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Accounting Policies of Valecha Engineering Ltd. Company

Mar 31, 2015

A. Basis of accounting and preparation of financial statements

These financial statements have been prepared to comply with the Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013.

The financial statements are prepared on accrual basis under the historical cost convention, except for certain Fixed Assets which are carried at revalued amounts.

B. Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/materialized.

C. Fixed Assets

Fixed Assets are stated at cost, less accumulated depreciation. However, Fixed Assets which were revalued by the Company as on 31st March, 1992 are stated at their revalued amount. The cost of a Fixed Asset comprises its purchase price and any direct attributable cost for bringing the asset in an operational condition for its intended use. Pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from 1st April, 2014, the useful life of fixed assets have been revised as prescribed there in. As a result, an amount of Rs. 485.06 lacs representing assets whose useful life has already exhausted as on 1st April, 2014 has been adjusted against retained earnings. In respect of remaining assets additional depreciation amounting to Rs. 1,703.18 lacs has been charged for the Year ended 31.03.2015.

D. Depreciation and amortisation

(i) Depreciation on Fixed Assets is calculated on "Straight Line Method" at the rates and in the manner prescribed in Schedule II of the Companies Act, 2013, w.e.f. 01.04.2014. Depreciation on Revalued Assets, is calculated on their respective book values, at the rates considered applicable by the valuers.

(ii) Free hold land is not depreciated.

E. Inventories

The inventories of materials on hand at the end of the year are valued at lower of cost or net realisable value. The cost is being determined on First-In-First-out method. The Work-in-progress is valued at Cost or Net Realisable value whichever is Lower.

F. Investments

Long term Investments are stated at cost. It includes Office Premises in Valecha Chambers on which depreciation not provided for as Investment in properties in accordance with Accounting Standard (AS-13) issued by the Institute of Chartered Accountants of India.

G. Revenue recognition

1. The Company follows the "Percentage of Completion Method" of accounting for all contracts in accordance with "Accounting Standard 7" — "Accounting for Construction Contracts" issued by the Institute of Chartered Accountants of India. The revenue from the execution of contracts is recognised proportionately with the degree of completion achieved under each contract, matching revenue with expenses incurred and after considering the total contract value and associated costs.

2. Contract prices are either fixed or subject to price escalation clause. Amounts due in respect of price escalation and/or variation in contract work approved by the customers are recognised as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers.

3. Uncertified work-in-progress is recognised as revenues and is valued at the lower of cost and net realizable value upto the stage of completion. Cost includes direct material, labour cost and appropriate overheads.

4. Contracts executed in Joint Ventures/Consortium under work sharing arrangement are accounted in accordance with the accounting policy followed by the Company as that of an independent contract to the extent work is executed. In case where the contracts are executed independently by the Joint Ventures the share of Profit/(Loss) is recognized as an income/(Loss) in the Books of account of the Company in the year in which the relative contract/s is/are completed/Income received.

5. Site development including initial expenses (shown in Project in progress) thereon is charged to the projects from the date of its revenue recognition.

6. Progress payments received are adjusted against amounts receivable from customers in respect of the contract of work performed.

7. Expected loss, if any, on the construction/projects, related activity is recognised as an expense in the period in which it is foreseen, irrespective of the stage of completion of the contract. While determining the amount of foreseeable loss, all elements of costs and related incidental income not included in contract revenue is taken into consideration.

8. Amounts retained by the customers until the satisfactory completion of the contracts are recognised in the financial statements as receivables. Where such retention has been released by the customers against submission of Bank Guarantees, the amount so released is adjusted against receivables from the customers and the value of the Bank Guarantees is disclosed as contingent liability.

H. Other income

All other Incomes accounted on accrual basis.

I. Foreign currency transactions

Transactions denominated in Foreign Currency are normally recorded at Exchange Rate prevailing at the time of transactions. Current asset/ investments denominated in Foreign Currency are translated at the rate prevailing at the end of the year and the net gain/loss is recognised in the Statement of Profit and Loss.

J. Segment reporting

The Company considers its operations as one single segment i.e. "Construction Activity" and as such AS-17 is not applicable.

K. Borrowing cost

Interest and other borrowing costs attributable to qualifying assets are capitalised. Other interest and borrowing costs are charged to revenue.

L. Provision for Current and Deferred Tax

Current Tax :

Current Tax is the amount of Tax payable on the Taxable Income for the year as determined in accordance with provisions of Income Tax Act 1961.

Deferred Tax Provision :

Deferred Tax charge or credit is recognised on timing differences, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. It is calculated using the applicable tax rates and tax laws that have been enacted by the balance sheet date.

Deferred tax assets are recongnised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

M. Provisions and contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outfow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. However, out of the total Debtors of more than six months old of Rs. 7,400.99 lacs the management is of the opinion that an amount of Rs. 500.00 lacs is doubtful of recovery. Hence, a provision for doubtful debts is provided for Rs. 500.00 lacs during current financial year.

N. Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is only indication of impairment based on internal/external factors. An assets is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identifed as impaired. An impairment loss recognised in prior accounting periods is reversed if there has been change in the estimate of the recoverable amount.


Mar 31, 2014

A. Basis of accounting and preparation of financial statements

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, subject to what is stated herein below, as adopted consistently by the Company. The Company follows accrual system of accounting except otherwise stated.

B. Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/materialised.

C. Fixed Assets

Fixed Assets are stated at cost, less accumulated depreciation. However, Fixed Assets which were revalued by the Company as on 31st March, 1992 are stated at their revalued amount. The cost of a Fixed Asset comprises its purchase price and any direct attributable cost for bringing the asset in an operational condition for its intended use.

D. Depreciation and amortisation

Depreciation on Fixed Assets is calculated on "Straight Line Method" at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on Revalued Assets, is calculated on their respective book values, at the rates considered applicable by the valuers. The additional charge of depreciation on account of revaluation is withdrawn from the Revaluation Reserve and credited to the Profit and Loss Account.

E. Inventories

The inventories of materials on hand at the end of the year are valued at lower of cost or net realisable value. The cost is being determined on First-In-First out method. The Work-in-progress is valued at Cost or Net Realisable value whichever is Lower.

F. Investments

Long term Investments are stated at cost. It includes Office Premises in Valecha Chambers on which depreciation not provided for as Investment in properties in accordance with Accounting Standard (AS-13) issued by the Institute of Chartered Accountants of India.

G. Revenue recognition

1. The Company follows the "Percentage of Completion Method" of accounting for all contracts in accordance with "Accounting Standard 7" -"Accounting for Construction Contracts" issued by the Institute of Chartered Accountants of India. The revenue from the execution of contracts is recognised proportionately with the degree of completion achieved under each contract, matching revenue with expenses incurred and after considering the total contract value and associated costs.

2. Contract prices are either fixed or subject to price escalation clause. Amounts due in respect of price escalation and/or variation in contract work approved by the customers are recognised as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers.

3. Uncertified work-in-progress is recognised as revenues and is valued at the lower of cost and net realizable value upto the stage of completion. Cost includes direct material, labour cost and appropriate overheads.

4. Contracts executed in Joint Ventures/Consortium under work sharing arrangement are accounted in accordance with the accounting policy followed by the Company as that of an independent contract to the extent work is executed. In case where the contracts are executed independently by the Joint Ventures the share of profit/(Loss) is recognized as an income/(Loss) in the Books of account of the Company in the year in which the relative contract/s is/are completed/Income received.

5. Site development including initial expenses (shown in Project in progress) thereon is charged to the projects from the date of its revenue recognition.

6. Progress payments received are adjusted against amounts receivable from customers in respect of the contract of work performed.

7. Amounts retained by the customers until the satisfactory completion of the contracts are recognised in the financial statements as receivables. Where such retention has been released by the customers against submission of Bank Guarantees, the amount so released is adjusted against receivables from the customers and the value of the Bank Guarantees is disclosed as contingent liability.

H. Other income

Interest income is accounted on accrual basis.

I. Foreign currency transactions

Transactions denominated in Foreign Currency are normally recorded at Exchange Rate prevailing at the time of transactions. Current asset/ investments denominated in Foreign Currency are translated at the rate prevailing at the end of the year and the net gain/loss is recognised in the Statement of Profit and Loss.

J. Segment reporting

The Company considers its operations as one single segment i. e. "Construction Activity" and as such AS-17 is not applicable.

K. Provision for Current and Deferred Tax

Current Tax:

Current Tax is the amount of Tax payable on the Taxable Income for the year as determined in accordance with provisions of Income Tax Act 1961.

Deferred Tax Provision:

Deferred Tax charge or credit is recognised on timing differences, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. It is calculated using the applicable tax rates and tax laws that have been enacted by the balance sheet date.

L. Provisions and contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes.


Mar 31, 2013

A. Basis of accounting and preparation of financial statements

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, subject to what is stated herein below, as adopted consistently by the Company. The Company follows accrual system of accounting except otherwise stated.

B. Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/materialised.

C. Fixed Assets

Fixed Assets are stated at cost, less accumulated depreciation. However, Fixed Assets which were revalued by the Company as on 31st March, 1992 are stated at their revalued amount. The cost of a Fixed Asset comprises its purchase price and any direct attributable cost for bringing the asset in an operational condition for its intended use.

D. Depreciation and amortisation

Depreciation on Fixed Assets is calculated on "Straight Line Method" at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on Revalued Assets, is calculated on their respective book values, at the rates considered applicable by the valuers. The additional charge of depreciation on account of revaluation is withdrawn from the Revaluation Reserve and credited to the Profit and Loss Account.

E. Inventories

The inventories of materials on hand at the end of the year are valued at lower of cost or net realisable value. The cost is being determined on First-In-First out method. The Projects-in-progress is valued at Cost or Net Realisable value whichever is Lower.

F. Investments

Long term Investments are stated at cost. It includes Office Premises in Valecha Chambers on which depreciation not provided for as Investment in properties in accordance with Accounting Standard (AS-13) issued by the Institute of Chartered Accountants of India.

G. Revenue recognition

1. The Company follows the "Percentage of Completion Method" of accounting for all contracts in accordance with "Accounting Standard 7" - "Accounting for Construction Contracts" issued by the Institute of Chartered Accountants of India. The revenue from the execution of contracts is recognised proportionately with the degree of completion achieved under each contract, matching revenue with expenses incurred and after considering the total contract value and associated costs.

2. Contract prices are either fixed or subject to price escalation clause. Amounts due in respect of price escalation and/or variation in contract work approved by the customers are recognised as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers.

3. Uncertified work-in progress is recognised as revenues and is valued at the lower of cost and net realizable value upto the stage of completion. Cost includes direct material, labour cost and appropriate overheads.

4. Contracts executed in Joint Ventures/Consortium under work sharing arrangement are accounted in accordance with the accounting policy followed by the Company as that of an independent contract to the extent work is executed. In case where the contracts are executed independently by the Joint Ventures the share of profit/(Loss) is recognized as an income/(Loss) in the Books of account of the Company in the year in which the relative contract/s is/are completed/Income received.

5. Site development including initial expenses (shown in Projects in progress) thereon is charged to the projects from the date of its revenue recognition.

6. Progress payments received are adjusted against amounts receivable from customers in respect of the contract of work performed.

7. Amounts retained by the customers until the satisfactory completion of the contracts are recognised in the financial statements as receivables. Where such retention has been released by the customers against submission of Bank Guarantees, the amount so released is adjusted against receivables from the customers and the value of the Bank Guarantees is disclosed as contingent liability.

H. Other income

Interest income is accounted on accrual basis.

I. Foreign currency transactions

Transactions denominated in Foreign Currency are normally recorded at Exchange Rate prevailing at the time of transactions. Current asset/ Investments denominated in Foreign Currency are translated at the rate prevailing at the end of the year and the net gain/loss is recognised in the Statement of Profit and Loss.

J. Segment reporting

The Company considers its operations as one single segment i.e. "Construction Activity" and as such AS-17 is not applicable.

K. Provision for Current and Deferred Tax

Current Tax :

Current Tax is the amount of Tax payable on the Taxable Income for the year as determined in accordance with provisions of Income Tax Act 1961.

Deferred Tax Provision :

Deferred Tax charge or credit is recognised on timing differences, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. It is calculated using the applicable tax rates and tax laws that have been enacted by the balance sheet date.

L. Provisions and contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes.


Mar 31, 2012

A. Basis of accounting and preparation of financial statements

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, subject to what is stated herein below, as adopted consistently by the Company. The Company follows accrual system of accounting except otherwise stated.

B. Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/materialised.

C. Fixed Assets '

Fixed Assets are stated at cost, less accumulated depreciation. However, Fixed Assets which were revalued by the Company as on 31st March, 1992 are stated at their revalued amount. The cost of a Fixed Asset comprises its purchase price and any direct attributable cost for bringing the asset in an operational condition for its intended use.

D. Depreciation and amortisation

Depreciation on Fixed Assets is calculated on "Straight Line Method" at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on Revalued Assets, is calculated on their respective book values, at the rates considered applicable by the valuers. The additional charge of depreciation on account of revaluation is withdrawn from the Revaluation Reserve and credited to the Profit and Loss Account.

E. Inventories

The inventories of materials on hand at the end of the year are valued at lower of cost or net realisable value. The cost is being determined on First -In-First-Out method. The Work-in-progress is valued at Cost or Net Realisable value whichever is Lower.

E Investments

Long term Investments are stated at cost. It includes Office Premises in Valecha Chambers on which depreciation not provided for as Investment in properties in accordance with Accounting Standard (AS-13) issued by the Institute of Chartered Accountants of India.

G. Revenue recognition

1. The Company follows the "Percentage of Completion Method" of accounting for all contracts in accordance with "Accounting Standard 7"

- "Accounting for Construction Contracts" issued by the Institute of Chartered Accountants of India. The revenue from the execution of contracts is recognised proportionately with the degree of completion achieved under each contract, matching revenue with expenses incurred and after considering the total contract value and associated costs.

2. Contract prices are either fixed or subject to price escalation clause. Amounts due in respect of price escalation and/or variation in contract work approved by the customers are recognised as revenue only when there are conditions in the Contracts for such claims or variations and/or evidence of the acceptability of the same from customers.

3. Uncertified work-in progress is recognised as revenues and is valued at the lower of cost and net realizable value upto the stage of completion. Cost includes direct material, labour cost and appropriate overheads.

4. Contracts executed in Joint Ventures/Consortium under work sharing arrangement are accounted in accordance with the accounting policy followed by the Company as that of an independent contract to the extent work is executed. In case where the contracts are executed independently by the Joint Ventures the share of profit/(Loss) is recognized as an income/(Loss) in the Books of account of the Company in the year in which the relative contract/s is/are completed/income received.

5. Site development including initial expenses (shown in work in progress) thereon is charged to the projects from the date of its revenue recognition.

6. Progress payments received are adjusted against amounts receivable from customers in respect of the contract of work performed.

7. Amounts retained by the customers until the satisfactory completion of the contracts are recognised in the financial statements as receivables. Where such retention has been released by the customers against submission of Bank Guarantees, the amount so released is adjusted against receivables from the customers and the value of the Bank Guarantees is disclosed as contingent liability.

H. Other income

Interest income is accounted on accrual basis.

Extraordinary Income of Rs. 24,09,261/- (Previous Year - Rs. 4,81,99,703/-) pertains to Profit on Sale of 60,000 Nos. (Previous Year 8,00,000 Nos.) of Shares of M/s. Jyoti Structures Ltd.

I. Foreign currency transactions

Transactions denominated in Foreign Currency are normally recorded at Exchange Rate prevailing at the time of transactions. Current assets/ Investments denominated in Foreign Currency are translated at the rate prevailing at the end of the year and the net gain/loss is recognized in Profit and Loss Account.

J. Segment reporting

The Company considers its operations as one single segment i.e. "Construction Activity" and as such, AS-17 is not applicable.

K. Provision for Current and Deferred Tax

Current Tax :

The Provision for Income Tax is determined in accordance with provisions of Income Tax Act 1961.

Deferred Tax :

Deferred Tax charge or credit is recognized on timing differences, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. It is calculated using the applicable tax rates and tax laws that have been enacted by the balance sheet date.

L. Provisions and contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be and outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes.


Mar 31, 2011

A. Basis of Preparation of Accounts :

i. The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, subject to what is stated herein below, as adopted consistently by the Company.

ii. The Company follows accrual system of accounting except otherwise stated.

B. Fixed Assets :

i. Fixed Assets are stated at cost, less accumulated depreciation. However, Fixed Assets which were revalued by the Company as on 31st March, 1992 are stated at their revalued amount.

ii. The cost of a Fixed Asset comprises its purchase price and any direct attributable cost for bringing the asset in an operational condition for its intended use.

C. Depreciation :

i. Depreciation on Fixed Assets is calculated on "Straight Line Method" at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

ii. Depreciation on Revalued Assets, is calculated on their respective book values, at the rates considered applicable by the valuers. The additional charge of depreciation on account of revaluation is withdrawn from the Revaluation Reserve and credited to the Profit and Loss Account.

D. Work-in progress :

Work-in-progress is valued at Cost or Net Realisable value whichever is Lower.

E. Inventories :

The inventories of materials on hand at the end of the year are valued at lower of cost or net realisable value. The cost is being determined on First-in First-out method.

F. Accounting Estimates :

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/materialised.

G. Investments :

Long term Investments are stated at cost. It includes Office Premises in Valecha Chambers on which depreciation not provided for as Investment in properties in accordance with Accounting Standard (AS-13) issued by the Institute of Chartered Accountants of India.

H. Disclosure of the Revenue Recognition as per Accounting Standard - 7 :

a. On Contracts :

i. The Company follows the "Percentage of Completion Method" of accounting for all contracts in accordance with "Accounting Standard-7" - "Accounting for Construction Contracts" issued by the Institute of Chartered Accountants of India. The revenue from the execution of contracts is recognised proportionately with the degree of completion achieved under each contract, matching revenue with expenses incurred and after considering the total contract value and associated costs.

ii. Contract prices are either fixed or subject to price escalation clause. Amounts due in respect of price escalation and/or variation in contract work approved by the customers are recognised as revenue only when there are conditions in the Contracts for such claims or variations and/or evidence of the acceptability of the same from customers.

iii. Uncertified work-in-progress is recognised as revenues and is valued at the lower of cost and net realizable value upto the stage of completion. Cost includes direct material, labour cost and appropriate overheads.

iv. Contracts executed in Joint Ventures under work sharing arrangement (Consortium) are accounted in accordance with the accounting policy followed by the Company as that of an independent contract to the extent work is executed. In case where the contracts are executed independently by the Joint Ventures the share of profit/(Loss) is recognized as an income/(Loss) in the Books of account of the Company in the year in which the relative contract/s is/are completed/Income received.

v. Site development including initial expenses (shown in work in progress) thereon is charged to the projects from the date of its revenue recognition.

b. Extraordinary Income :

Extraordinary Income of Rs. 4,81,99,703/- (Previous Year - Rs. 12,73,62,492/-) pertains to Profit on Sale of 8,00,000 Nos. (Previous Year 10,21,400 Nos.) of Shares of M/s. Jyoti Structures Ltd.

I. Advances from Customers and Progress payments :

i. Advances received from customers in respect of contracts are treated as liabilities.

ii. Progress payments received are adjusted against amounts receivable from customers in respect of the contract of work performed.

iii. Amounts retained by the customers until the satisfactory completion of the contracts are recognised in the financial statements as receivables. Where such retention has been released by the customers against submission of Bank Guarantees, the amount so released is adjusted against receivables from the customers and the value of the Bank Guarantees is disclosed as contingent liability.

J. Employees Retirement and other Benefits :

i. Defined Contribution Plan :

The Companys contribution to provident fund is charged to Profit and Loss account.

ii. Defined Benefit Plan :

The Companys Liability towards Gratuity are determined by Independent actuaries using the projected credit method. Actual gain and losses are recognised immediately in the Income and Expenses. Obligation is measured at the Present value of the estimated future cash flow using a discounted rate i.e. determined by the market yield at the Balance Sheet date.

The following table set out the funded status of the Gratuity plan and the amount recognised by the Companys financial statements as at 31st March, 2011.

iii. The Company does not have scheme of leave encashment.


Mar 31, 2010

A. Basis of Preparation of Accounts:

i. The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, subject to what is stated herein below, as adopted consistently by the Company.

ii. The Company follows accrual system of accounting except otherwise stated.

B. Fixed Assets:

i. Fixed Assets are stated at cost, less accumulated depreciation. However, Fixed Assets which were revalued by the Company as on 31st March, 1992 are stated at their revalued amount.

ii. The cost of a Fixed Asset comprises its purchase price and any direct attributable cost for bringing the asset in an operational condition for its intended use.

C. Depreciation:

i. Depreciation on Fixed Assets is calculated on "Straight Line Method" at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

ii. Depreciation on Revalued Assets, is calculated on their respective book values, at the rates considered applicable by the valuers. The additional charge of depreciation on account of revaluation is withdrawn from the Revaluation Reserve and credited to the Profit and Loss Account.

D. Work-in progress:

Work-in-progress is valued at Cost or Net Realisable value whichever is Lower.

E. Inventories:

The inventories of materials on hand at the end of the year are valued at lower of cost or net realisable value. The cost is being determined on First-In-First out method.

F. Investments:

Long term Investments are stated at cost. It includes Office Premises in Valecha Chambers on which depreciation not provided for as Investment in properties in accordance with Accounting Standard (AS-13) issued by the Institute of Chartered Accountants of India.

G. Disclosure of the Revenue Recognition as per Accounting Standard - 7:

a. On Contracts:

i. The Company follows the "Percentage of Completion Method" of accounting for all contracts in accordance with "Accounting Standard 7" - "Accounting for Construction Contracts" issued by the Institute of Chartered Accountants of India. The revenue from the execution of contracts is recognised proportionately with the degree of completion achieved under each contract, matching revenue with expenses incurred and after considering the total contract value and associated costs.

ii. Contract prices are either fixed or subject to price escalation clause. Amounts due in respect of price escalation and/or variation in contract work approved by the customers are recognised as revenue only when there are conditions in the Contracts for such claims or variations and/or evidence of the acceptability of the same from customers.

iii. Uncertified work-in progress is recognised as revenues and is valued at the lower of cost and net realizable value upto the stage of completion. Cost includes direct material, labour cost and appropriate overheads.

iv. Contracts executed in Joint Ventures under work sharing arrangement (Consortium) are accounted in accordance with the accounting policy followed by the Company as that of an independent contract to the extent work is executed. In case where the contracts are executed independently by the Joint Ventures the share of Profit/(Loss) is recognized as a Income/(Loss) in the Books of account of the Company in the year in which the relative contract/s is/are completed/Income received.

v. Site development including initial expenses (shown in work in progress) thereon is charged off proportionately within the stipulated period of contract from the date of revenue recognition.

vi. Borrowing cost attributable to the acquisition of qualifying assets are added to the cost up to the date when such assets are ready for their intended use. Other borrowing costs are recognized as expenses in the period in which they are incurred.

b. Extraordinary Income:

Extraordinary Income of Rs. 12,73,62,492/- (Previous Year - Nil) pertains to Profit on Sale of 10,21,400 Nos. of Shares of M/s. Jyoti Structures Ltd.

H. Advances from Customers and Progress payments:

i. Advances received from customers in respect of contracts are treated as liabilities.

ii. Progress payments received are adjusted against amounts receivable from customers in respect of the contract of work performed.

iii. Amounts retained by the customers until the satisfactory completion of the contracts are recognised in the financial statements as receivables. Where such retention has been released by the customers against submission of Bank Guarantees, the amount so released is adjusted against receivables from the customers and the value of the Bank Guarantees is disclosed as contingent liability.

I. Employees Retirement and other Benefits:

i. Defined contribution Plan:

The Companys contribution to provident fund is charged to Profit and Loss account.

ii. Defined benefit plan:

The Companys Liability towards Gratuity are determined by Independent actuaries using the projected credit method. Actual gain and losses are recognised immediately in the Income and Expenses. Obligation is measured at the Present value of the estimated future cash flow using a discounted rate i.e. determined by the market yield at the Balance Sheet date.

 
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