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Accounting Policies of UB Engineering Ltd. Company

Mar 31, 2014

A) The Accounts are prepared under the historical cost convention, except revaluation of certain Fixed Assets, as stated in D (ii) below and that those comply with the Companies Act, 1956 ( Which continue to be applicable in respect of section 133 of Companies Act, 2013 in terms of circular 15/2013 dated 13.09.2013 of the Ministry of Corporate Affairs as well as per circular 08/2014 dated 04.04.2014of the Ministry of Corporate Affairs) and with the Applicable Accounting Standards ( AS ) and statements issued by the Institute of Chartered Accountants of India.

B) Use of Estimates

The presentation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual result and estimates are recognized in the period in which the results are known / materialized.

C) Revenue Recognition

Revenue from construction and project related activities is recognized by applying percentage of completion to the contract value. Percentage of completion is determined as a proportion of cost incurred to date to the total estimated cost. No profit is recognized until a contract has progressed to the point where ultimate realisable profit can be reasonably determined. Full provision is made for any loss in the year in which, it is foreseen.

Additional Claims (including for escalation), which in the opinion of the Management are recoverable on the contract, are recognized as and when claims are lodged and accepted by client. Extra work is accounted for, after Clients acceptance or realization.

Income from technical services is accrued as per terms of relevant agreement. Similarly, revenue from services rendered is recognized based on services rendered.

D) Fixed Assets and Depreciation

I. Fixed Assets are generally stated at cost inclusive of all expenses directly attributable in bringing the Assets to their working condition.

II. Based on independent valuation reports by approved valuers, the Company had revalued its Land and Buildings as on March 31, 1989 and certain Assets such as Building, Plant & Machinery and Cranes as on March 31, 1994. The surplus arising on such revaluation was credited to ''Revaluation Reserve'' and the incremental annual differential depreciation on account of the revaluation is being charged against such Reserve.

Based on independent valuation reports by approved valuers the Company had revalued its Land, Building, Plant and Machinery (including Cranes) as on March 31, 2005 , and the excess of revalued amount , over the then carrying value of the said assets has been credited to ''Revaluation Reserve.''In pursuance to the Scheme of Arrangement sanctioned by the Bombay High Court, Land , Building and Plant & Machinery of the Company post merger were revalued as on 1st January 2009 by independent valuers and were taken at fair values. The excess of revalued amount, over the then carrying value of the said assets has been credited to ''General Reserve.

Depreciation on Fixed Assets is provided on straight line method, including revalued amount, at the rates prescribed under Schedule XIV to the Companies Act, 1956.

Impairment of Assets, Fixed Assets were reviewed for impairment with reference to their carrying cost compared to the recoverable value and the effect of impairment, if any, is considered in the Statement of Profit and Loss in the accordance with AS 28.

E) Investments

Investments (Long term) are stated at cost, less provision for permanent diminution in the value, if any. Current Investments are stated at the lower of cost and market value.

F) Inventories

i) Inventory of Consumables, Stores and Spares at Project Sites, is valued at cost on Weighted Average Price or net realizable value, whichever is less.

ii) Work in Progress on construction contracts is valued at cost - comprising Materials, Labor and Site Overheads or proportionate contract value or net realizable value, whichever is less and as certified by Management.

iii) Loose Tools stock and Tools & Tackles for Domestic operations, purchased during the year, are amortized over a period of three years and those used for Overseas operations are expensed to Site cost in the year of Purchase.

G) Contract Costs

All the expenditure incurred at / for contract sites is shown under Contract Costs. Taxes payable on Foreign contracts are recognized when determined and paid / withheld.

H) Employee Benefit Expenses

i) Company provides liability towards Contribution to Provident Fund including Employee''s Deposit Linked Insurance Scheme and it is charged to the Profit and Loss account on accrual basis.

ii) Company provides liability for Gratuity as per the Actuarial Valuation and the same is accrued and provided.

iii) Company provides for liability for Superannuation on accrual basis and incremental liability for the period is provided.

iv) Liability on account of encashment of Leave entitlement of employees in accordance with the Rules of the Company is provided for the Current year on the basis of actuarial valuation.

I) Foreign Currency Transactions

i) Foreign Currency transactions are accounted for at the rates prevailing on the date of the transaction. Exchange rate Differences are accounted for under appropriate head in the Profit and Loss Account.

ii) Translation of the financial statements of foreign site offices other than fixed assets, have been made in accordance with the AS 11 dealing with Accounting for the Effect of Changes in Foreign Exchange Rates issued by the Institute of Chartered Accountants of India.

J) Taxes on Income

Provision for Income Tax is made on the basis of taxable income for the current accounting period in accordance with the Income Tax Act , 1961.

Deferred tax asset / liability is calculated at the current income tax rate and is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of

reversal in one or more subsequent periods. Deferred tax assets subject to the consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Tax has been provided in accordance with provisions of Income Tax Act.

K) Contingent Liabilities

All known Liabilities, wherever material, are provided for and Liabilities, which are disputed, are referred to by way of Notes on Accounts.

L) Sundry Debtors, Loans & Advances

Specific debts and advances identified as irrecoverable or doubtful, if any, are written off or provided for, respectively. Trade Receivables / Trade Payables pertaining to back to back contracts are shown at net values.


Mar 31, 2011

Notes to Abridged Balance Sheet as at March 31, 2011 and Abridged Profit and Loss for the year ended on that date.

(The number against the Notes to Accounts refer to those in the Un-abridged Annual Accounts for the Year ended March31, 2011)

1) In terms of "Accounting Treatment" referred to in the Scheme of Arrangement sanctioned by the Bombay High Court in its Order dated 6th March, 2009, the following accounting entries were made in the accounts.

(a) Land, Building and Plant & Machinery, other Assets & Liabilities were revalued / reviewed as on 1st January, 2009 at their fair market values in respect of the Company and the erstwhile subsidiary and the notional appreciation representing the difference between the revalued values and their original cost amounting to Rs. 222.47 Million (net) was credited to General Reserve which otherwise would have been taken to Fixed Asset Revaluation Reserve during FY. 2008-09.

(b) Arrears of Deferred Tax Asset of Rs. 121.15 Million relating to pre-merger period has been deducted from the above General Reserve instead of recognizing in the Profit and Loss Account during FY 2009 -10.

The above treatment is however at variance with the Accounting Standard Nos. 10 and 22 and the Generally Accepted Accounting principles, and the General Reserve is not an appropriation out of profits, available for dividend.

2) Sales (Income from Contracts ) include Claim of Rs. 135.78 Million relating to an earlier year.

3) The overseas operations are not exposed to material loss on exchange in view of natural hedging, accordingly the Company has not hedged Overseas Financial Exposures against Currency Fluctuation. The amount outstanding as on March 31,2011 Rs. 61.44 Million (Previous year Rs. 96.46 Million).

The Company has not entered into speculative derivative transactions.

Accounting Ratios :

i) Sales to Total Assets : 2.92 Times (Previous Year- 3.17 Times )

ii) Operating Profit to Closing Capital Employed: 24.04 % (Previous Year - 26.69 %)

iii) Return on Closing Net Worth: 20.65% (Previous Year- 30.19%)

iv) Profit to Sales : 6.17% (PreviousYear- 7.62%)


Mar 31, 2010

A) The Accounts are prepared on the basis of Going Concern and under the historical cost convention, except revaluation of certain Fixed Assets, as stated in D (ii) below and that those comply with the Companies Act, 1956 and with the Applicable Accounting Standards ( AS ) and statements issued by the Institute of Chartered Accountants of India.

B) Use of Estimates

The presentation of financial statements in conformity with the Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual result and estimates are recognized in the period in which the results are known / materialized.

C) Revenue Recognition

Revenue from construction and project related activities is recognized by applying percentage of completion to the contract value. Percentage of completion is determined as a proportion of cost incurred to date to the total estimated cost. No profit is recognized until a contract has progressed to the point where ultimate realisable profit can be reasonably determined. Full provision is made for any loss in the year in which, it is foreseen.

Additional Claims (including for escalation), which in the opinion of the Management are recoverable on the contract, are recognized as and when claims are lodged and accepted by client. Extra work is accounted for after Clients acceptance or realization.

Income from technical services is accrued as per terms of relevant agreement. Similarly, revenue from services rendered is recognized based on services rendered.

D) Fixed Assets and Depreciation

i) Fixed Assets are generally stated at cost inclusive of all expenses directly attributable in bringing the Assets to their working condition.

ii) Based on independent valuation reports by approved valuers, the Company had revalued its Land and Buildings as on March 31, 1989 and certain Assets such as Building, Plant & Machinery and Cranes as on March 31, 1994. The surplus arising on such revaluation was credited to Revaluation Reserve and the incremental annual differential depreciation on account of the revaluation is being charged against such Reserve.

Based on independent valuation reports by approved valuers the Company had revalued its Land, Building, Plant and Machinery (including Cranes) as on March 31, 2005 , and the excess of revalued amount , over the then carrying value of the said assets has been credited to Revaluation Reserve.

In pursuance to the Scheme of Arrangement sanctioned by the Bombay High Court, Land , Building and Plant & Machinery of the Company post merger were revalued as on 1st January 2009 by independent valuers and were taken at fair values. The excess of revalued amount, over the then carrying value of the said assets has been credited to General Reserve.

Depreciation on Fixed Assets is provided on straight line method, including revalued amount, at the rates prescribed under Schedule XIV to the Companies Act, 1956.

As per AS 28- Impairment of Assets, Fixed Assets were reviewed for impairment with reference to their carrying cost compared to the recoverable value and the effect of impairment, if any , is considered in the Profit and Loss Account.

E) Investments

Investments (Long term) are stated at cost, less provision for permanent diminution in the value, if any. Current Investments are stated at the lower of cost and market value.

F) Inventories

i) Inventory of Consumables, Stores and Spares at Project Sites included under Contract Work in Progress, is valued at cost on FIFO basis or net realizable value, whichever is less.

ii) Work in Progress on construction contracts is valued at cost - comprising Materials, Labor and Site Overheads or proportionate contract value or net realizable value whichever is less.

iii) Loose Tools stock and Tools & Tackles for Domestic operations, purchased during the year, are amortized over a period of three years and those used for Overseas operations are expensed to Site cost in the year of purchase.

G) Contract Costs

All the expenditure incurred at / for contract sites is shown under Contract Costs. Taxes payable on Foreign Contracts are recognized on payment basis.

H) Employee Benefits

i) Company provides liability towards Contribution to Provident Fund including Employees Deposit Linked Insurance Scheme and it is charged to the Profit and Loss account on accrual basis, accordingly.

ii) Company provides liability for Gratuity as per the actuarial valuation and the same is accrued and provided.

iii) Company provides for liability for Superannuation on accrual basis and incremental liability for the period is provided.

iv) Liability on account of encashment of Leave entitlement of employees in accordance with the Rules of the Company is provided for the current year on the basis of actuarial valuation.

I) Foreign Currency Transactions

i) All other Foreign Currency transactions are accounted for at the rates prevailing on the date of the transaction. Exchange rate differences are accounted for under appropriate head in the Profit and Loss Account.

ii) Translation of the financial statements of foreign site offices other than fixed assets have been made in accordance with the AS 11 dealing with Accounting for the Effect of Changes in Foreign Exchange Rates issued by the Institute of Chartered Accountants of India.

J) Taxes on income

Provision for Income Tax is made on the basis of taxable income for the current accounting period in accordance with the Income Tax Act , 1961.

Deferred tax asset / liability is calculated at the current income tax rate and is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets subject to the consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Tax has been provided in accordance with provisions of Income Tax Act.

K) Contingent Liabilities

All known Liabilities, wherever material, are provided for and Liabilities, which are disputed, are referred to by way of Notes on Accounts.

L) Sundry Debtors, Loans & Advances

Specific debts and advances identified as irrecoverable or doubtful, if any, are written off or provided for, respectively. Debtors / Creditors pertaining to back to back contracts are shown at net values.

 
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