cash fows are reported using the indirect method, whereby proft/(loss) before extra-ordinary items and tax is adjusted for the efects of transactons of non-cash nature. The cash fow from operatng, investng and fnancing actvites of the Company are segregated based on the available informaton.

f) Depreciaton and Amortsaton

Depreciaton is provided for all assets except for vehicles on straight-line method and depreciaton on vehicles is provided on writen down value method at the rates prescribed in schedule XIV to the Companies Act, 1956.

Depreciaton on assets sold, discarded or demolished during the year is being provided at their respectve rates on pro-rata up to the date on which such assets are sold, discarded or demolished.

Intangible assets are amortsed over their estmated useful life. The estmated useful life of the intangible assets and the amortsaton period are reviewed at the end of each fnancial year and the amortsaton method is revised to refect the changed patern.Sofware being Intangible Assets used at Head ofce and work-shop are amortsed over a period of three years and sofware used at Project sites are amortsed over the project completon period.

g) Recogniton of contract revenue and expenses:

(i) In case of Item rate contracts Revenue is recognized over the life of the contract using proportonate completon method, on the basis of physical measurement of work actually completed at the balance sheet date

(ii) In the case of lumpsum contracts, revenue is recognized on the completon of milestones as specifed in the contract or as identfed by the management.

(iii) An expected loss on constructon contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.

(iv) Price escalaton and other Claims and/or variatons in the contract work are included in contract revenue only when:

(a) Negotatons have reached at an advanced stage such that it is probable that customer will accept the claim; and

(b) The amount that is probable will be accepted by the customer can be measured reliably.

(v) Incentve payments, as per customer-specifed performance standards, are included in contract revenue only when:

(a) The contract is sufciently advanced that it is probable that the specifed performance standards will be met; and

(b) The amount of the incentve payment can be measured reliably.

(vi) Site mobilizaton (Camp) Expenditure for site installaton is writen of over the period of contract in proporton to the value of work done.

(vii) Income and expenses of previous years up to Rs. 500000/- are recognized in the current year as such. However income and expenses over and above Rs. 500000/- of previous year are accounted for as Prior Period item.

h) Other Income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

i) Fixed Assets (Tangible / Intangible)

Tangible Fixed Assets are valued at cost less accumulated depreciaton. Direct cost is inclusive of all expenditure of capital in nature atributable to bring the fxed assets to working conditons, dutes and taxes, incidental expenses including interest relatng to acquisiton and cost of improvements thereon are capitalized untl fxed assets are ready for use. Subsequent expenditure on fxed assets afer its purchase/completon is capitalised only if such expenditure results in an increase in the future benefts from such asset beyond its previously assessed standard of performance.

Intangible Fixed Assets are valued at cost less accumulated amortzaton/depleton. Direct cost is inclusive of all expenditure of capital in nature atributable to bring the fxed assets to working conditons, dutes and taxes, incidental expenses including interest relatng to acquisiton and cost of improvements thereon are capitalized untl fxed assets are ready for use.

j) Impairment of Assets:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indicaton of impairment based on internal/external factors. On such indicaton, the recoverable amount of the assets is estmated and if such estmaton is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estmated future cash fows are discounted to their present value using a pre-tax discount rate that refects current market assessments of the tme value of money and risks specifc to the asset.

Afer impairment, depreciaton is provided on the revised carrying amount of the asset over its remaining useful life.

k) Foreign Currency Transactons and Translatons:

Transactons denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transactons or rates that closely approximate the rate at the date of the transacton.

Monetary items denominated in foreign currencies at the year-end are restated at year end rates. As the Company has adopted para 46A of AS-11, the exchange diferences arising on setlement / restatement of long-term foreign currency monetary items are Capitalised as part of the depreciable fxed assets. If such monetary items do not relate to acquisiton of depreciable fxed assets, the exchange diference is amortsed over the maturity period/up to the date of setlement of such monetary items, whichever is earlier, and charged to the Statement of Proft and Loss. The unamortsed exchange diference is carried in the Balance Sheet as "Foreign Currency Monetary Item Translaton Diference Account" net of the tax efect thereon, where applicable.

Non monetary foreign currency items are carried at cost.

l) Investments:

Trade Investments are the investments made to enhance the Company''s business interest. Investments are either classifed as current or long-term based on the management''s intenton at the tme of purchase or Investment. Current investments are carried at the lower of cost or quoted / fair value, computed category wise. Long Term Investments are stated at cost. Provision for diminuton in the value of long-term investments is made only if such a decline is other than temporary.

m) Employee Benefts:

Contributon to "Defned Contributon Schemes" such as Provident Fund is charged to the proft and loss account as incurred. Provident Fund contributon is made to the Government Administered Provident Fund. Company has no further obligaton beyond this contributon charged in fnancial statement.

Company also provides for Retrement Benefts in the form of Gratuity. Such Benefts are provided for, based on valuaton, as at the Balance Sheet date, made by independent actuaries. Company has taken Group Gratuity Policy of L.I.C. of India and Premium paid is recognized as expenses when it is incurred. Actuarial gains and loss in respect of Gratuity are charged to Proft & Loss Account.

Short term employee benefts including leave are recognized as an expense in the proft and loss account of the year in which the related services are rendered.

In respect of employee stock optons, the excess of fair price on the date of grant over the exercise price is recognized as deferred compensaton cost amortsed over the vestng period.

n) Employee Share Based payment

The Company has consttuted Employee Stock Opton Plan - 2008. Employee Stock Opton granted on 4th October, 2010 is accounted under ‘Fair Value Method'' stated in the Guidance Note on Employee Share Based Payments issued by the Insttute of Chartered Accountants of India.

o) Borrowing Costs:

Borrowing costs include interest, amortsaton of ancillary costs incurred and exchange diferences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Cost in connecton with the borrowing of the funds to the extent not directly related to the acquisiton of qualifying assets are charged to the Statement of Proft and Loss over the tenure of the loan.

Borrowing Costs directly atributable and identfable to the acquisiton or constructon of qualifying assets are capitalized tll the date such qualifying assets are ready to be put to use. A qualifying asset is one that required substantal period of tme to get ready for its intended use. All other borrowing costs are charged to the Proft & Loss Account as period costs.

p) Earning per share (EPS):

Basic earnings per share are calculated by dividing the net proft for the year atributable to equity shareholders by the weighted average number of Equity Shares outstanding during the year.

For the purpose of calculatng diluted earning per share, the net proft for the year atributable to equity shareholders and the weighted average number of Equity Shares outstanding during the year are adjusted for the efects of all dilutve potental equity shares.

q) Income Taxes:

Tax Expenses comprise Current Tax and Deferred Tax.

Provision for current tax is made afer taking into consideraton benefts admissible under the provision of the Income Tax Act, 1961.

Deferred Tax is recognized on tming diference being the diferences between the taxable incomes and accountng income that originate in one period and are capable of reversal in one or more subsequent periods. In situaton where the company has unabsorbed depreciaton or carry forward losses, all Deferred Tax Assets subject to the consideraton of prudence are recognized and carried forward only to the extent that there is a reasonable certainty that sufcient future taxable income will be available against which such Deferred Tax Assets can be realized. The tax efect is calculated on the accumulated tming diference at the year end based on the tax rates and laws enacted or substantally enacted on Balance Sheet date.

r) Impairment of Assets

The carrying values of assets at each balance sheet date are reviewed for impairment. If any indicaton of impairment exists, the recoverable amount of such assets is estmated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discountng the future cash fows to their present value based on an appropriate discount factor. When there is indicaton that an impairment loss recognised for an asset in earlier accountng period no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Proft and Loss, except in case of revalued assets.

s) Provisions:

A provision is recognized when an enterprise has a present obligaton as a result of past event; it is probable that an outlow of resources will be required to setle the obligaton, in respect of which a reliable estmate can be made. Provisions are not discounted to its present value and are determined based on best estmate required to setle the obligaton at the balance sheet date. These are reviewed at each balance sheet date and adjusted to refect the current best estmates.

t) Contngent Liabilites & contngent assets:

Contngent liabilites are not provided for and are disclosed by way of notes. Contngent assets are neither recognized nor disclosed in the fnancial statement

u) Recogniton of receipt on joint venture contracts:

In case of Constructon Contracts received in the name of joint ventures the income and expenditure are included in fnancial statements of the company to the extent of share of the company in the joint ventures.

v) Derivatve Contracts:

The Company enters into derivatve contracts in the nature of foreign currency swaps, currency optons, and forward contracts with an intenton to hedge its existng assets and liabilites, frm commitments and highly probable transactons in foreign currency. Derivatve contracts which are closely linked to the existng assets and liabilites are accounted as per the policy stated for Foreign Currency Transactons and Translatons.

All the derivatve contracts are marked-to-market and losses are recognised in the Statement of Proft and Loss. Gains arising on the same are not recognised untl realised on grounds of prudence.

w) Insurance Claims

Insurance claims are accounted for on the basis of claims admited/expected to be admited and to the extent that there is no uncertainty in receiving the claims.

x) Service Tax Input Credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing/utlizing the credits.

y) Operatng Cycle

Operatng cycle for the business actvites of the company covers the duraton of the specifc projects/contract/product line/ service including the defect liability period wherever applicable and extends up to the realizaton of receivables (including retenton monies) within the agreed credit period normally applicable to the respectve lines of business.

z) General:

Accountng policies not specifcally referred to are consistent with generally accepted accountng principles.


Mar 31, 2012

A) Basis of preparation

The Financial Statements are based on historical cost convent on and prepared in accordance with Generally Accepted Accounting Principles (Indian GAAP) comprising the mandatory Accounting standards issued by the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.

b) Use of Accounting estimates:

The preparation of the financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balance sheet of assets and Liabilities and disclosures relating to contingent Liabilities as at the Reporting date of the financial statements and amount of income and expenses during the year of account. Example of such estimates includes contract costs expected to be incurred to complete Construction contracts, provision for doubtful debts, income taxes etc. Management periodically assesses whether there is an indication that an assets may be impaired and makes provision in the account for any impairment losses estimated. Contingencies are recorded when it is probable that a Liabilities will be incurred and the amount can be reasonably estimated. Actual result could differ from those estimates.

c) recognition of contract revenue and expenses:

(i) In case of Item rate contracts Revenue is recognized on the basis of physical measurement of work actually completed at the balance sheet date.

(ii) In the case of lump sum contracts, revenue is recognized on the Completion of milestones as specified in the contract or as identified by the management.

(iii) An expected loss on Construction contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.

(iv) Price escalation and other Claims and/or variations in the contract work are included in contract revenue only when:

(a) Negotiations have reached at an advanced stage such that it is probable that customer will accept the claim; and

(b) The amount that is probable will be accepted by the customer can be measured reliably.

(v) Incentive payments, as per customer-specified performance standards, are included in contract revenue only when:

(a) The contract is sufficiently advanced that it is probable that the specified performance standards will be met; and

(b) The amount of the incentive payment can be measured reliably.

(vi) Insurance claims are accounted for on cash basis.

(vii) Site mobilizaton (Camp) Expenditure for site installation is written of over the period of contract in proportion to the value of work done.

(viii) Income and expenses of previous years up to Rs. 500000/- are recognized in the current year. However income and expenses over and above Rs. 500000/- of previous year are accounted for as Prior Period item.

(ix) Dividend income is accounted when the right to receive dividend is established.

d) recognition of receipt on joint venture contracts:

In case of Construction Contracts received in the name of joint ventures the income and expenditure are included in financial statements of the company to the extent of share of the company in the joint ventures.

e) Fixed Assets and Depreciation:

(i) Tangible Fixed Assets are valued at cost less accumulated Depreciation. Direct cost is inclusive of all expenditure of capital in nature attributable to bring the fixed assets to working conditions, duties and taxes, incidental expenses including interest relating to acquisition and cost of improvements thereon are capitalized until fixed assets are ready for use.

(ii) Intangible Fixed Assets are valued at cost less accumulated amortzaton/depletion. Direct cost is inclusive of all expenditure of capital in nature attributable to bring the fixed assets to working conditions, duties and taxes, incidental expenses including interest relating to acquisition and cost of improvements thereon are capitalized until fixed assets are ready for use. Sofware being Intangible Assets used at Head office and work-shop are amortised over a period of three years and sofware used at Project sites are amortised over the project Completion period.

(iii) Depreciation is provided for all assets except for vehicles on straight-line method and Depreciation on vehicles is provided on written down value method at the rates specified in schedule XIV to the Companies Act, 1956, except Heavy Earthmoving Equipments, on which higher rate has been charged.

(iv) Depreciation on assets sold, discarded or demolished during the year is being provided at their respective rates on pro-rata up to the date on which such assets are sold, discarded or demolished.

f) Impairment of Assets:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. On such indication, the recoverable amount of the assets is estimated and if such estimation is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. 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 risks specific to the asset.

after impairment, Depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

g) Inventories:

(i) Stock of material, Spare-parts, Diesel oil is valued at cost or net realizable value, whichever is less. Cost is determined on first-in-first-out basis.

(ii) Work in progress is valued at contract rates.

h) Employee benefits:

(i) contribution to "defined contribution Schemes" such as Provident Fund is charged to the profit and loss account as incurred. Provident Fund contribution is made to the Government Administered Provident Fund. Company has no further obligation beyond this contribution charged in financial statement.

(ii) Company also provides for Retirement benefits in the form of Gratuity. Such benefits are provided for, based on valuation, as at the Balance Sheet date, made by independent actuaries. Company has taken Group Gratuity Policy of L.I.C. of India and Premium paid is recognized as expenses when it is incurred. Actuarial gains and loss in respect of Gratuity are charged to profit & Loss Account.

(iii) Short term employee benefits including leave are recognized as an expense in the profit and loss account of the year in which the related services are rendered.

(iv) In respect of employee stock Options, the excess of fair price on the date of grant over the exercise price is recognized as deferred compensation cost amortised over the vesting period.

i) Investments:

Trade Investments are the investments made to enhance the Company's business interest. Investments are either classified as current or long-term based on the management's intention at the time of purchase or Investment. Current investments are carried at the lower of cost or quoted / fair value, computed category wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

j) Foreign Currency Transactions:

(i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transactions.

(ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognized as exchange difference and charged to profit & Loss account and the premium or discount on forward contracts is recognized over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expenses for the period.

(iii) Non monetary foreign currency items are carried at cost.

(iv) Foreign currency transactions are recorded in the Reporting currency either on settlement or on year end by applying to the foreign currency amount the exchange rate between the Reporting currency and the foreign currency at the date of the settlement or year end.

k) Derivative Contracts:

The Company uses Derivative contracts to hedge its risks. In respect of Derivative contracts, premiums paid, gains / losses on settlement and provision for losses for cash flow hedges are recognized in the statement of profit and loss.

l) Borrowing Costs:

Borrowing Costs directly attributable and identifiable to the acquisition or Construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. A qualifying asset is one that required substantial period of time to get ready for its intended use. All other borrowing costs are charged to the profit & Loss Account as period costs.

m) Income Taxes:

Tax Expenses comprise Current Tax and Deferred Tax.

Provision for current tax is made after taking into consideration benefits admissible under the provision of the Income Tax Act, 1961.

Deferred Tax is recognized on timing difference being the differences between the taxable incomes and Accounting income that originate in one period and are capable of reversal in one or more subsequent periods. In situation where the company has unabsorbed Depreciation or carry forward losses, all Deferred Tax Assets subject to the consideration of prudence are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized. The tax effect is calculated on the accumulated timing difference at the year end based on the tax rates and laws enacted or substantially enacted on Balance Sheet date.

n) Provisions:

A provision is recognized 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.

o) Earning per share (EPS):

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of Equity Shares outstanding during the year.

For the purpose of calculating diluted earning per share, the net profit for the year attributable to equity shareholders and the weighted average number of Equity Shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

p) Contingent Liabilities & contingent assets:

Contingent Liabilities are not provided for and are disclosed by way of notes. Contingent assets are neither recognized nor disclosed in the financial statement.

q) Cash and Cash Equivalent:

Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less.

r) General:

Accounting policies not specifically referred to are consistent with generally accepted Accounting principles.


Mar 31, 2011

A) Method of Accounting:

The Financial Statements are based on historical cost convention and prepared in accordance with Generally Accepted Accounting Principles (Indian GAAP) comprising the mandatory accounting standards issued by the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.

b) Use of accounting Estimates:

The preparation of the financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balance sheet of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amount of income and expenses during the year of account. Example of such estimates includes contract costs expected to be incurred to complete construction contracts, provision for doubtful debts, income taxes etc. Management periodically assesses whether there is an indication that an assets may be impaired and makes provision in the account for any impairment losses estimated. Contingencies are recorded when it is probable that a liabilities will be incurred and the amount can be reasonably estimated. Actual result could differ from those estimates.

c) Recognition of contract revenue and expenses:

i) Revenue from contract is recognized on the percentage completion method based on billing schedules agreed with the client on a progressive completion basis.

ii) An expected loss on construction contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.

iii) Price escalation and other Claims and/or variations in the contract work are included in contract revenue only when:

a) Negotiations have reached an advanced stage such that it is probable that customer will accept the claim; and

b) The amount that is probable will be accepted by the customer can be measured reliably.

iv) Incentive payments, as per customer-specified performance standards, are included in contract revenue only when:

a) The contract is sufficiently advanced that it is probable that the specified performance standards will be met; and

b) The amount of the incentive payment can be measured reliably.

v) Insurance claims are accounted for on cash basis.

vi) Site mobilization (Camp) Expenditure for site installation is written off over the period of contract in proportion to the value of work done.

vii) Income and expenses of previous years up to Rs. 500000/- are recognized in the same year. However income and expenses over and above Rs. 500000/- are accounted for as Prior Period item, which are also shown in a separate schedule in the financial statement.

viii) Dividend income is accounted when the right to receive dividend is established.

d) Recognition of receipt on joint venture contracts:

In case of Construction Contracts received in the name of joint ventures the income and expenditure are included in financial statements of the company to the extent of share of the company in the joint ventures.

e) Fixed Assets and Depreciation:

i) Fixed Assets are valued at cost less accumulated depreciation. Direct cost is inclusive of all expenditure of capital in nature attributable to bring the fixed assets to working conditions, duties and taxes, incidental expenses including interest relating to acquisition and cost of improvements thereon are capitalized until fixed assets are ready for use.

ii) Depreciation is provided for all assets except for vehicles on straight-line method and depreciation on vehicles is provided on written down value method at the rates specified in schedule XIV to the Companies Act, 1956, except Heavy Earthmoving Equipments, on which higher rate has been charged.

iii) Depreciation on assets sold, discarded or demolished during the year is being provided at their respective rates on pro-rata up to the date on which such assets are sold, discarded or demolished.

iv) Software used at Head Office and work-shop are amortised over a period of three years and software used at Project sites are amortised over the project completion period.

f) Impairment of Assets:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. On such indication, the recoverable amount of the assets is estimated and if such estimation is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash fows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

g) Value of Inventories:

i) Stock of material, Spare-parts, Diesel oil is valued at cost or net realizable value, whichever is less. Cost is determined on frst-in-frst-out basis.

ii) Work in progress is valued at contract rate.

h) Retirement Benefts:

i) Contribution to "Defined Contribution Schemes" such as Provident Fund is charged to the Profit and loss account as incurred. Provident Fund contribution is made to the Government Administered Provident Fund. Company has no further obligation beyond this contribution charged in financial statement.

ii) Company also provides for Retirement Benefts in the form of Gratuity. Such Benefts are provided for, based on valuation, as at the Balance Sheet date, made by independent actuaries. Company has taken Group Gratuity Policy of L.I.C. of India and Premium paid is recognized as expenses when it is incurred. Actuarial gains and loss in respect of Gratuity are charged to Profit & Loss Account.

iii) Leave encashment is paid to employees on annual basis and recognized as expenses when it is accured.

i) Investments:

Current investments are carried at the lower of cost or quoted / fair value, computed category wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

j) Foreign Currency Transactions:

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) Imported Machinery spare parts, Diesel and Raw materials are recorded at the exchange rate prevailing on the date of transaction and exchange rate difference arises on account of payment and foreign currency rate on balance-sheet date are charged/credited to Profit & Loss Account.

iii) In case of advance received in foreign currency for construction projects in India, the exchange rate difference arises on account of repayment of advances received from customers are debited to foreign exchange rate difference and charged to Profit & Loss Account.

iv) Any foreign currency exchange rate difference arises on account of deemed exports are debited to foreign exchange rate difference account and charged to Profit and Loss Account.

v) Exchange rate difference arising on account of payment made during current year for outstanding liability as on last day of previous financial year on account of imported spare parts & Raw materials are debited/credited to foreign exchange rate difference account and charged/credited to Profit & Loss Account.

vi) In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognized as exchange difference and the premium or discount on forward contracts is recognized over the life of the contract. Any Profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expenses for the period.

k) Borrowing Costs:

Borrowing Costs directly attributable and identifable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. A qualifying asset is one that required substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Profit & Loss Account as period costs.

l) Income Taxes:

Tax Expenses comprise Current Tax and Deferred Tax.

Provision for current tax is made after taking into consideration benefts admissible under the provision of the Income Tax Act, 1961.

Deferred Tax is recognized on timing difference being the differences between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets subject to the consideration of prudence are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized. The tax effect is calculated on the accumulated timing difference at the year end based on the tax rates and laws enacted or substantially enacted on Balance Sheet date.

m) Provisions:

A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outfow 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.

n) Earning per share (EPS):

In carrying at the EPS, the company's net Profit after tax, computed in terms of the Indian GAAP, is divided by the weighted average number of Equity Shares outstanding on the last day of the reporting period. In determining EPS, the company considers the net Profit after tax and it includes the short provision of current tax and deferred tax of earlier year and the exceptional item. The EPS thus arrived is known as Basic EPS. To arrive at diluted EPS, net Profit after tax, refereed as above is increased by the amount of dividend, interest and other expenses that will be saved and reduced by the amount of income that will cease to accrue, on the conversion of the dilutive potential equity shares, is divided by average number of Equity Shares as computed above and weighted number average of Equity Share that could have been issued on conversion of shares/warrants having potentials dilute effect subject to the terms of the issue of those potential shares. The amounts of dividends, interest and other expenses or income are adjusted for any attributable taxes. The date of issue of such potential shares determined the amount of the weighted average number of potential shares.

0) Contingent Liabilities & contingent assets:

Contingent liabilities are not provided for and are disclosed by way of notes. Contingent assets are neither recognized nor disclosed in the financial statement.

p) Cash and Cash Equivalent:

Cash and cash equivalents for the purpose of cash fow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less.

q) General:

Accounting policies not specifically referred to are consistent with generally accepted accounting policies.

 
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