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Accounting Policies of Tecpro Systems Ltd. Company

Mar 31, 2014

1.1 Basis of preparation of financial statements

The financial statements are prepared on accrual basis under the historical cost convention, modified to include revaluation of certain assets, in accordance with applicable Accounting Standards (AS) specified in the Companies (Accounting Standards) Rules, [ and with the General Circular 15/2013 dated 13th September 2013 issued by the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act,2013] issued by the Central Government, the relevant provisions of the Companies Act, 1956 and other accounting principles generally accepted in India, to the extent applicable.

1.2 Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make judgements, estimates and assumptions that affect the applicability of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future years.

1.3 Current and non-current classification

All assets and liabilities are classified into current and non- current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

(a) it is expected to be realised in, or is intended for sale or consumption in, the company''s normal operating cycle;

(b) it is held primarily for the purpose of being traded;

(c) it is expected to be realised within 12 months after the reporting date; or

(d) it is cash or cash equivalent unless It is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include the current portion of non-current financial assets. All other assets are classified as non- current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

(a) it is expected to be settled in the company''s normal operating cycle;

(b) it is held primarily for the purpose of being traded;

(c) it is due to be settled within 12 months after the reporting date; or

(d) the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result In its settlement by the Issue of equity instruments do not affect Its classification.

Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non- current.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.

The Company has multiple operating cycles determined on the basis of the distinguishing features and characteristics of various categories of contracts. However, assets/liabilities so disclosed as current on the basis of the relevant operating cycle but having a longer period of life than 12 months after the reporting period are also shown separately. (Also refer note 38)

1.4 Revenue recognition

Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership in the goods to the customer.

Revenue from services is recognised on rendering of services to customers.

Interest income is recognised using the time proportion method, based on underlying interest rates.

Revenue from long-term construction contracts in accordance with Accounting Standard - 7 on "Construction Contracts" is recognized using the percentage of completion method. Percentage of completion method is determined as a proportion of cost incurred to date to the total estimated contract cost or completion of a physical portion of the contract work depending on the nature of contract whichever is appropriate Where the total cost of the contract, based on technical and other estimates, is expected to exceed the corresponding contract value, such excess is provided during the year.

Duty drawback available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of scheme are established and these are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilisation of such duty credit

1.5 Tangible fixed assets and capital work-in-progress Tangible fixed assets, including capital work in progress are stated at cost of acquisition or construction less accumulated depreciation. Cost comprises the purchase price, including Import duties and other non refundable taxes or levies and any directly attributable costs of bringing the asset to its working condition for the intended use. Tangible fixed assets under construction are disclosed as Capital work-ln- progress.

Exchange differences arising in respect of translation / settlement of long term foreign currency borrowings attributable to the acquisition of a depreciable asset are also included in the cost of the asset.

1.6 Intangible assets

Intangible assets comprising computer software and technical know-how are stated at cost less accumulated amortisation. Computer software ,s amortised on a straight line basis over three years. Technical now how is amortised on a straight line basis over its estimated useful life, the period over which the Company expects to derive economic benefits from the use of the technical know how Goodwill that arises on an amalgamation or on acquisition of a business is presented as an intangible asset.

Goodwill arising from amalgamation measured at cost less accumulated amortisation and any accumulated impairment loss. Such goodwill is amortised aver its estimated useful life or five years whichever is short.

1.7 Borrowing Cost

Financing costs relating to borrowed funds attributable to construction or acquisition of qualifying assets for the period up to the completion of construction or acquisition of such assets are included in the cost of the assets. All other borrowing costs are charged to Statement of Profit and Loss.

1.8 Impairment

The carrying values of assets are reviewed at each reporting date to determine whether there any indication of impairment. If such indication exists, the amount recoverable towards such asset is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss has been recognised.

1.9 Depreciation

Depreciation is provided on a pro-rata basis under the straight line method. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management''s estimate of the useful life/remaining useful life. Rates of depreciation (where different from the rates prescribed in Schedule XIV to the Companies Act, 1956) have been derived on the basis of the following estimated useful lives:

Estimated useful life (in years)

Plant and machinery 20

Office equipments 6

Furniture and fixtures 5

Vehicles 2-10

Temporary sheds at project sites (to coincide with the project period)* 1-5

Patterns 3

Shuttering and scaffolding ** 4

Office building * 28.44

Computers 6

Computer software 3

Technical know-how 5

Goodwill 5

* included in buildings in note 11 to the financial statements

** included in plant and machinery in note 11 to the financial statements

Leasehold land is amortised on straight line basis over the period of the lease. Leasehold improvements are depreciated over the period of lease or the useful life of the underlying asset, whichever is less.

Depreciation on additions is being provided on a pro rata basis from the date of such additions. Similarly, depreciation on assets sold/disposed off during the year is being provided up to the date on which such assets are sold/disposed off. Assets costing individually Rs. 5,000 or less are depreciated fully in the year of purchase.

1.10 Inventories

Inventories are valued at the lower of cost and net realisable value. Cost includes all applicable costs incurred in bringing goods to their present location and condition, determined on a first in first out basis.

In determining the cost of inventories, fixed production overheads are allocated on the basis of normal capacity of production facilities.

Contract work in progress includes contract costs that relate to future activity on the long term construction contract, such as costs of materials that have been delivered to a contract site or set aside for use in a contract but not yet installed, used or applied during contract performance and excludes the materials which have been made specially for such contracts.

1.11 Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the respective transactions. Monetary foreign currency assets and liabilities remaining unsettled atthe balance sheet date are translated at exchange rates prevailing on that date. All exchange differences other than in relation to acquisition of fixed assets and other long term foreign currency monetary liabilities are dealt with in the Statement of Profit and Loss.

In accordance with Accounting Standard 11, ''Accounting for the effects of changes in foreign exchange rates", exchange differences arising in respect of long term foreign currency monetary items:

* used for acquisition of depreciable capital asset, are added to or deducted from the cost of asset and are depreciated over the balance life of asset.

* used for the purpose other than the acquisition of depreciable capital asset, are accumulated in Foreign Currency Monetary Item Translation Difference Account (FCMITDA) and amortized over the balance period of such liability.

These exchange differences are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change.

The premium or discount that arises on entering into a forward exchange contract for hedging underlying assets and liabilities is measured by the difference between the exchange rate at the date of inception of the forward exchange contract and the forward rate specified in the contract and is amortised as expense or income over life of the contract. Exchange difference on forward exchange contract is the difference between:

(a) the foreign currency amount of the contract translated at the exchange rate 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 inception of the forward exchange contract and the last reporting date.

The company use foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to firm commitments and highly probable forecast transactions.The company designates such forward contracts in a cash flow hedging relationship by applying the hedge accounting principles set out in Accounting Standard -30 " Financial Instruments Recognition and measurement" issued by ICAI. Gains and losses on this forward contract designated as"effective Cash flow hedges"are recognized in the "Hedge Reserve Account" till the underlying forecasted transaction occurs. Any ineffective portion however, is recognized immediately in the Statement of profit and loss.

1.12 Provisions and contingencies

A provision is created when there is a present obligation as a result of a past event that entails a probable outflow of resources and a reliable estimate can be made of the amount of the obligation. Disclosure of a contingent liability is made when there is a possible but not probable obligation or a present obligation that may, but probably will not, entail an outflow of resources. When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Onerous contract

A Contract is considered as onerous when the expected economic benefits to be derived by the Company from the contract are lower than the unavoidable cost of meeting its obligation under the contract. The provision for an onerous contract is measured at the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.

1.13 Taxation

Income-tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income- tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities and assets are recognised using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward losses under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and are written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised.

1.14 Employee benefits

a. All employee benefits payable/available within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognised in the Statement of Profit and Loss in the year in which the employee renders the related service.

b. Provident fund is a defined contribution scheme. Contributions payable to the provident fund are charged to the Statement of Profit and Loss.

c. Superannuation fund is a defined contribution scheme. The Company contributes to schemes administered by the Life Insurance Corporation of India (''L(C'') to discharge its superannuation liabilities. The Company''s contribution paid/payable under the scheme is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.

d. Gratuity costs are defined benefits plans. The present value of obligations under such defined benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Annual contributions are made to the employee''s gratuity fund, established with the LIC based on an actuarial valuation carried out by the LIC as at 31 March each year. The fair value of plan assets is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on net basis. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs,

e. Benefits under the Company''s leave encashment scheme constitute other long term employee benefits. The obligation in respect of leave encashment is provided on the basis on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Annual contributions are made to the employee''s leave encashment fund, established with the LIC based on an actuarial valuation carried out by the LIC as at 31 March each year. The fair value of plan assets is reduced from the gross obligation, to recognise the obligation on net basis. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss.

1.15 Investments

Long term investments are valued at cost. Any decline other than temporary, in the value of long-term investments, is adjusted in the carrying value of such investments. Diminution, if any, is determined individually for each long-term investment. Current investments are valued at the lower of cost and fair value of individual scrips.

1.16 Earnings per share

Basic earnings per share are computed by dividing the net profit/ (loss) for the year attributable to the equity shareholders with the weighted average number of equity shares outstanding during the year. Diluted earnings per share are computed using the weighted average number of equity and dilutive potential equity shares outstanding during the year, except where the results would be anti- dilutive.

1.17 Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are classified as operating leases. Lease rents under operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term.

1.18 Events occurring after the balance sheet date Adjustment to assets and liabilities are made for events occurring after the balance sheet date that provide additional information materially affecting the determination of the amount of assets and liabilities relating to condition existing at the balance sheet date.


Mar 31, 2013

1.1 Basis of preparation of fnancial statements

The fnancial statements are prepared on accrual basis under the historical cost convention, modifed to include revaluation of certain assets, in accordance with applicable Accounting Standards (AS) specifed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, the relevant provisions of the Companies Act, 1956 and other accounting principles generally accepted in India, to the extent applicable.

1.2 Use of estimates

The preparation of fnancial statements in conformity with generally accepted accounting principles requires the management to make judgements, estimates and assumptions that afect the applicability of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the fnancial statements. Actual results could difer from those estimates. Any revision to accounting estimates is recognised prospectively in current and future years.

1.3 Current and non-current classifcation

All assets and liabilities are classifed into current and non-current.

Assets

An asset is classifed as current when it satisfes any of the following criteria:

(a) it is expected to be realised in, or is intended for sale or consumption in, the company''s normal operating cycle;

(b) it is held primarily for the purpose of being traded;

(c) it is expected to be realised within 12 months after the reporting date; or

(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include the current portion of non-current fnancial assets. All other assets are classifed as non-current.

Liabilities

A liability is classifed as current when it satisfes any of the following criteria:

(a) it is expected to be settled in the company''s normal operating cycle;

(b) it is held primarily for the purpose of being traded;

(c) it is due to be settled within 12 months after the reporting date; or

(d) the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not afect its classifcation.

Current liabilities include current portion of non-current fnancial liabilities. All other liabilities are classifed as non-current.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.

The Company has multiple operating cycles determined on the basis of the distinguishing features and characteristics of various categories of contracts. However, assets/liabilities so disclosed as current on the basis of the relevant operating cycle but having a longer period of life than 12 months after the reporting period are also shown separately (Also refer note 38).

1.4 Revenue recognition Revenue from sale of goods is recognised on transfer of all signifcant risks and rewards of ownership in the goods to the customer.

Revenue from services is recognised on rendering of services to customers.

Interest income is recognised using the time proportion method, based on underlying interest rates.

Revenue from long-term construction contracts in accordance with Accounting Standard - 7 on "Construction Contracts" is recognized using the percentage of completion method. Percentage of completion method is determined as a proportion of cost incurred to date to the total estimated contract cost or completion of a physical portion of the contract work depending on the nature of contract whichever is appropriate. Where the total cost of the contract, based on technical and other estimates, is expected to exceed the corresponding contract value, such excess is provided during the year.

Duty drawback available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of scheme are established and these are accounted to the extent there is no signifcant uncertainty about the measurability and ultimate utilisation of such duty credit.

1.5 Tangible fxed assets and capital work-in-progress Tangible fxed assets, including capital work in progress are stated at cost of acquisition or construction less accumulated depreciation. Cost comprises the purchase price, including import duties and other non- refundable taxes or levies and any directly attributable costs of bringing the asset to its working condition for the intended use. Tangible fxed assets under construction are disclosed as Capital work-in-progress.

Exchange diferences arising in respect of translation / settlement of long term foreign currency borrowings attributable to the acquisition of a depreciable asset are also included in the cost of the asset.

1.6 Intangible assets Intangible assets comprising computer software and technical know-how are stated at cost, including taxes, less accumulated amortisation. Computer software is amortised on a straight line basis over three years. Technical know-how is amortised on a straight line basis over its estimated useful life, the period over which the Company expects to derive economic benefts from the use of the technical know-how. Goodwill that arises on an amalgamation or on acquisition of a business is presented as an intangible asset.

Goodwill arising from amalgamation is measured at cost less accumulated amortisation and any accumulated impairment loss. Such goodwill is amortised over its estimated useful life or fve years whichever is shorter.

1.7 Borrowing Cost Financing costs relating to borrowed funds attributable to construction or acquisition of qualifying assets for the period up to the completion of construction or acquisition of such assets are included in the cost of the assets. All borrowing costs are charged to Statement of Proft and Loss.

1.8 Impairment The carrying values of assets are reviewed at each reporting date to determine whether there any indication of impairment. If such indication exists, the amount recoverable towards such asset is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the Statement of Proft and Loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss has been recognised.

1.9 Depreciation

Depreciation is provided on a pro-rata basis under the straight line method. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the management''s estimate of the useful life of a fxed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management''s estimate of the useful life/remaining useful life. Rates of depreciation (where diferent from the rates prescribed in Schedule XIV to the Companies Act, 1956) have been derived on the basis of the following estimated useful lives:

* included in buildings in note 11 to the fnancial statements.

** included in plant and machinery in note 11 to the fnancial statements.

Leasehold land is amortised on straight line basis over the period of the lease. Leasehold improvements are depreciated over the period of lease or the useful life of the underlying asset, whichever is less.

Depreciation on additions is being provided on a pro-rata basis from the date of such additions. Similarly, depreciation on assets sold/disposed of during the year is being provided up to the date on which such assets are sold/disposed of.

Assets costing individually Rs. 5,000 or less are depreciated fully in the year of purchase.

1.10 Inventories

Inventories are valued at the lower of cost and net realisable value. Cost includes all applicable costs incurred in bringing goods to their present location and condition, determined on a frst in frst out basis. In determining the cost of inventories, fxed production overheads are allocated on the basis of normal capacity of production facilities.

Contract work in progress includes contract costs that relate to future activity on the long term construction contract, such as costs of materials that have been delivered to a contract site or set aside for use in a contract but not yet installed, used or applied during contract performance and excludes the materials which have been made specially for such contracts.

1.11 Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the respective transactions. Monetary foreign currency assets and liabilities remaining unsettled at the balance sheet date are translated at exchange rates prevailing on that date. All exchange diferences other than in relation to acquisition of fxed assets and other long term foreign currency monetary liabilities are dealt with in the Statement of Proft and Loss. In accordance with Accounting Standard 11, "Accounting for the efects of changes in foreign exchange rates", exchange diferences arising in respect of long term foreign currency monetary items:

- used for acquisition of depreciable capital asset, are added to or deducted from the cost of asset and are depreciated over the balance life of asset.

- used for the purpose other than the acquisition of depreciable capital asset, are accumulated in Foreign Currency Monetary Item Translation Diference Account (FCMITDA) and amortized over the balance period of such liability.

The premium or discount that arises on entering into a forward exchange contract for hedging underlying assets and liabilities is measured by the diference between the exchange rate at the date of inception of the forward exchange contract and the forward rate specifed in the contract and is amortised as expense or income over life of the contract. Exchange diference on forward exchange contract is the diference between:

(a) the foreign currency amount of the contract translated at the exchange rate 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 inception of the forward exchange contract and the last reporting date.

These exchange diferences are recognised in the Statement of Proft and Loss in the reporting period in which the exchange rates change.

1.12 Provisions and contingencies

A provision is created when there is a present obligation as a result of a past event that entails a probable outfow of resources and a reliable estimate can be made of the amount of the obligation. Disclosure of a contingent liability is made when there is a possible but not probable obligation or a present obligation that may, but probably will not, entail an outfow of resources. When there is an obligation in respect of which the likelihood of outfow of resources is remote, no provision or disclosure is made. Onerous contract

A Contract is considered as onerous when the expected economic benefts to be derived by the Company from the contract are lower than the unavoidable cost of meeting its obligation under the contract. The provision for an onerous contract is measured at the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.

1.13 Taxation

Income-tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income-tax law) and deferred tax charge or credit (refecting the tax efects of timing diferences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities and assets are recognised using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward losses under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and are written down or written up to refect the amount that is reasonably/virtually certain (as the case may be) to be realised.

1.14 Employee benefts

1. All employee benefts payable/available within twelve months of rendering the service are classifed as short-term employee benefts. Benefts such as salaries, wages and bonus etc., are recognised in the Statement of Proft and Loss in the year in which the employee renders the related service.

2. Provident fund is a defned contribution scheme. Contributions payable to the provident fund are charged to the Statement of Proft and Loss.

3. Superannuation fund is a defined contribution scheme. The Company contributes to schemes administered by the Life Insurance Corporation of India (‘LIC'') to discharge its superannuation liabilities. The Company''s contribution paid/payable under the scheme is recognised as an expense in the Statement of Proft and Loss during the period in which the employee renders the related service.

4. Gratuity costs are defned benefts plans. The present value of obligations under such defned beneft plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee beneft entitlement and measure each unit separately to build up the fnal obligation.

The obligation is measured at the present value of estimated future cash fows. The discount rates used for determining the present value of obligation under defned beneft plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Annual contributions are made to the employee''s gratuity fund, established with the LIC based on an actuarial valuation carried out by the LIC as at 31 March each year. The fair value of plan assets is reduced from the gross obligation under the defned beneft plans, to recognise the obligation on net basis. Actuarial gains and losses are recognised immediately in the Statement of Proft and Loss. Gains or losses on the curtailment or settlement of any defned beneft plan are recognised when the curtailment or settlement occurs.

5. Benefts under the Company''s leave encashment scheme constitute other long term employee benefts. The obligation in respect of leave encashment is provided on the basis on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee beneft entitlement and measure each unit separately to build up the fnal obligation.

The obligation is measured at the present value of estimated future cash fows. The discount rates used for determining the present value of obligation under defned beneft plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Annual contributions are made to the employee''s leave encashment fund, established with the LIC based on an actuarial valuation carried out by the LIC as at 31 March each year. The fair value of plan assets is reduced from the gross obligation, to recognise the obligation on net basis. Actuarial gains and losses are recognised immediately in the Statement of Proft and Loss.

1.15 Investments

Long term investments are valued at cost. Any decline other than temporary, in the value of long-term investments, is adjusted in the carrying value of such investments. Diminution, if any, is determined individually for each long-term investment. Current investments are valued at the lower of cost and fair value of individual scrips.

1.16 Earnings per share

Basic earnings per share are computed by dividing the net proft/(loss) for the year attributable to the equity shareholders with the weighted average number of equity shares outstanding during the year. Diluted earnings per share are computed using the weighted average number of equity and dilutive potential equity shares outstanding during the year, except where the results would be anti-dilutive.

1.17 Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are classifed as operating leases. Lease rents under operating leases are recognized in the Statement of Proft and Loss on a straight line basis over the lease term.

1.18 Events occurring after the balance sheet date

Adjustment to assets and liabilities are made for events occurring after the balance sheet date that provide additional information materially afecting the determination of the amount of assets and liabilities relating to condition existing at the balance sheet date.


Mar 31, 2012

1.1 Basis of preparation of financial statements

The financial statements are prepared on accrual basis under the historical cost convention, modified to include revaluation of certain assets, in accordance with applicable Accounting Standards (AS) specified in the Companies (Accounting Standards) Rules, 2006 and presentational requirements of the Companies Act, 1956.

This is the first year of application of the revised Schedule VI to the Companies Act, 1956 for the preparation of the financial statements of the company. The revised Schedule VI introduces some significant conceptual changes as well as new disclosures. These include classification of all assets and liabilities into current and non-current. The previous year figures have also undergone a major reclassification to comply with the requirements of the revised Schedule VI.

1.2 Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenue and expenses during the reporting year. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future years.

1.3 Current and non-current classification

All assets and liabilities are classified into current and non-current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

(a) it is expected to be realised in, or is intended for sale or consumption in, the company's normal operating cycle;

(b) it is held primarily for the purpose of being traded;

(c) it is expected to be realised within 12 months after the reporting date; or

(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

(a) it is expected to be settled in the company's normal operating cycle;

(b) it is held primarily for the purpose of being traded;

(c) it is due to be settled within 12 months after the reporting date; or

(d) the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.

Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle being a period within 12 months for the purposes of classification of assets and liabilities as current and non-current.

1.4 Revenue recognition

Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership in the goods to the customer.

Revenue from services is recognised on rendering of services to customers.

Interest income is recognised using the time proportion method, based on underlying interest rates.

Revenue from long-term construction contracts in accordance with Accounting Standard-7 on "Construction Contracts" is recognized using the percentage of completion method. Percentage of completion method is determined as a proportion of cost incurred to date to the total estimated contract cost or completion of a physical portion of the contract work depending on the nature of contract whichever is appropriate. Where the total cost of the contract, based on technical and other estimates, is expected to exceed the corresponding contract value, such excess is provided during the year.

Duty drawback available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of scheme are established and these are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.

1.5 Tangible fixed assets and capital work-in-progress

Fixed assets, including capital work in progress are stated at cost of acquisition or construction less accumulated depreciation. Cost comprises the purchase price and any directly attributable costs of bringing the asset to its working condition for the intended use. Tangible fixed assets under construction are disclosed as Capital work-in-progress.

1.6 Intangible assets

Intangible assets comprising computer software and technical know-how are stated at cost, including taxes, less accumulated amortisation. Computer software is amortised on a straight line basis over three years. Technical know-how is amortised on a straight line basis over its estimated useful life, the period over which the Company expects to derive economic benefits from the use of the technical know-how.

1.7 Borrowing Cost

Financing costs relating to borrowed funds attributable to construction or acquisition of qualifying assets for the period up to the completion of construction or acquisition of such assets are included in the cost of the assets. All borrowing costs are charged to Statement of Profit and Loss.

1.8 Impairment

The carrying values of assets are reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the amount recoverable towards such asset is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss has been recognised.

1.9 Depreciation

Depreciation is provided on a pro-rata basis under the straight line method. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the management's estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management's estimate of the useful life/remaining useful life. Rates of depreciation (where different from the rates prescribed in Schedule XIV to the Companies Act, 1956) have been derived on the basis of the following estimated useful life:

Leasehold land is amortised on straight line basis over the period of the lease. Leasehold improvements are depreciated over the period of lease or the useful life of the underlying asset, whichever is less. Depreciation on additions is being provided on a pro rata basis from the date of such additions. Similarly, depreciation on assets sold/disposed off during the year is being provided up to the date on which such assets are sold/disposed off.

Assets costing individually Rs. 5,000 or less are depreciated fully in the year of purchase.

1.10 Inventories

Inventories are valued at the lower of cost and net realisable value. Cost includes all applicable costs incurred in bringing goods to their present location and condition, determined on a first in first out basis.

In determining the cost of inventories, fixed production overheads are allocated on the basis of normal capacity of production facilities.

Contract work in progress includes contract costs that relate to future activity on the long term construction contract, such as costs of materials that have been delivered to a contract site or set aside for use in a contract but not yet installed, used or applied during contract performance and excludes the materials which have been made specially for such contracts.

1.11 Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the respective transactions. Monetary foreign currency assets and liabilities remaining unsettled at the balance sheet date are translated at exchange rates prevailing on that date. All exchange differences other than in relation to acquisition of fixed assets and other long term foreign currency monetary liabilities are dealt with in the Statement of Profit and Loss.

In accordance with Accounting Standard 11, "Accounting for the effects of changes in foreign exchange rates", exchange differences arising in respect of long term foreign currency monetary items:

- used for acquisition of depreciable capital asset, are added to or deducted from the cost of asset and are depreciated over the balance life of asset.

- used for the purpose other than the acquisition of depreciable capital asset, are accumulated in Foreign Currency Monetary Item Translation Difference Account (FCMITDA) and amortized over the balance period of such liability.

The premium or discount that arises on entering into a forward exchange contract for hedging underlying assets and liabilities is measured by the difference between the exchange rate at the date of inception of the forward exchange contract and the forward rate specified in the contract and is amortised as expense or income over life of the contract. Exchange difference on forward exchange contract is the difference between:

(a) the foreign currency amount of the contract translated at the exchange rate 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 inception of the forward exchange contract and the last reporting date.

These exchange differences are recognised in the statement of profit and loss in the reporting period in which the exchange rates change.

1.12 Provisions and contingencies

A provision is created when there is a present obligation as a result of a past event that entails a probable outflow of resources and a reliable estimate can be made of the amount of the obligation. Disclosure of a contingent liability is made when there is a possible but not probable obligation or a present obligation that may, but probably will not, entail an outflow of resources. When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

1.13 Taxation

Income-tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities and assets are recognised using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward losses under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and are written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised.

1.14 Employee benefits

1. All employee benefits payable/available within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognised in the Statement of Profit and Loss in the year in which the employee renders the related service.

2. Provident fund is a defined contribution scheme. Contributions payable to the provident fund are charged to the Statement of Profit and Loss.

3. Superannuation fund is a defined contribution scheme. The Company contributes to schemes administered by the Life Insurance Corporation of India ('LIC') to discharge its superannuation liabilities. The Company's contribution paid/payable under the scheme is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.

4. Gratuity costs are defined benefits plans. The present value of obligations under such defined benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Annual contributions are made to the employee's gratuity fund, established with the LIC based on an actuarial valuation carried out by the LIC as at 31 March each year. The fair value of plan assets is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on net basis. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs.

5. Benefits under the Company's leave encashment scheme constitute other long term employee benefits. The obligation in respect of leave encashment is provided on the basis on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Annual contributions are made to the employee's leave encashment fund, established with the LIC based on an actuarial valuation carried out by the LIC as at 31 March each year. The fair value of plan assets is reduced from the gross obligation, to recognise the obligation on net basis. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss.

1.15 Investments

Long term investments are valued at cost. Any decline other than temporary, in the value of long-term investments, is adjusted in the carrying value of such investments. Diminution, if any, is determined individually for each long-term investment. Current investments are valued at the lower of cost and fair value of individual scrips.

1.16 Earnings per share

Basic earnings per share are computed by dividing the net profit/(loss) for the year attributable to the equity shareholders with the weighted average number of equity shares outstanding during the year. Diluted earnings per share are computed using the weighted average number of equity and dilutive potential equity shares outstanding during the year, except where the results would be anti-dilutive.

1.17 Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are classified as operating leases. Lease rents under operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term.

1.18 Events occurring after the balance sheet date

Adjustment to assets and liabilities are made for events occurring after the balance sheet date that provide additional information materially affecting the determination of the amount of assets and liabilities relating to condition existing at the balance sheet date.


Mar 31, 2011

(a) Basis of accounting

The financial statements are prepared and presented under the historical cost convention, on the accrual basis of accounting in accordance with the Indian Generally Accepted Principles and accounting standards as notifed under the Companies (Accounting Standards) Rules, 2006, and the presentation requirements of the Companies Act, 1956 to the extent applicable.

(b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenue and expenses during the reporting year. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future years.

(c) Revenue recognition

Revenue from sale of goods is recognised on transfer of all signifcant risks and rewards of ownership in the goods to the customer.

Revenue from services is recognised on rendering of services to customers.

Interest income is recognised using the time proportion method, based on underlying interest rates.

Revenue from long-term construction contracts in accordance with Accounting Standard-7 on "Construction Contracts" is recognized using the percentage of completion method. Percentage of completion method is determined as a proportion of cost incurred to date to the total estimated contract cost. Where the total cost of the contract, based on technical and other estimates, is expected to exceed the corresponding contract value, such excess is provided during the year.

Duty drawback available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of scheme are established and these are accounted to the extent there is no signifcant uncertainty about the measurability and ultimate utilization of such duty credit.

(d) Fixed assets and capital work-in-progress

Fixed assets, including capital work in progress are stated at cost of acquisition or construction less accumulated depreciation. Cost comprises the purchase price and any directly attributable costs of bringing the asset to its working condition for the intended use.

(e) Borrowing Cost

Financing costs relating to borrowed funds attributable to construction or acquisition of qualifying assets for the period up to the completion of construction or acquisition of such assets are included in the cost of the assets.

(f) Impairment

The carrying values of assets are reviewed at each reporting date to determine whether there are any indication of impairment. If such indication exists, the amount recoverable towards such asset is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the Profit and Loss Account. An impairment loss is reversed if there has been been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss has been recognised.

(g) Depreciation

Depreciation is provided on a pro-rata basis under the straight line method. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the management's estimate of the useful life of a fxed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management's estimate of the useful life/ remaining useful life. Rates of depreciation (where different from the rates prescribed in Schedule XIV to the Companies Act, 1956) have been derived on the basis of the following estimated useful lives:

*Included in Buildings in Schedule 5 of the financial statements

**Included in Plant and Machinery in Schedule 5 of the financial statements

Leasehold land is amortised over the period of the lease. Leasehold improvements are depreciated over the period of lease or the useful life of the underlying asset, whichever is less.

Depreciation on additions is being provided on a pro rata basis from the date of such additions. Similarly, depreciation on assets sold/disposed off during the year is being provided up to the date on which such assets are sold/disposed off.

Assets costing individually Rs. 5,000 or less are depreciated fully in the year of purchase.

(h) Intangible assets

Intangible assets comprise computer software and technical know-how and are stated at cost, including taxes, less accumulated amortisation. Computer software is amortised on a straight line basis over three years. Technical know-how is amortised on a straight line basis over its estimated useful life, the period over which the Company expects to derive economic Benefits from the use of the technical know-how.

(i) Inventories

Inventories are valued at the lower of cost and net realisable value. Cost includes all applicable costs incurred in bringing goods to their present location and condition, determined on a frst in frst out basis. In determining the cost of inventories, fxed production overheads are allocated on the basis of normal capacity of production facilities.

Contract work in progress includes contract costs that relate to future activity on the long term construction contract, such as costs of materials that have been delivered to a contract site or set aside for use in a contract but not yet installed, used or applied during contract performance and excludes the materials which have been made specially for such contracts.

(j) Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the respective transactions. Monetary foreign currency assets and liabilities remaining unsettled at the balance sheet date are translated at exchange rates prevailing on that date. Gains/losses arising on account of realisation/settlement of foreign currency transactions and on translation of foreign currency assets and liabilities are recognised in the Profit and Loss Account.

The premium or discount that arises on entering into a forward exchange contract for hedging underlying assets and liabilities is measured by the difference between the exchange rate at the date of inception of the forward exchange contract and the forward rate specifed in the contract and is amortised as expense or income over life of the contract. Exchange difference on forward exchange contract is the difference between:

(a) the foreign currency amount of the contract translated at the exchange rate 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 inception of the forward exchange contract and the last reporting date.

These exchange differences are recognised in the statement of Profit and loss in the reporting period in which the exchange rates change.

(k) Provisions and contingencies

A provision is created when there is a present obligation as a result of a past event that entails a probable outflow of resources and a reliable estimate can be made of the amount of the obligation. Disclosure of a contingent liability is made when there is a possible but not probable obligation or a present obligation that may, but probably will not, entail an outflow of resources. When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

(l) Taxation

Income-tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income-tax law) and deferred tax charge or credit (refecting the tax effects of timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities and assets are recognised using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward losses under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and are written down or written up to refect the amount that is reasonably/virtually certain (as the case may be) to be realised.

(m) Employee Benefits

1. All employee Benefits payable/available within twelve months of rendering the service are classifed as short-term employee Benefits. Benefits such as salaries, wages and bonus etc., are recognised in the Profit and Loss Account in the year in which the employee renders the related service.

2. Provident fund is a defned contribution scheme. Contributions payable to the provident fund are charged to the Profit and Loss Account.

3. Superannuation fund is a defned contribution scheme. The Company contributes to schemes administered by the Life Insurance Corporation of India (‘LIC') to discharge its superannuation liabilities. The Company's contribution paid/payable under the scheme is recognised as an expense in the Profit and Loss Account during the period in which the employee renders the related service.

4. Gratuity costs are defned Benefits plans. The present value of obligations under such defned Benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee Benefit entitlement and measure each unit separately to build up the fnal obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defned Benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Annual contributions are made to the employee's gratuity fund, established with the LIC based on an actuarial valuation carried out by the LIC as at 31 March each year. The fair value of plan assets is reduced from the gross obligation under the defned Benefit plans, to recognise the obligation on net basis. Actuarial gains and losses are recognised immediately in the Profit and loss account. Gains or losses on the curtailment or settlement of any defned Benefit plan are recognised when the curtailment or settlement occurs.

5. Benefits under the Company's leave encashment scheme constitute other long term employee Benefits. The obligation in respect of leave encashment is provided on the basis on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee Benefit entitlement and measure each unit separately to build up the fnal obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defned Benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Annual contributions are made to the employee's leave encashment fund, established with the LIC based on an actuarial valuation carried out by the LIC as at 31 March each year. The fair value of plan assets is reduced from the gross obligation, to recognise the obligation on net basis. Actuarial gains and losses are recognised immediately in the Profit and loss account.

(n) Investments

Long term investments are valued at cost. Any decline other than temporary, in the value of long-term investments, is adjusted in the carrying value of such investments. Diminution, if any, is determined individually for each long-term investment. Current investments are valued at the lower of cost and fair value of individual scrips.

(o) Earnings per share

Basic earnings per share are computed by dividing the net Profit/(loss) for the year attributable to the equity shareholders with the weighted average number of equity shares outstanding during the year. Diluted earnings per share are computed using the weighted average number of equity and dilutive potential equity shares outstanding during the year, except where the results would be anti-dilutive.

(p) Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are classifed as operating leases. Lease rents under operating leases are recognized in the Profit and Loss Account on a straight line basis over the lease term.

(q) Events occurring after the balance sheet date

Adjustment to assets and liabilities are made for events occurring after the balance sheet date that provide additional information materially affecting the determination of the amount of assets and liabilities relating to condition existing at the balance sheet date.


Mar 31, 2010

(a) Basis of accounting

The financial statements are prepared and presented under the historical cost convention, on the accrual basis of accounting in accordance with the Indian Generally Accepted Principles and accounting standards as notified under the Companies (Accounting Standards) Rules, 2006, and the presentation requirements of the Companies Act, 1956 to the extent applicable.

b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenue and expenses during the reporting year. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future years.

(c) Revenue recognition .

Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership in the goods to the customer.

Revenue from services is recognised on rendering of services to customers. Interest income is recognised using the lime proportion method, based on underlying interest rates. Revenue from long-term construction contracts in accordance with Accounting Standard-7 on "Construction Contracts" is recognized using the percentage of completion method. Percentage of completion method is determined as a Proportion of cost incurred to date to the total estimated contract cols. Where the total cost of the contract, based on technical and other estimates, is expected to exceed the corresponding contract value, such excess is provided during the year. Duty drawback available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of scheme are established and these are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.

d) Fixed assets and capital work-in-progress Fixed assets including capital work in progress are stated at cost of acquisition or construction less accumulated depreciation. Cost comprises the purchase price and any directly attributable costs of bringing the asset to its working condition for the intended use.

(e) Borrowing Cost . Financing costs relating to borrowed funds attributable to construction or acquisition of qualifying assets for the period up to the completion of construction or acquisition of such assets are included in the cost of the assets.

(f) Impairment

The carrying values of assets are reviewed at each reporting date to determine whether there any indication of impairment. It such indication exists, the amount recoverable towards such asset is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the Profit and Loss Account. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss has been recognised.

(g) Depreciation

Depreciation is provided on a pro-rata basis under the straight line method. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the management's estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management's estimate of the useful life/ remaining useful life. Rates of depreciation (where different from the rates prescribed in Schedule XIV to the Companies Act,

Depreciation on additions is being provided on a pro rata basis from the date of such additions. Similarly depreciation on assets sold/disposed off during the year is being provided up to the date on which such assets are sold/disposed off Assets costing individually Rs. 5,000 or less are depreciated fully in the year of purchase

(h) Intangible assets

Intangible assets comprise computer software and technical know-how and are stated at cost, including taxes, less accumulated amortisation. Computer software is amortised on a straight line basis over three years. Technical know-how is amortised on a straight line basis over its estimated useful life of approximately 50 months, being the period over which the Company expects to derive economic benefits from the use of the technical know-how.

(i) Inventories

Inventories are valued at the lower of cost and net realisable value. Cost includes all applicable costs incurred in bringing goods to their present location and condition, determined on a first in first out basis.

In determining the cost of inventories, fixed production overheads are allocated on the basis of normal capacity of production Contract work in progress includes contract costs that relate to future activity on the long term construction contract such as costs of materials that have been delivered to a contract site or set aside for use in a contract but not yet installed' used or applied during contract performance and excludes the materials which have been made specially for such contracts'

(j) Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the respective transactions Monetary foreign currency assets and liabilities remaining unsettled at the balance sheet date are translated at exchange rates prevailing on that date. Gains/losses arising on account of realisation/settlement of foreign currency transactions and on translation of foreign currency assets and liabilities are recognised in the Profit and Loss Account.

The premium or discount that arises on entering into a forward exchange contract for hedging underlying assets and liabilities is measured by the difference between the exchange rate at the date of inception of the forward exchange contract and the forward rate specified in the contract and is amortised as expense or income over life of the contract. Exchange difference on forward exchange contract is the difference between:

(a) the foreign currency amount of the contract translated at the exchange rate 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 inception of the forward exchange contract and the last reporting date.

These exchange differences are recognised in the statement of profit and loss in the reporting period in which the exchange rates change.

(k) Provisions and contingencies

A provision is created when There is a present obligation as a result of a past event that entails a probable outflow of resources and a reliable estimate can be made of the amount of the obligation. Disclosure of a contingent liability is made when there is a possible but not probable obligation or a present obligation that may, but probably will not, entail an outflow of resources When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made

(l) Taxation

Income-tax expense comprises current tax/fringe benefit tax (i.e. amount of tax for the year determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities and assets are recognised using the tax rates that have been enacted or substantively enacted by the Balance Sheet date Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however where there is unabsorbed depreciation or carried forward losses under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and are written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be to be realised.

(m) Employee benefits

1 All employee benefits payable/available within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognised in the Profit and Loss Account in the year in which the employee renders the related service.

2. Provident fund is a defined contribution scheme. Contributions payable to the provident fund are charged to the Profit and Loss Account.

3 Superannuation fund is a defined contribution scheme. The Company contributes to schemes administered by the Life Insurance Corporation of India ('LIC") to discharge its superannuation liabilities. The Company's contribution paid/payable under the scheme is recognised as an expense in the Profit and Loss Account during the period in which the employee renders the related service.

4 Gratuity costs are defined benefits plans. The present value of obligations under such defined benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Annual contributions are made to the employee's gratuity fund, established with the LIC based on an actuarial valuation carried out by the LIC as at 31 March each year. The fair value of plan assets is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on net basis. Actuarial gains and losses are recognised immediately in the profit and loss account. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs.

5 Benefits under the Company's leave encashment scheme constitute other long term employee benefits. The obligation in respect of leave encashment is provided on the basis of actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Annual contributions are made to the employee's leave encashment fund, established with the LIC based on an actuarial valuation carried out by the LIC as at 31 March each year. The fair value of plan assets is reduced from the gross obligation, to recognise the obligation on net basis. Actuarial gains and losses are recognised immediately in the profit and loss account.

(n) Investments

Long term investments are valued at cost. Any decline otherthan temporary, in the value of long-term investments, is adjusted in the carrying value of such investments. Diminution, if any, is determined individually for each long-term investment. Current investments are valued at the lower of cost and fair value of individual scrips.

(o) Earnings per share

Basic earnings per share are computed by dividing the net profit/(loss) for the year attributable to the equity shareholders with the weighted average number of equity shares outstanding during the year. Diluted earnings per share are computed ¦ using the weighted average number of equity and dilutive potential equity shares outstanding during the year, except where the results would be annihilative.

(p) Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are classified as operating leases. Lease rents under operating leases are recognized in the Profit and Loss Account on a straight line basis over the lease term.

(q) Events occurring alter the balance sheet date

Adjustment to assets and liabilities are made for events occurring after the balance sheet date that provide additional information materially affecting the determination of the amount of assets and liabilities relating to condition existing at the balance sheet date. I, Amalgamation

(a) Background and nature of business First Scheme

The Hon'ble High Court of Delhi and the Hon'ble High Court of Rajasthan have approved the Scheme of Amalgamation of Company's wholly owned subsidiary Blossom Automotive Private Limited (Transferor company or Blossom) with Tecpro Systems Limited ('Transferee Company or Company or TSL") on 22 May 2009 and 10 July 2009 respectively. The Orders of the Hon'ble High Courts of Delhi and Rajasthan were duly filed with the respective Registrar of Companies and the Scheme of Amalgamation became effective on 10 September 2009.

Prior to amalgamation Blossom owned the factory premises at Bhiwadi in Rajasthan which had been exclusively let out to Tecpro Systems Limited for carrying out manufacturing operations.

Second Scheme

The Hon'ble High Court of Bombay at Mumbai and the Hon'ble High Court of Delhi have approved the Scheme of Amalgamation of Tecpro Ashtech Limited (the First Transferor Company or TAL) and Tecpro Power Systems Limited (the Second Transferor Company or TPSL) with the Tecpro Systems Limited (the 'Transferee Company" or "Company" or 'TSL") vide their order dated 20 November 2009 and 4 March 2010 respectively. The First Transferor Company and the Second Transferor Company are hereinafter jointly referred to as "the Transferor Companies". The effective date of amalgamation being the last of the dates on which the certified copies of the orders of the High Courts have been filed with the Registrar of Companies at Mumbai and Delhi is 31 March 2010.

The First Transferor Company was engaged in the business of manufacture of ash handling equipments and undertakes turnkey projects for ash handling systems. The Second Transferor Company was engaged in the business undertaking the Erection, Procurement and Construction contracts for setting up the power plants and also undertakes design and engineering services for power sector projects.

(b) Salient features of the Schemes

The salient features of the first scheme of amalgamation of Blossom with the Company are as follows:

- The Appointed Date for the amalgamation is 1 April 2008.

- On and from the Appointed Date, authorised share capital of the Transferor Company has been merged with those of the Transferee Company.

- The undertaking of the Transferor Company to vest in the Company subject to encumbrances, charges if any.

- All suits, claims, actions and proceedings by or against the Transferor company pending and / or arising on or before the effective date shall be continued and be enforced by or against the Transferee company as effectually as the same had been instituted by or pending against the Transferee Company.

- Upon the scheme becoming effective, any loan or other obligation due between or amongst the Transferor Company and the Transferee Company, if any, shall stand discharged and there shall be no liability in that behalf.

The salient features of the second scheme of amalgamation of TAL and TPSL with the Company are as follows:

- The Appointed Date for the amalgamation is 1 April 2009.

- On and from the Appointed Date, authorised share capital of both the Transferor Companies have been reclassified and merged with authorised share capital of the Transferee Company.

- With effect from the Appointed Date, the whole of the undertakings of both the Transferor Companies, shall pursuant to provisions of Sections 394(2) and other applicable provisions of the Act, without any further act, instrument or deed be transferred to and be vested in the Transferee Company as a going concern so as to become the undertakings of the Transferee Company by virtue of and in the manner provided in this Scheme.

- All suits, claims, actions and proceedings by or against the Transferor company pending and / or arising on or before the effective date shall be continued and be enforced by or against the Transferee company as effectually as the same had been instituted by or pending against the Transferee Company.

(c) Consideration First Scheme

Transferor Company (Blossom Automotive Private Limited) was a wholly owned subsidiary of the Transferee Company. On the appointed date, the entire equity share capital of the Transferor Company was held by the Transferee Company,

On amalgamation of the Transferor company and the Transferee company, the share capital of the Transferor Company will be extinguished since all the shares of the Transferor company are held by the Transferee company. Since, the Transferor company is a wholly owned subsidiary of the Transferee company; no shares will be issued by the Transferee company to the shareholders of the Transferor company as a result of amalgamation.

Pursuant to the Scheme, the shareholders of Transferor Companies are entitled to the equity shares of the Transferee Company in the following ratio:

The shareholders of TAL:

a. Equity shareholders ¦ 100 Equity Shares of Rs.10 each of TSL, for every 299 equity shares of Rs.10 each held by such equity shareholders or their respective heirs, executors or, as the case may be, successors in TAL, on the effective date.

b. Preference shareholders -16,570 Equity Shares of Rs.10 each of TSL for every 100 0.01% compulsorily convertible preference shares of Rs.100 each held by such preference shareholders or their respective heirs, executors or, as the case may be, successors in TAL, on the effective date.

The shareholders of TPSL: a. Equity shareholders -100 Equity Shares of Rs.10 each of TSL for every 349 equity shares of Rs.10 each held by such equity shareholders or their respective heirs, executors or, as the case may be, successors in TPSL on the effective date.

b. Investments of TSL in TPSL appearing in the books of account of TSL will stand cancelled.

c. Preference shareholders - 100 Equity Shares of Rs.10 each of TSL, for every 280 0.01% compulsorily convertible cumulative preference shares of Rs.100 each held by such preference shareholders or their respective heirs, executors or, as the case may be, successors in TPSL on The effective date.

d. The equity shares of the Transferee Company issued to the members of each of the Transferor companies shall be subject to the provisions of Articles of Association of the Transferee company and shall rank pari-passu, in all respects.

(r) Accounting treatment

The Company has accounted for the amalgamation in its books as per the Pooling of Interest Method of Accounting prescribed under the Accounting Standard 14 - 'Accounting for Amalgamation" in respect of both the schemes.

- All the assets and liabilities recorded in the books of the Blossom, TAL, TPSL (collectively referred to as Transferor companies hereafter) have been transferred to and vested in Tecpro Systems Limited (the Company / the Transferee company) pursuant to the Scheme and have been recorded by the Transferee Company at their book values as appearing in the books of the Transferor Companies;

- On and from the Appointed Date, the reserves and the balance in the Profit and Loss Account of the Transferor Companies have been merged with those of the Transferee Company in the same form as they appear in the financial statements of the Transferor Companies.

- In relation to the First scheme of amalgamation, the difference between the amount recorded as investments in the Transferee Company and the amount of share capital of Blossom, on amalgamation, has been adjusted in the reserves in the books of the Transferee Company.

- In relation to the Second scheme of amalgamation, the difference between the share capital to be issued pursuant to the scheme of amalgamation and the amount of share capital of the Transferor companies has been adjusted in the reserves in the books of the Transferee Company.

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