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Accounting Policies of Welspun Enterprises Ltd. Company

Mar 31, 2014

1.1 REVENUE RECOGNITION ON CONTRACTS

a). All revenues and expenses are accounted on accrual basis except to the extent stated otherwise.

b). The Company follows the percentage completion method, based on the stage of completion at the Balance Sheet date taking in to account the contractual price and revision thereto by estimating total revenue and total cost till completion of the contract and profit so determined has been accounted for proportionate to the percentage of the actual work done.

In case of lump-sump contract revenue is recognized on the completion of milestone as specified in the contract or as identified by the management. Foreseeable losses are accounted for as and when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration.

c). Amount due in respect of the price escalation claim and/or variation in contract work approved by the customers are recognized as revenue only when there are conditions stipulated in the contracts for such claims or variations and/or the same are evidenced inter alia by way of confirmation or the same are accepted by the customers.

d). Disputed amount under the contract works are recognized as revenue when the same are settled and amounts are received.

e). Liquidated damages payable, if any, as per the terms of the contract, for the delays, if any, are accounted only when such delay is attributable to the Company.

1.2 EXPENDITURE INRESPECT OF BUILD, OPERATE & TRANFER PROJECTS:

Expenditure incurred on construction or reconstruction (net of corresponding interest income earned on deployment or other wise of fund attributable to the project) of Build, Operate and Transfer (BOT) Project which does not represent Company''s own assets is classified as "BOT PROJECT EXPENDITURE" (Toll Collection right) and shown under the head ''Intangible Assets''.

1.3 ADVANCES AND PROGRESS PAYMENTS AND RETENTION

a. Advances received from customers in respect of contracts are treated as liability.

b. Progress payments received are adjusted against receivables from customers in respect of the contract work performed.

c. Amount(s) retained by the customers until the satisfactory completion of the contract are recognized in the final statement as receivables. Where such retention has been released by the customers against submission of bank guarantee the amount so released is adjusted against receivables from the customers and value of Bank guarantees is disclosed as contingent liability under bank guarantees outstanding.

1.3 FIXED ASSETS

1). Tangible Assets:

Fixed assets are stated at cost (net of recoverable taxes) and includes amount added on revaluation, less accumulated depreciation and impairment loss, if any. All cost, including financing cost, till commencement of commercial production, net changes on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

2). Intangible Assets:

Intangible Assets are stated at Cost of acquisition net of recoverable taxes less accumulated amortization / depreciation. All cost including financing costs, till commencement of commercial production, net changes on foreign contracts and adjustments arising from exchange rate variation attributable to the intangible assets are capitalized.

1.4 DEPRECIATION / AMORTISATION.

a. Depreciation is provided on written down value basis as per the rates and method prescribed under Schedule - XIV to the Companies Act, 1956.

b. Intangible Assets i.e. BOT Cost (Toll Collection right) is amortized over the period of concession, using revenue based amortization. Under this methodology, the Carrying value is amortized in the proportion of actual toll revenue for the year to projected revenue for the balance toll period, to reflect the pattern in which the assets economic benefits will be consumed. At each Balance sheet date, the projected revenue for the balance toll period is reviewed by the management. If there is any change in the projected revenue from previous estimates, the amortization of toll collection rights is changed prospectively to reflect any change in the estimates.

1.5 BORROWING COST

Borrowing costs directly attributable to the acquisition or construction of fixed assets are capitalized as part of the cost of the assets, up to the date the assets are put to use. Other borrowing costs are charged to the profit and loss account in the year in which they are incurred.

1.6 VALUATION OF INVENTORIES

a. Raw Materials are valued at lower of cost and net realizable value. Cost is determined on FIFO basis.

b. Unbilled Cost are carried as Construction Work in Progress which is valued considering the stage of completion and foreseeable losses in accordance with the Accounting Standard - 7

c. Stores and spares are written off in the year of purchase.

1.7 INVESTMENTS

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

1.8 PROVISION FOR DOUBT FUL DEBTS / ADVANCES:

Provision is made in accounts for doubtful debts / advances which in the opinion of the management are considered doubtful of recovery.

1.9 CLAIMS, DEMANDS AND CONTINGENCIES

Disputed and / or contingent liabilities are either provided for / or disclosed depending on management s judgement of the outcome.

1.10 RETIREMENT BENEFITS

a. Short Term Employee benefits:

Short Term Employee Benefits are recognized in the period during which the services have been rendered.

b. Long Term Employee benefits:

i. Provident Fund, Family Pension fund

As Per Provident Fund Act 1952 all employees of the Company are entitled to receive benefits under the provident fund and family pension fund which is defined contribution plan. These contributions are made to the plan administered and managed by Government of India.

The Company s contribution to these scheme are recognized as expense in the profit and loss account during the year in which the employee renders the related service, The Company has no further obligation under these plans beyond its monthly contribution

c. Leave encashment:

Liability for leave encashment is determined based on the number of days of encashable leave to the credit of each employees as on the balance sheet date and provided in accounts on accrual basis.

d. Gratuity :

For Liabilities in respect of staff gratuity, the Company had entered in to agreement with the Life Insurance corporation Of India (LIC) under group gratuity scheme and the periodical payment towards the premium on the policy is charged to the profit & loss account. The additional liability if any in respect of the above arising on retirement and not covered not funded are paid / provided and accordingly charged to the profit & loss statement in the year of retirement / payment or otherwise.

1.11 PROVISION FOR CURRENT AND DEFERRED TAX

a) Provision for current tax is made based on taxable income for the current accounting year and in accordance with the provisions of the Income tax Act, 1961.

b). Deferred tax resulting from timing difference between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be adjusted in future.

c). Minimum Alternate Tax (MAT) credit is recognized as an assets only when and to the extent there is convincing evidence that the Company will pay normal Income Tax during the specified period.

1.12 FOREIGN CURRENCY TRANSACTION

Transaction in foreign currency is recorded at the exchange rate prevailing on the date of the transaction, exchange rate differences resulting from foreign exchange transaction settled during the period including year end transaction of current assets and liabilities are recognized in the profit & loss accounts. Exchange rates differences arising in relation to liabilities incurred for acquisition of fixed assets are adjusted to the carrying value of the fixed assets.

In respect of forward exchange contract, except in case of fixed assets, the difference between forward rate and the exchange rate at the inception of the forward exchange contract is recognized as income / expenses over the life of the contract.

1.13 LEASE

a). OPERATING LEASE

Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with respective lease agreements.

b). FINANCE LEASE

Assets acquired under leases where Company has substantially all the risk and rewards of ownership are classified as finance lease. Assets acquired under finance are capitalized and corresponding lease liability is recorded at an amount equal to the fair value of the leased assets at the inception of the lease. Initial costs incurred in connection with the specific leasing activities directly attributable to activities performed by the Company are included as part of the amount recognized as an asset under the lease.

1.14 IMPAIRMENT OF ASSET

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset / cash generating asset is determined on the Balance - Sheet date and if it is less than its carrying amount of the asset / cash generating unit the carrying amount of asset is reduced to the said recoverable amount. The recoverable amount is measured as the higher of net selling price and value in use of such asset / cash generating unit, which is determined by the present value of carrying amount of the estimated future cash flow.

1.15 USE OF ESTIMATES

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumption to be made that affect the reported amount of the assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from these estimates and differences between actual results and estimates are recognized in the period in which the results are known / materialized.

1.16 GRANT / SUBSIDY RECEIVED:

Grant / Subsidy received during the construction period which is in the nature of promoter s contribution are credited to capital reserve under the head Reserve & Surplus in Balance sheet.


Mar 31, 2013

1.1 REVENUE RECOGNITION ON CONTRACTS

a). All revenues and expenses are accounted on accrual basis except to the extent stated otherwise.

b). The Company follows the percentage completion method, based on the stage of completion at the Balance Sheet date taking in to account the contractual price and revision thereto by estimating total revenue and total cost till completion of the contact and profit so determined has been accounted for proportionate to the percentage of the actual work done.

In case of lump-sump contract revenue is recognized on the completion of milestone as specified in the contract or as identified by the management. Foreseeable losses are accounted for as and when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customer or in arbitration.

c). Amount due in respect of the price escalation claim and/or variation in contract work approved by the customers are recognized as revenue only when there are conditions stipulated in the contracts for such claims or variations and/or the same are evidenced inter alia by way of confirmation or the same are accepted by the customers.

d). Disputed amount under the contract works are recognized as revenue when the same are settled and amounts are received.

e). Liquidated damages payable, if any, as per the terms of the contract, for the delays, if any, are accounted only when such delay is attributable to the Company.

1.2 EXPENDITURE INRESPECT OF BUILD, OPERATE & TRANFER PROJECTS:

Expenditure incurred on construction or reconstruction (net of corresponding interest income earned on deployment or other wise of fund attributable to the project) of Build, Operate and Transfer (BOT) Project which does not represent Company'' s own assets is classified as "BOT PROJECT EXPENDITURE" (Toll Collection right) and shown under the head ‘Intangible Assets'' .

1.3 ADVANCES AND PROGRESS PAYMENTS AND RETENSION

a. Advances received from customers in respect of contracts are treated as liability.

b. Progress payments received are adjusted against receivables from customers in respect of the contract work performed.

c. Amount(s) retained by the customers until the satisfactory completion of the contract are recognized in the final statement as receivables. Where such retention has been released by the customers against submission of bank guarantee the amount so released is adjusted against receivables from the customers and value of Bank guarantees is disclosed as contingent liability under bank guarantees outstanding.

1.3 FIXED ASSETS

1). Tangible Assets:

Fixed assets are stated at cost (net of recoverable taxes) and includes amount added on revaluation, less accumulated deprecation and impairment loss, if any. All cost, including financing cost, till commencement of commercial production, net changes on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

2). Intangible Assets:

Intangible Assets are stated at Cost of acquisition net of recoverable taxes less accumulated amortization / depreciation. All cost including financing costs, till commencement of commercial production, net changes on foreign contracts and adjustments arising from exchange rate variation attributable to the intangible assets are capitalized.

1.4 DEPRECIATION / AMORTISATION.

a. Depreciation is provided on written down value basis as per the rates and method prescribed under Schedule – XIV to the Companies Act, 1956.

b. Intangible Assets i.e. BOT Cost (Toll Collection right) is amortized over the period of concession, using revenue based amortization. Under this methodology, the Carrying value is amortized in the proportion of actual toll revenue for the year to projected revenue for the balance toll period, to reflect the pattern in which the assets'' economic benefits will be consumed. At each Balance sheet date, the projected revenue for the balance toll period is reviewed by the management. If there is any change in the projected revenue from previous estimates, the amortization of toll collection rights is changed prospectively to reflect any change in the estimates.

c. Intangible asset (Goodwill) is not depreciated.

1.5 BORROWING COST

Borrowing costs directly attributable to the acquisition or construction of fixed assets are capitalized as part of the cost of the assets, up to the date the assets are put to use. Other borrowing costs are charged to the profit and loss account in the year in which they are incurred.

1.6 VALUATION OF INVENTORIES

a. Raw Materials are valued at lower of cost and net realizable value. Cost is determined on FIFO basis.

b. Unbilled Cost are carried as Construction Work in Progress which is valued considering the stage of completion and foreseeable losses in accordance with the Accounting Standard – 7

c. Stores and spares are written off in the year of purchase.

1.7 INVESTMENTS

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

1.8 PROVISION FOR DOUBT FUL DEBTS / ADVANCES:

Provision is made in accounts for doubtful debts / advances which in the opinion of the management are considered doubtful of recovery.

1.9 CLAIMS, DEMANDS AND CONTINGENCIES

Disputed and / or contingent liabilities are either provided for / or disclosed depending on management'' s judgment of the outcome.

1.10 RETIREMENT BENEFITS

a. Short Term Employee benefits:

Short Term Employee Benefits are recognized in the period during which the services have been rendered.

b. Long Term Employee benefits:

i. Provident Fund, Family Pension fund

As Per Provident Fund Act 1952 all employees of the Company are entitled to receive benefits under the provident fund and family pension fund which is defined contribution plan. These contributions are made to the plan administered and managed by Government of India.

The Company'' s contribution to these scheme are recognized as expense in the profit and loss account during the year in which the employee renders the related service, The Company has no further obligation under these plans beyond its monthly contribution

c. Leave encashment:

The Company has provided for the liability at year end on account of un-availed earned leave as per the actuarial valuation.

d. Gratuity :

The Company provides for gratuity obligations through a Defined benefits retirement plan ("The Gratuity Plan") covering all employees. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the project unit credit method, which recognizes each period of service as giving rise to additional unit of employees benefits entitlement and measure each unit separately to build up final obligation. The obligation is measured at the present value of the estimated cash flows. The discount rate used for determining present value of the defined obligation under the defined benefit plan is based on the market yield on Government Securities as at the balance sheet date. Actuarial gains and losses are recognized in Profit and Loss Account as and when determined.

The Company makes annual contribution to LIC for the gratuity plan in respect of all the employees.

1.11 PROVISION FOR CURRENT AND DEFERRED TAX

a) Provision for current tax is made based on taxable income for the current accounting year and in accordance with the provisions of the Income tax Act, 1961.

b). Deferred tax resulting from "timing difference" between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be adjusted in future.

c). Minimum Alternate Tax (MAT) credit is recognized as an aseets only when and to the extent there is convincing evidence that the Company will pay normal Income Tax during the specified period.

1.12 FOREIGN CURRENCY TRANSACTION

Transaction in foreign currency is recorded at the exchange rate prevailing on the date of the transaction, exchange rate differences resulting from foreign exchange transaction settle during the period including year end transaction of current assets and liabilities are recognized in the profit & loss accounts. Exchange rates differences arising in relation to liabilities incurred for acquisition of fixed assets are adjusted to the carrying value of the fixed assets.

In respect of forward exchange contract, except in case of fixed assets, the difference between forward rate and the exchange rate at the inception of the forward exchange contract is recognized as income / expenses over the life of the contract.

1.13 LEASE

a). OPERATING LEASE

Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with respective lease agreements.

b). FINANCE LEASE

Assets acquired under leases where Company has substantially all the risk and rewards of ownership are classified as finance lease. Assets acquired under finance are capitalized and corresponding lease liability is recorded at an amount equal to the fair value of the leased assets at the inception of the lease. Initial costs incurred in connection with the specific leasing activities directly attributable to activities performed by the Company are included as part of the amount recognized as an asset under the lease.

1.14 IMPAIRMENT OF ASSET

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset / cash generating asset is determined on the Balance Sheet date and if it is less than its carrying amount of the asset / cash generating unit the carrying amount of asset is reduced to the said recoverable amount. The recoverable amount is measured as the higher of net selling price and value in use of such asset / cash generating unit, which is determined by the present value of carrying amount of the estimated future cash flow.

1.15 USE OF ESTIMATES

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumption to be made that affect the reported amount of the assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from these estimates and differences between actual results and estimates are recognized in the period in which the results are known / materialized.

1.16 GRANT / SUBSIDY RECEIVED:

Grant / Subsidy received during the construction period which is in the nature of promoter'' s contribution are credited to capital reserve under the head Reserve & Surplus in Balance sheet.


Mar 31, 2012

A)-l. REVENUE RECOGNITION ON CONTRACTS

a) All revenues and expenses are accounted on accrual basis except to the extent stated otherwise.

b) Contract Prices are either fixed or subject to price escalation clause. The Revenue is recognized on the basis of percentage of completion method and the stage of completion is determined on the basis of physical completion of proportion of contract work.

c) Amount due in respect of the price escalation claim and/or variation in contract work approved by the customers are recognized as revenue only when there are conditions stipulated in the contracts for such claims or variations and/or the same are evidenced inter alia by way of confirmation or the same are accepted by the customers.

d) Disputed amount under the contract works are recognized as revenue when the same are settled and amounts are received.

e) Liquidated damages payable, if any, as per the terms of the contract, for the delays, if any, are accounted only when such delay is attributable to the Company.

A)-2. EXPENDITURE IN RESPECT OF BUILD, OPERATE ANDTRANSFER (B.O.T) PROJECT

a) "Expenditure incurred on construction or reconstruction (net of corresponding interest income earned on deployment or other wise of fund attributable to the project) of Build, Operate and Transfer (BOT) Project which does not represent Company's own assets is classified as "BOT PROJECT EXPENDITURE" and is amortized /written off based on the projected toll revenue estimated having regards to the toll rate & expected increase."

b) The materials and stores etc. acquired / purchased for the construction activities of owned Build, Operate and Transfer Projects (BOT) are classified /reflected as B.O.T. Projects Expenditure and/or work in progress, as the case may be. Accordingly such purchases are disclosed as item of B.O.T. Project Expenditure.

B. ADVANCES AND PROGRESS PAYMENTS AND RETENTION

a) Advances received from customers in respect of contracts are treated as liability.

b) Progress payments received are adjusted against receivables from customers in respect of the contract work performed.

c) Amount(s) retained by the customers until the satisfactory completion of the contract are recognized in the final statement as receivables. Where such retention has been released by the customers against submission of bank guarantee the amount so released is adjusted against receivables from the customers and value of Bank guarantees is disclosed as contingent liability under bank guarantees outstanding.

C. FIXED ASSETS

1) Tangible Assets:

Fixed assets are stated at cost net of recoverable taxes and includes amount added on revaluation, less accumulated deprecation and impairment loss, if any. All cost, including financing cost, till commencement of commercial production, net changes on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

2) Intangible Assets:

Intangible assets are stated at cost of acquisition net of recoverable taxed less accumulated amortization / depreciation. All cost, including financing costs till commencement of commercial production, net changes on foreign exchange contracts and adjustments arising from exchange rate variation attributable to the intangible assets are capitalized.

D. DEPRECIATION

a) Depreciation is provided on written down value basis as per the rates and method prescribed under Schedule- XlV to the Companies Act, 1956.

b) Intangible asset (Goodwill) is not depreciated.

E. BORROWING COST

Borrowing costs directly attributable to the acquisition or construction of fixed assets are capitalized as part of the cost of the assets, up to the date the assets are put to use. Other borrowing costs are charged to the profit and loss account in the year in which they are incurred.

F. VALUATION OF INVENTORIES

a) Raw Materials are valued at lower of cost and net realizable value. Cost is determined on FIFO basis.

b) Contract Work in progress is valued at tender rate having regards to unbilled work, outstanding running bills and expected recovery thereof.

c) Stores and spares are written off in the year of purchase.

G. INVESTMENTS

Current Investment are carried at lower of cost and quoted / fair value, computed category wide, long term investment are stated at cost. Provision for diminution in the long term investment is made only if such a decline is other than temporary.

H. PROVISION FOR DOUBT FUL DEBTS/ADVANCES:

Provision is made in accounts for doubtful debts/advances which in the opinion of the management are considered doubtful of recovery.

I. CLAIMS, DEMANDS AND CONTINGENCIES

Disputed and/or contingent liabilities are either provided for/or disclosed depending on management's judgment of the outcome.

J. RETIREMENT BENEFITS

a) Short Term Employee benefits:

Short Term Employee Benefits are recognized in the period during which the services have been rendered.

b) Long Term Employee benefits:

i) Provident Fund, Family Pension fund

As Per Provident Fund Act 1952 all employees of the Company are entitled to receive benefits under the provident fund and family pension fund which is defined contribution plan. These contributions are made to the plan administered and managed by Government of India.

The Company's contribution to these scheme are recognized as expense in the profit and loss account during the year in which the employee renders the related service, The Company has no further obligation under these plans beyond its monthly contribution

c) Leave encashment:

The Company has provided for the liability at year end on account of un-availed earned leave as per the actuarial valuation.

d) Gratuity:

The Company provides for gratuity obligations through a Defined benefits retirement plan ("The Gratuity Plan") covering all employees. The present value of the obligation under such defined benefit plan is

determined based on the actuarial valuation using the project unit credit method, which recognizes each period of service as giving rise to additional unit of employees benefits entitlement and measure each unit separately to build up final obligation. The obligation is measured at the present value of the estimated cash flows. The discount rate used for determining present value of the defined obligation under the defined benefit plan is based on the market yield on Government Securities as at the balance sheet date. Actuarial gains and losses are recognized in Profit and Loss Account as and when determined.

The Company makes annual contribution to LIC for the gratuity plan in respect of all the employees.

K. PROVISION FOR CURRENT AND DEFERREDTAX

a) Provision for current tax is made based on taxable income for the current accounting year and in accordance with the provisions of the Income tax Act, 1961.

b) Deferred tax resulting from "timing difference" between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be adjusted in future.

L. FOREIGN CURRENCY TRANSACTION

Transaction in foreign currency is recorded at the exchange rate prevailing on the date of the transaction, exchange rate differences resulting from foreign exchange transaction settle during the period including year end transaction of current assets and liabilities are recognized in the profit & loss accounts. Exchange rates differences arising in relation to liabilities incurred for acquisition of fixed assets are adjusted to the carrying value of the fixed assets.

In respect of forward exchange contract, except in case of fixed assets, the difference between forward rate and the exchange rate at the inception of the forward exchange contract is recognized as income / expenses over the life of the contract.

M. LEASE

a) OPERATING LEASE

Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with respective lease agreements.

b) FINANCE LEASE

Assets acquired under leases where Company has substantially all the risk and rewards of ownership are classified as finance lease. Assets acquired under finance are capitalized and corresponding lease liability is recorded at an amount equal to the fair value of the leased assets at the inception of the lease. Initial costs incurred in connection with the specific leasing activities directly attributable to activities performed by the Company are included as part of the amount recognized as an asset under the lease.

N. IMPAIRMENT OF ASSET

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset/cash generating asset is determined on the Balance-Sheet date and if it is less than its carrying amount of the asset / cash generating unit the carrying amount of asset is reduced to the said recoverable amount. The recoverable amount is measured as the higher of net selling price and value in use of such asset / cash generating unit, which is determined by the present value of carrying amount of the estimated future cash flow.

O. USE OF ESTIMATES

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumption to be made that affect the reported amount of the assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from these estimates and differences between actual results and estimates are recognized in the period in which the results are known / materialized.


Mar 31, 2011

A-1. REVENUERE COGNITION ON CONTRACTS

a. All revenues and expensesare accounted on accrual basis except to the extent stated otherwise.

b. Contract Prices are either fixed or subject to price escalation clause. The Revenue is recognized on the basis of percentage of completion method and the stage of completion is determined on the basis of physical completion of proportion of contract work.

c. Amount due in respect of the price escalation claim and/or variation incontract work approved by the customers are recognized as revenue only when there are conditions stipulated in the contracts for such claimsor variations and/or the same are evidenced inter alia by way of confirmation or the same are accepted by the customers.

d. Disputed amount under the contract works are recognized as revenue when the same are settled and a mounts are received.

e. Liquidated damages payable, if any, as per the terms of the contract, for the delays, if any, are accounted only when such delay is attribut able to the Company.

A-2 EXPENDITURE INRESPECT OF BUILD, OPERATE AND TRANSFER (B.O.T) PROJECT

a. Expenditure (netofcorresponding interest income earnedondeploymentorother wiseoffund attributable to the projects) incurred on Build, Operate and Transfer (BOT) Project which does not represent Company's own assets is classified as "BOT PROJECT EXPENDITURE" and is amortized / written off based on the projected toll revenue. The projectedtotal revenue is base don the tollrate & expected increase.

b. The materials and stores etc. acquired / purchased for the construction activities of owned Build, Operate and Transfer Projects (BOT) are classified / reflected as B.O.T. Projects Expenditure and /or work in progress, asthe casemay be. Accordinglysuch purchasesare disclosedas item of B.O.T. Project Expenditure.

B. ADVANCES AND PROGRESS PAYMENTS ANDRETENSI ON

a. Advances received from customers inrespect of contracts are treate dasliability.

b. Progress payments received are adjusted against receivables from customers in respect of the contract work performed.

c. Amount(s) retained by the customers until the satisfactory completion of the contract are recognized in the final statement as receivables. Where such retention has been released by the customers against submission of bank guarantee the amount so released is adjusted against receivables from the customers and value of Bank guarantees is disclose das contingent liability under bank guarantees outstanding.

C. FIXED ASSETS

a. Fixed assets are stated at cost of acquisition as reduced by accumulated depreciation.

b. All direct expenses attributable to fixed assets are capitalized.

D. DEPRECIATION

a. Depreciation is provided on written down value basis as per the rates and method prescribed under Schedule – XIV to the Companies Act, 1956.

b. Good will is not depreciated.

E. BORROWING COST

Borrowing costs directly attributable to the acquisition or construction of fixed assets are capitalized as part of the cost of the assets, up to the date the assets are put to use. Other borrowing costs are charged to the profit and loss accountin the year in which they are incurred.

F. VALUATION OF INVENTORIES

a. Raw Materials are valued at lower of cost and netrealizable value. Cost is determinedon FIFO basis.

b. Contract Work in progress is valued at tender rate having regards to unbilled work, outstanding running bills and expected recovery thereof.

c. Stores and spares are written off in the year of purchase.

G. INVESTMENTS

Long terms investments are stated at cost. Provision for diminution in the value of investments is made only if such decline is other than temporary in the opinion of the management.

H. PROVISION FOR DOUBTFUL DEBTS/ADVANCES:

Provision is made in accounts for doubtful debts / advances which in the opinion of the management are considered doubtful of recovery.

I. CLAIMS, DEMANDS AND CONTINGENCIES

Disputed and / or contingent liabilities are either provided for / or disclosed depending on management's judgment of the outcome.

J. RETIREMENT BENEFITS

a. Short Term Employee benefits:

Short Term Employee Benefitsare recognized in the period during which the services have been rendered.

b. Long Term Employee benefits:

i. Provident Fund, Family Pension fund

As Per Provident Fund Act 1952 all employees of the Company are entitled to receive benefits under the provident fund and family pension fund which is defined contribution plan. These contributions are made to the plan administered and managed by Government ofIndia.

The Company's contribution to these scheme are recognized as expense in the profit and loss account during the year in which the employee renders the related service,The Company has no further obligation under these plans beyond its monthly contribution

c. Leaveen cashment:

The Company has provided for the liability at year end on account of un-availed earned leave as per the actuarial valuation.

d. Gratuity:

The Company provides for gratuity obligations through a Defined benefits retirement plan ("The Gratuity Plan") covering all employees. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the project unit credit method, which recognizes each period of service as giving rise to additional unit of employees benefits entitlement and measure each unit separately to build up final obligation. The obligation is measured at the present value of the estimated cash flows.The discount rateused for determining present valueofthe defined obligation under the defined benefit plan is based on the market yield on Government Securities as at the balance sheet date. Actuarial gains and losses are recognized in Profit and Loss Account as and when determined.

The Company makes annual contribution to LIC for the gratuity plan in respect of all the employees.

K. PROVISION FOR CURRENT AND DEFERRED TAX

a) Provision for current tax is made based on taxable income for the current accounting year and in accordance with the provisions of the Income tax Act, 1961.

b). Deferred tax resulting from " timing difference" between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date.The deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be adjusted in future.

L. FOREIGN CURRENCY TRANSACTION

Transaction in foreign currency is recorded at the exchange rate prevailing on the date of the transaction, exchange rate differences resulting from foreign exchange transaction settle during the period including year end transaction of current assets and liabilities are recognized in the profit & loss accounts. Exchange rates differences arising in relation to liabilities incurred for acquisition of fixed assets are adjusted to the carrying value of the fixed assets.

In respect of forward exchange contract, except in case of fixed assets, the difference between forward rate and the exchange rate at the inception of the forward exchange contract is recognized as income expenses over the life of the contract.

M. LEASE

a. OPERATING LEASE

Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with respective lease agreements.

b. FINANCE LEASE

Assets acquired under leases where Company has substantially all the risk and rewards of ownership are classified as finance lease. Assets acquired under finance are capitalized and corresponding lease liability is recorded at an amount equal to the fair value of the leased assets at the inception of the lease. Initial costs incurred in connection with the specific leasing activities directly attributable to activities performed by the Company are included as part of the amount recognized as an as set under the lease.

N. IMPAIRMENT OF ASSET

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset / cash generating asset is determined on the Balance – Sheet date and if it is less than its carrying amount of the asset / cash generating unit the carrying amount of asset is reduced to the said recoverable amount. The recoverable amount is measured as the higher of net selling price and value in use of such asset / cash generating unit, which is determined by the present value of carrying amount of the estimated future cash flow.

O. USE OF ESTIMATES

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumption to be made that affect the reported amount of the assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from these estimates and differences between actual results and estimates are recognized in the period in which the results are known / materialized.

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