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 (ÂLIC'') 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 (ÃLIC') 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 æ 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 æ 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.