Accounting Policies of Ahluwalia Contracts (India) Ltd. Company
Mar 31, 2023
1. Corporate information
Ahluwalia Contracts (India) Limited (hereinafter referred to as "the Company") is a Public Ltd. Company domiciled in India, having its registered office located at A-177, Okhla Industrial Area, Phase-I, New Delhi-110020, India and incorporated under the provisions of the Companies Act, 1956. The Company is primarily engaged in the business of civil construction activities. The Company is also engaged into developing and operating commercial complex under license arrangement and is also engaged in the real estate trading business. The Company has its primary listings on BSE Limited, National Stock Exchange of India Limited (NSE) and Calcutta Stock Exchange Ltd.
These standalone financial statements were authorized by Board of Directors for issuing accordance with a resolution passed on May 27, 2023.
2. Significant accounting policies
The significant accounting policies applied by the Company in preparation of its standalone financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these standalone financial statements.
a) Statement of compliance:
These standalone financial statements are prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ''Ind AS'') notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (Ind AS compliant schedule III) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended), as are applicable.
b) Basis of measurement
These standalone financial statements are prepared under the historical cost convention on accrual basis except for the following material items those have been measured at fair value as required by relevant Ind AS:
- certain financial assets and liabilities that are measured at fair value;
- defined benefit plans - plan assets measured at fair value;
Also, the fair values of financial instruments measured at amortised cost are required to be disclosed in the said standalone financial statements.
Historical cost is generally based on the fair value of the consideration given in exchange for assets.
Fair value measurement:
Fair value is the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, an exit price). It is a market-based measurement, not an entity-specific measurement. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Where required/appropriate, external valuers are involved.
All financial assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorised within the fair value hierarchy established by Ind AS-113, that categorises into three levels, the inputs to valuation
techniques used to measure fair value. These are based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly(i.e. as prices) or indirectly(i.e. derived from prices).
Level 3 inputs are unobservable inputs for the asset or liability.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).
For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amount approximates fair value due to the short maturity of these instruments.
The Company recognises transfers between levels of fair value hierarchy at the end of reporting period during which change has occurred.
c) Current non-current classification:
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating cycle for the business activities of the Company covers the duration of the specific project/contract/product line/service including the defect liability period, wherever applicable and extends up to the realisation of receivables (including retention monies) within the agreed credit period normally applicable to the respective projects/lines of business.
d) Functional and presentation currency
Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (i.e. the "functional currency"). The standalone financial statements are presented in Indian Rupee, the national currency of India, which is the functional currency of the Company.
e) Rounding of amounts:
All amounts disclosed in the standalone financial statements and notes are in Indian Rupees in lakhs rounded off to two decimal places as permitted by Schedule III to the Companies Act, 2013, unless otherwise stated.
The preparation of standalone financial statements in conformity with the recognition and measurement principles of the Ind AS requires management to make judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the standalone financial statements, and the reported
amounts of revenues, expenses and the results of operations during the reporting period. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Such estimates & assumptions are based on management evaluation of relevant facts & circumstances as on date of standalone financial statements. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; they are recognised in the period of the revision and future periods if the revision affects both current and future periods.
Revenue from construction/project related activity is recognised as follows:
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
A single performance obligation is identified in the construction projects that the Company engages in, owing to the high degree of integration and customisation of the various goods and services to provide a combined output which is transferred to the customer over time and not at a specific point in time since the entity''s performance creates or enhances as asset that the customer controls as the asset is created or enhanced.
With respect to the method for recognising revenue over time (i.e. the method for measuring progress towards complete satisfaction of a performance obligation), the Company has established certain criteria that are applied consistently for similar performance obligations. In this regard, the method chosen by the Company to measure the value of goods or services for which control is transferred to the customer over time is the output method based on surveys of performance completed to date (or measured unit of work), according to which revenue is recognised corresponding to the units of work performed and on the basis of the price allocated thereto. In cases where the work performed till the reporting date has not reached the milestone specified in the contract, the Company recognises revenue only to the extent that it
is highly probable that the customer will acknowledge the same. This method is applied as the progress of the work performed can be measured during its performance on the basis of the contract. Under this method, on a regular basis, the work completed under each contract is measured and the corresponding output is recognised as revenue.
Contract modifications are accounted for when additions, deletions or changes are approved either to the scope or price or both. Goods/services added that are not distinct are accounted for on a cumulative catch up basis. Goods / services that are distinct are accounted for prospectively as a separate contract, if the additional goods/services are priced at the standalone selling price else as a termination of the existing contract and creation of a new contract. In cases where the additional work has been approved but the corresponding change in price has not been determined, the recognition of revenue is made for an amount with respect to which it is highly probable that a significant reversal will not occur.
If the consideration promised in a contract includes a variable amount, this amount is recognised only to the extent that it is highly probable that a significant reversal in the amount recognised will not occur.
In some circumstances (for example, in the early stages of a contract), an entity may not be able to reasonably measure the outcome of a performance obligation, but the entity expects to recover the costs incurred in satisfying the performance obligation. In those circumstances, the entity recognise revenue only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation.
Costs related to work performed in projects are recognised on an accrual basis. Costs incurred in connection with the work performed are recognised as an expense.
Provision for future losses are recognised as soon as it becomes evident that the total costs expected to be incurred in a contract exceed the total expected revenue from that contract.
Contract balances
i) Contract assets
A contract asset is recognised for amount of work done but pending billing/acknowledgement by customer or amounts billed but payment is due on completion of future performance obligation, since it is conditionally receivable. The provision for Expected Credit Loss on contract assets is made on the same basis as financial assets as stated in note No. 2.7.
ii) Trade receivables
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section Financial instruments - Initial recognition and subsequent measurement.
iii) Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received advance payments from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the consideration received.
Revenue (other than sale)
Revenue (other than sale) is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.
Claim on insurance companies and others, where quantum of accrual cannot be ascertained with reasonable certainty, are accounted for on acceptance basis.
Claim on clients: Claims are accounted as income in the period of receipt of arbitration award or acceptance by client or evidence of acceptance received. Interest awarded, being in the nature of additional compensation under the terms of the contract, is accounted as other revenue on receipt of favourable arbitration award.
Rental Income :
Rental Income from investment property is
recognized in statement of profit and loss on straight-line basis over the term of the lease.
Interest Income
Interest income from financial assets is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate (EIR) applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Dividend
Dividend income is recognized when the company''s right to receive dividend is established by the reporting date, which is generally when shareholders approve the dividend.
2.4 Property, plant and equipment (PPE)
Property, plant and equipment is stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit and Loss during the period in which they are incurred.
Cost of an item of property, plant and equipment comprises -
i. its purchase price, including import duties and non -refundable purchase taxes (net of duty/ tax credit availed), after deducting trade discounts and rebates.
ii. any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
iii. borrowing cost directly attributable to the qualifying asset in accordance with accounting policy on borrowing cost.
iv. the costs of dismantling, removing the item and restoring the site on which it is located.
|
Type of assets |
Useful life in years |
|
Buildings |
|
|
Non Factory Building |
60 years |
|
Plant and Machinery * |
4-15 years |
|
Solar Power Plant |
24 years (Being the lower of useful life of asset or lease term) |
|
Furniture and Fixtures |
10 years |
|
Office Equipment |
5 years |
|
Vehicles |
8 - 10 years |
|
Computers |
3 years |
PPE in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes direct costs, related pre-operational expenses and for qualifying assets applicable borrowing costs to be capitalised in accordance with the Company''s accounting policy. Administrative, general overheads and other indirect expenditure (including borrowing costs) incurred during the project period which are not directly related to the project nor are incidental thereto, are expensed.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as "Capital work-in-progress". They are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other items of PPE, commences when the assets are ready for their intended use.
Capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing cost, less impairment losses if any.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
When significant parts of an item of property, plant and equipment have materially different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Such items, if any, are depreciated separately.
Machinery spares which meets the criteria of PPE is capitalized and depreciated over the useful life of the respective asset.
Deemed cost on transition to Ind AS:
Under the Previous GAAP, all property, plant and equipment were carried at in the Balance Sheet on basis of historical cost.
Depreciation:
Depreciation on Property, Plant & Equipments (other than freehold land and capital work in progress) is provided on the straight line method, based on their respective estimate of useful lives, as given below.
Estimated useful lives of assets are determined based on internal assessment estimated by the management of the Company and supported by technical advice wherever so required. The management believes that useful lives currently used, which is as prescribed under Schedule II to the Companies Act, 2013, fairly reflect its estimate of the useful lives and residual values of Property, Plant & Equipments ( considered at 5% of the original cost), though these lives in certain cases are different from lives prescribed under Schedule II.
*In respect of these assets, the management estimate of useful lives, based on technical assessment is different than the useful lives prescribed under Part C of Schedule II to the Companies Act, 2013. However, based on internal technical evaluation and external advice received, the management believes that the useful lives as considered for arriving at the depreciation rates, best represent the period over which management expect to use these assets.
Assets individually costing '' 5000 or less are fully depreciated in the year of acquisition.
Depreciation of an asset begins when it is available for use, i.e., when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation of an asset ceases at the earlier of the date that the asset is retired from active use and is held for disposal and the date that the asset is derecognised.
Depreciation methods, useful lives and residual values are reviewed periodically including at the end of each financial year. Any changes in depreciation method, useful lives and residual values are treated as a change in accounting estimate and applied/adjusted prospectively, if appropriate.
2.5 Intangible assets
Identifiable intangible assets are recognised when the Company controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Company and the cost of the asset can be reliably measured.
At initial recognition, the separately acquired intangible assets with finite useful lives are recognised at cost of acquisition. Following initial recognition, the intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.
Intangible assets not ready for the intended use on the date of the balance sheet are disclosed as ''intangible assets under development''.
Intangible assets are derecognised (eliminated from the balance sheet) on disposal or when no future economic benefits are expected from its use and subsequent disposal.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and should be recognised as income or expense in the statement of profit and loss.
Deemed cost on transition to Ind AS:
Under the Previous GAAP, all Intangible assets were carried at in the Balance Sheet on basis of historical cost. The Company has elected to continue with the carrying value of all of its intangible assets recognised as of April 1, 2016 (the transition date) measured as per the previous GAAP and use such carrying value as its deemed cost as of the transition date.
Amortisation:
Intangible assets are amortised on a straight line basis over the estimated useful lives of respective assets from the date when the asset are available for use, on prorata basis. Estimated useful lives by major class of finite-life intangible assets are as follows:
|
Type of assets |
Useful life in years |
|
Computer software |
5 years |
The amortisation period and the amortisation method for finite-life intangible assets is reviewed at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are
considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates and adjusted prospectively.
Properties including those under construction (land or a buildingâor part of a buildingâor both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for: (a) use in the production or supply of goods or services or for administrative purposes; or (b) sale in the ordinary course of business; are classified as investment property.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
Costs include costs incurred initially to acquire an investment property, being purchase price and any directly attributable expenditure and costs incurred subsequently to add to, replace part of, or service a property. Costs of the day-to-day servicing of such a property primarily being the cost of labour and consumables, and may include the cost of minor parts (the purpose of these expenditures whereof is often described as for the ''repairs and maintenance'' of the property) are recognised in the Statement of profit or loss as incurred.
The Company has developed a building (being Bus Terminal and Depot and Commercial Complex at Kota) for Rajasthan State Road Transport Corporation (RSRTC) under an "Agreement to develop"/ License Agreement on the land belonging to RSRTC under finance lease arrangement. The expenditure (construction cost) incurred has been shown in Balance Sheet under the main head "Investment Property" and sub-head Right of Use Assets (Building) meeting the definition of Investment Property as defined in Ind As 40. The Company has a right to sub-lease Right of Use Asset (Commercial Complex). The primary lease period of Commercial complex is 30 years which can be extended for a further period of 10 years at the option of the Company from the date of completion of the project. Thereafter, the Commercial Complex will be handed over to RSRTC. The Management expects to use the said property in primary period of lease of 30 years.
Depreciation is recognised using straight line method so as to write off the cost of the investment property less their residual values over their estimated useful lives.
The Company depreciates building held as investment property over the period of 30 years having zero residual value.
Estimated useful life of the asset and residual value thereof is determined based on internal assessment estimated by the management of the Company and supported by technical advice wherever so required. Based on such assessment and advice, the management believes that useful life and residual value currently used is different from the useful life and residual value prescribed in Schedule II to the Companies Act, 2013. However based on internal technical evaluation and external advice received, the management believes that the estimated useful life and residual value is realistic and reflect fair approximation of the period over which the asset is likely to be used.
Depreciation method is reviewed at each financial year end to reflect the expected pattern of consumption of the future benefits embodied in the investment property. The estimated useful life and residual values are also reviewed at each financial year end and the effect of any change in the estimates of useful life/ residual value is accounted on prospective basis. Freehold land and properties under construction are not depreciated.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use/ expiry of lease term and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of property is recognised in the Statement of Profit and Loss in the same period.
On transition to Ind AS, the Company has opted to continue with the carrying values measured under the previous GAAP as at 1 April 2016 of its investment properties and used that carrying value as the deemed cost of the investment properties on the date of
transition i.e. 1 April 2016.
2.7 Financial instruments Financial Assets:
Initial recognition and measurement:
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, a financial asset is recognised at fair value, except for trade receivables which are initially measured at transaction price. In case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction costs are recognised in the statement of profit and loss. In other cases, the transaction costs are added to or deducted from the fair value of the financial assets.
Financial assets are subsequently classified as measured at
⢠amortised cost (if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding)
⢠fair value through profit and loss (FVTPL)
⢠fair value through other comprehensive income (FVOCI).
Equity Instruments:
Investment in subsidiaries are measured at cost less impairment losses, if any.
All investments in equity instruments in scope of Ind AS 109 classified under financial assets are initially measured at fair value.
If the equity investment is not held for trading, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL. The Company makes such election on an instrument-byinstrument basis. Equity Instruments which are held for trading are classified as measured at FVTPL.
Fair value change on an equity instrument is recognised as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI
are recognized in OCI. Amounts recognised in OCI are not subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised as ''other income'' in the Statement of Profit and Loss.
The Company does not have any equity investments designated at FVOCI.
Derecognition:
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.
Impairment of Financial Asset:
In accordance with Ind AS 109, the Company applies the expected credit loss ("ECL") model for measurement and recognition of impairment loss on financial assets and credit risk exposures. The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables or contract revenue receivables. Simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition. This involves use of provision matrix constructed on the basis of historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and the rates used in the provision matrix.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
The Company measures the expected credit loss associated with its assets based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the Statement of Profit and Loss.
Financial Liabilities and equity instruments:
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a company entity are recognised at the proceeds received, net of direct issue costs.
Financial liabilities
Initial recognition and measurement:
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The fair value of a financial instrument at initial recognition is normally the transaction price. If the Company determines that the fair value at initial
recognition differs from the transaction price, difference between the fair value at initial recognition and the transaction price shall be recognized as gain or loss unless it qualifies for recognition as an asset or liability. This normally depends on the relationship between the lender and borrower or the reason for providing the loan. Accordingly in case of interest-free loan from promoters to the Company, the difference between the loan amount and its fair value is treated as an equity contribution to the Company.
In accordance with Ind AS 113, the fair value of a financial liability with a demand feature is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.
The Company''s financial liabilities include trade and other payables and loans and borrowings including bank overdrafts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss, unless and to the extent capitalised as part of costs of an asset.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Trade and other payables
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Off setting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is currently enforceable legal right to offset the recognised amount and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
2.8 Impairment of Non-financial assets
The carrying amounts of non-financial assets other than inventories are assessed at each reporting date to ascertain whether there is any indication of impairment. If any such indication exists then the asset''s recoverable amount is estimated. An impairment loss is recognised, as an expense in the Statement of Profit and Loss, for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less cost to sell and value in use. Value in use is ascertained through discounting of the estimated future cash flows using a discount rate that reflects the current market assessments of the time value of money and the risk specific to the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels into cash generating units for which there are separately identifiable cash flows.
Impairment losses recognised in prior years are reversed when there is an indication that the impairment losses recognised no longer exist or have decreased. Such reversals are recognised as an increase in carrying amounts of assets to the extent that it does not exceed the carrying amounts that would have been determined (net of amortization or depreciation) had no impairment loss been recognised in previous years.
Borrowing costs comprises interest expense on borrowings calculated using the effective interest method and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period.
The effective interest rate (EIR) is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. EIR calculation does not include exchange differences.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are included in the cost of those assets. Such borrowing costs are capitalised as part of the cost of the asset when it is probable that they will result in future economic benefits to the entity and the costs can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress.
Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset, if any, for its intended use or sale are interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
2.10 Foreign currency transactions
The standalone financial statements are presented in Indian Rupees (INR), the functional currency of the Company. Items included in the standalone financial
statements of the Company are recorded using the currency of the primary economic environment in which the Company operates (the ''functional currency'').
Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of these transactions and from translation of monetary assets and liabilities at the reporting date exchange rates are recognised in the Statement of Profit and Loss.
Non-monetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction.
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
The Company''s lease asset classes primarily consist of leases for commercial complex, land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
The company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, company''s incremental borrowing rate.Generally, the company uses its incremental borrowing rate as the discount rate.Lease payments included in the measurement of the lease liability comprise the following:
- Fixed payments, including in-substance fixed payments;
- Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
- Amounts expected to be payable under a residual value guarantee; and
- The exercise price under a purchase option that the company is reasonably certain to exercise, lease payments in an optional renewal period if the company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the company is reasonably certain not to terminate early.
The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The company recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in the statement of profit and loss.
The company presents right-of-use assets and lease liabilities separately in balance sheet.
Short-term leases and leases of low-value assets
The company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of 12 months or less and low value leases. The company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
(b) Company as a Lessor
Lease for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Operating lease
Rental income from operating sub lease of Right of Use (ROU) Asset is recognised on a straight-
line basis over the term of the relevant lease unless either another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished, even if the payments to the lessor are not on that basis. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset.
Where the Company provides incentives for the lessee to enter into the agreement such as an up-front cash payment to the lessee or the reimbursement or assumption by the lessor of costs of the lessee (such as relocation costs, leasehold improvements and costs associated with a pre-existing lease commitment of the lessee), such incentives are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the incentive''s nature or form or the timing of payments.
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition, are accounted for as follows:
⢠Construction materials, stores and spares: cost includes cost of purchase (viz. the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition and is net of trade discounts, rebates and other similar items) and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on first in first out (FIFO) basis.
⢠Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on first in first out basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Assessment of net realisable value is made in each subsequent period and when the circumstances that previously caused inventories to be written-down below cost no longer exist or when there is clear evidence of an increase in net realisable value because of changed economic circumstances, the writedown, if any, in the past period is reversed to that extent of the original amount written-down so that the resultant carrying amount is the lower of the cost and the revised net realisable value.
Obsolete, slow moving and defective inventories are identified from time to time and, where necessary, a provision is made for such inventories.
(b) Inventory property
Properties (including under construction) acquired for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory property and is measured at the lower of cost and net realisable value (NRV).
Cost includes: Freehold and leasehold rights for land, amounts paid to contractors/builders for construction linked payments for flats acquired by allotment from builders, property transfer taxes, and other related costs.
Non-refundable commissions paid to sales or marketing agents on the sale of real estate units are expensed when paid.
NRV is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less estimated costs of completion and the estimated costs necessary to make the sale.
The cost of inventory property recognised in profit or loss on disposal is determined with reference to the specific costs incurred on the property sold.
Short- term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as shortterm employee benefits. Benefits such as salaries, wages, social security contributions, short term compensated absences (paid annual leaves) etc. are measured on an undiscounted basis at the amounts expected to be paid when the liabilities are settled and are expensed in the period in which the employee renders the related service.
Post-employment benefits:
i) Defined contribution plan
The defined contribution plan is postemployment benefit plan under which the Company contributes fixed contribution to a government administered fund and will have no obligation to pay further contribution. The Company''s defined contribution plan comprises of Provident Fund, Employee State Insurance Scheme and Labour Welfare Fund. The Company''s contribution to defined contribution plans are recognized in the Statement of Profit and Loss in the period in which employee renders the related service.
ii) Defined benefit plan
The Company''s obligation towards gratuity liability is funded to an approved gratuity fund which is managed by Life Insurance Corporation of India (LIC). The present value of the defined benefit obligations is determined based on actuarial valuation using the projected unit credit method. The difference, if any between the actuarial valuation of the gratuity of the employees at the year end and the balance of funds is provided for assets/ liabilities in the books.
The amount recognised as ''Employee benefit expenses'' in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the current year and the costs of individual events such as past/future service benefit changes and settlements (such events are recognised immediately in the Statement of Profit and Loss).
The amount of net interest expense calculated by applying the liability discount rate to the net defined
benefit liability or asset is charged or credited to ''Finance costs'' in the Statement of Profit and Loss.
Re-measurement of net defined benefit liability/ asset pertaining to gratuity comprise of actuarial gains/ losses (i.e. changes in the present value of the defined benefit obligation resulting from experience adjustments and effects of changes in actuarial assumptions), the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest) and is recognised immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurements are not reclassified to profit or loss account in subsequent periods.
Other long-term employee benefit obligations:
The liabilities for earned leave that are not expected to be settled wholly within 12 months are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss. Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short term employee benefit.
Tax expense comprises of current and deferred tax and includes any adjustments related to past periods in current and/or deferred tax adjustments that may become necessary due to certain developments or reviews during the relevant period.
Current income tax:
Tax on income for the current period is determined on the basis of taxable income (or on the basis of book profits wherever minimum alternate tax is applicable) and tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on the expected outcome of assessments/ appeals.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws
used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Company operates and generates taxable income.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.
Deferred tax:
Deferred
Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements and in preparing the opening Ind AS balance sheet as at 01st April, 2016 for the purpose of transition to Ind AS, unless otherwise indicated.
1.1 Basis of preparation
a) Statement of compliance with Ind AS:
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 and the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.
For all periods upto and including the year ended 31st March, 2017, the Company prepared its financial statements in accordance with the accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as âPrevious GAAPâ) used for its statutory reporting requirement in India immediately before adopting Ind AS.
These financial statements for the year ended 31st March, 2018 are the first financial statements that the Company has prepared under Ind AS. The financial statements for the year ended 31st March, 2017 and the opening Balance Sheet as at 1st April, 2016 (being the âdate of transition to Ind ASâ) have been restated in accordance with Ind AS for comparative information. Reconciliations and explanations of the effect of the transition from Previous GAAP to Ind AS on the Companyâs Balance Sheet, Statement of Profit and Loss and Statement of Cash Flows are provided in note 3.
b) basis of measurement
These financial statements are prepared under the historical cost convention except for the following material items those have been measured at fair value as required by relevant IndAS :
- certain financial assets and liabilities that are measured at fair value;
- defined benefit plans - plan assets measured at fair value;
Also, the fair values of financial instruments measured at amortised cost are required to be disclosed in the said financial statements.
Historical cost is generally based on the fair value of the consideration given in exchange for assets.
Fair value measurement:
Fair value is the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, an exit price). It is a market-based measurement, not an entity-specific measurement. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Where required/appropriate, external valuers are involved.
All financial assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy established by Ind AS 113, that categorises into three levels, the inputs to valuation techniques used to measure fair value. These are based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly(i.e. as prices) or indirectly(i.e. derived from prices).
Level 3 inputs are unobservable inputs for the asset or liability.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).
For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amount approximates fair value due to the short maturity of these instruments.
The Company recognises transfers between levels of fair value hierarchy at the end of reporting period during which change has occurred.
c) current non-current classification:
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
Operating cycle for the business activities of the Group covers the duration of the specific project/contract/ product line/service including the defect liability period, wherever applicable and extends up to the realisation of receivables (including retention monies) within the agreed credit period normally applicable to the respective projects/lines of business.
d) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (i.e. the âfunctional currencyâ). The financial statements are presented in Indian Rupee, the national currency of India, which is the functional currency of the Company.
e) Rounding of amounts:
All amounts disclosed in the financial statements and notes are in Indian Rupees in lakhs rounded off to two decimal places as permitted by Schedule III to the Companies Act, 2013, unless otherwise stated.
1.2 use of estimates
The preparation of financial statements in conformity with the recognition and measurement principles of the Ind AS requires management to make judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, expenses and the results of operations during the reporting period. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Such estimates & assumptions are based on management evaluation of relevant facts & circumstances as on date of financial statements. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; they are recognised in the period of the revision and future periods if the revision affects both current and future periods.
1.3 Revenue recognition
Revenue from construction/project related activity is recognised as follows:
Cost plus contract is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of these costs or a fixed fee.
Fixed price contract: is a construction contract in which the contractor agrees to a fixed contract price, or a fixed rate per unit of output, which in some cases is subject to cost escalation clauses.
The Company enters into fixed price construction contracts involving fixed rate per unit of output.
Contract revenue comprises (a) the initial amount of revenue agreed in the contract; and (b) variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue; and they are capable of being reliably measured.
When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated with the construction contract shall be recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period.
The recognition of revenue and expenses by reference to the stage of completion of a contract is referred to as the percentage of completion method. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed.
The stage of completion of a contract is determined by a method that measures reliably the work performed. Depending on the nature of the contract, the methods may include:
(a) the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs;
(b) surveys of work performed; or
(c) completion of a physical proportion of the contract work.
The Company, in case of item rate contracts, follows the percentage of completion method on the basis of physical measurement of work actually completed, at the Balance Sheet date, taking into account the contractual price and revision thereto by estimating total revenue including claims/variations as per Ind AS 11 Construction Contracts, and total cost till completion of the contract and the profit so determined proportionate to the percentage of the actual work done.
The Stage / percentage of completion is determined with reference to the certificates given by the Clients / Consultants appointed by Clients as well as on the billing schedule agreed with them for the value of work done during the year.
When it is probable that total contract costs will exceed total contract revenue, the expected loss shall be recognised as an expense immediately in the period in which it is foreseen irrespective of whether work has commenced on the contract or the stage of completion of contract activity.
Revenue from supply contracts/ Sale of goods
Revenue from sale of goods is recognised when all the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract, which is mainly upon delivery and the amount of revenue can be measured reliably. The Company retains no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Revenue is measured at fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as goods & services tax and services tax.
Revenue (other than sale)
Revenue (other than sale) is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.
Claim on insurance companies and others, where quantum of accrual cannot be ascertained with reasonable certainty, are accounted for on acceptance basis.
Claim on clients: Claims are accounted as income in the period of receipt of arbitration award or acceptance by client or evidence of acceptance received. Interest awarded, being in the nature of additional compensation under the terms of the contract, is accounted as other operating revenue on receipt of favourable arbitration award.
Rental Income :
Rental Income from investment property is recognized in statement of profit and loss on straight-line basis over the term of the lease except where the rentals are structured to increase in line with expected general inflation.
Interest Income
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of a financial liability or a financial asset to their gross carrying amount.
Dividend
Dividend income is recognized when the companyâs right to receive dividend is established by the reporting date, which is generally when shareholders approve the dividend.
1.4 property, plant and equipment (ppE)
Property, plant and equipment is stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit and Loss during the period in which they are incurred.
Cost of an item of property, plant and equipment comprises
i. its purchase price, including import duties and non -refundable purchase taxes (net of duty/ tax credit availed), after deducting trade discounts and rebates.
ii. any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
iii. borrowing cost directly attributable to the qualifying asset in accordance with accounting policy on borrowing cost.
iv. the costs of dismantling, removing the item and restoring the site on which it is located.
PPE in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes direct costs, related pre-operational expenses and for qualifying assets applicable borrowing costs to be capitalised in accordance with the Companyâs accounting policy. Administrative, general overheads and other indirect expenditure (including borrowing costs) incurred during the project period which are not directly related to the project nor are incidental thereto, are expensed.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as âCapital work-in-progressâ. They are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other items of PPE, commences when the assets are ready for their intended use.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
When significant parts of an item of property, plant and equipment have materially different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Such items, if any, are depreciated separately.
Machinery spares which meets the criteria of PPE is capitalized and depreciated over the useful life of the respective asset.
Deemed cost on transition to Ind As:
Under the Previous GAAP, all property, plant and equipment were carried at in the Balance Sheet on basis of historical cost.
Depreciation:
Depreciation on fixed assets (other than freehold land and capital work in progress) is provided on the straight line method, based on their respective estimate of useful lives, as given below. Estimated useful lives of assets are determined based on internal assessment estimated by the management of the Company and supported by technical advice wherever so required. The management believes that useful lives currently used, which is as prescribed under Schedule II to the Companies Act, 2013, fairly reflect its estimate of the useful lives and residual values of fixed assets ( considered at 5% of the original cost), though these lives in certain cases are different from lives prescribed under Schedule II.
*In respect of these assets, the management estimate of useful lives, based on technical assessment is different than the useful lives prescribed under Part C of Schedule II to the Companies Act, 2013. However, based on internal technical evaluation and external advice received, the management believes that the useful lives as considered for arriving at the depreciation rates, best represent the period over which management expect to use these assets.
Assets (except shuttering material) individually costing Rs.5000 or less are fully depreciated in the year of acquisition.
Depreciation of an asset begins when it is available for use, i.e., when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation of an asset ceases at the earlier of the date that the asset is retired from active use and is held for disposal and the date that the asset is derecognised.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.
Depreciation methods, useful lives and residual values are reviewed periodically including at the end of each financial year. Any changes in depreciation method, useful lives and residual values are treated as a change in accounting estimate and applied/adjusted prospectively, if appropriate.
1.5 Intangible assets
Identifiable intangible assets are recognised when the Company controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Company and the cost of the asset can be reliably measured.
At initial recognition, the separately acquired intangible assets with finite useful lives are recognised at cost of acquisition. Following initial recognition, the intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.
Intangible assets not ready for the intended use on the date of the balance sheet are disclosed as âintangible assets under developmentâ.
An intangible asset should be derecognised (eliminated from the balance sheet) on disposal or when no future economic benefits are expected from its use and subsequent disposal.
Gains or losses arising from the retirement or disposal of an intangible asset should be determined as the difference between the net disposal proceeds and the carrying amount of the asset and should be recognised as income or expense in the statement of profit and loss.
Deemed cost on transition to Ind AS:
Under the Previous GAAP, all Intangible assets were carried at in the Balance Sheet on basis of historical cost. The Company has elected to continue with the carrying value of all of its intangible assets recognised as of 01st April, 2016 (the transition date) measured as per the previous GAAP and use such carrying value as its deemed cost as of the transition date.
Amortisation:
Intangible assets are amortised on a straight line basis over the estimated useful lives of respective assets from the date when the asset are available for use, on pro-rata basis. Estimated useful lives by major class of finite-life intangible assets are as follows:
The amortisation period and the amortisation method for finite-life intangible assets is reviewed at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates and adjusted prospectively.
1.6 Investment properties
Properties including those under construction (land or a buildingâor part of a buildingâor both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for:
(a) use in the production or supply of goods or services or for administrative purposes; or
(b) sale in the ordinary course of business;
are classified as investment property. Investment property includes land held for a currently undetermined future use.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
For transition to Ind AS, the company has elected to adopt as deemed cost, the carrying value of investment property as per I-GAAP less accumulated depreciation and cumulative impairment as on the transition date of 01st April, 2016 .
Depreciation is recognised using straight line method so as to write off the cost of the investment property less their residual values over their estimated useful lives.
The Company has developed a building (being Bus Terminal and Depot and Commercial Complex at Kota) for Rajasthan State Road Transport Corporation (RSRTC) under an âAgreement to Developâ at a cost of Rs.8930.67 Lakhs spent till 31.03.2017 on the land belonging to RSRTC under license arrangement. The expenditure (construction cost) incurred has been shown in Balance Sheet under the main head âInvestment Propertyâ and sub-head âBuildingâ. The Company has a right to Lease Commercial Complex. The period of lease of right of Commercial complex is 40 years (30 years, primary lease period 10 years extended period) from the date of completion of the project. Thereafter, the Commercial Complex will be handed over to RSRTC.
The Company depreciates building held as investment property over the period of 30 years having zero residual value.
Estimated useful life of the asset and residual value thereof is determined based on internal assessment estimated by the management of the Company and supported by technical advice wherever so required. Based on such assessment and advice, the management believes that useful life and residual value currently used is different from the useful life and residual value prescribed in Schedule II to the Companies Act, 2013. However based on internal technical evaluation and external advice received, the management believes that the estimated useful life and residual value is realistic and reflect fair approximation of the period over which the asset is likely to be used.
Depreciation method is reviewed at each financial year end to reflect the expected pattern of consumption of the future benefits embodied in the investment property. The estimated useful life and residual values are also reviewed at each financial year end and the effect of any change in the estimates of useful life/residual value is accounted on prospective basis. Freehold land and properties under construction are not depreciated.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of property is recognised in the Statement of Profit and Loss in the same period.
On transition to Ind AS, the Company has opted to continue with the carrying values measured under the previous GAAP as at 1 April 2016 of its investment properties and used that carrying value as the deemed cost of the investment properties on the date of transition i.e. 1 April 2016
1.7 Financial instruments Financial Assets:
Initial recognition and measurement:
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, a financial asset is recognised at fair value, except for trade receivables which are initially measured at transaction price. In case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction costs are recognised in the statement of profit and loss. In other cases, the transaction costs are added to or deducted from the fair value of the financial assets.
Financial assets are subsequently classified as measured at
- amortised cost (if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding)
- fair value through profit and loss (FVTPL)
- fair value through other comprehensive income (FVOCI).
Equity Instruments:
Investment in subsidiaries are measured at cost less impairment losses, if any.
All investments in equity instruments in scope of Ind AS 109 classified under financial assets are initially measured at fair value.
If the equity investment is not held for trading, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Equity Instruments which are held for trading are classified as measured at FVTPL.
Fair value changes on an equity instrument is recognised as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognized in OCI. Amounts recognised in OCI are not subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments inequity instruments are recognised as âother incomeâ in the Statement of Profit and Loss.
Derecognition:
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.
Impairment of Financial asset:
In accordance with Ind AS 109, the Company applies the expected credit loss (âECLâ) model for measurement and recognition of impairment loss on financial assets and credit risk exposures. The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables or contract revenue receivables. Simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition. This involves use of provision matrix constructed on the basis of historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and the rates used in the provision matrix.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the group in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls),discounted at the original EIR. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
The Company measures the expected credit loss associated with its assets based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
ECL impairment loss allowance (or reversal)recognised during the period is recognised as income/ expense in the Statement of Profit and Loss.
Financial liabilities and equity instruments: classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a company entity are recognised at the proceeds received, net of direct issue costs.
Financial liabilities
Initial recognition and measurement:
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The fair value of a financial instrument at initial recognition is normally the transaction price. If the Company determines that the fair value at initial recognition differs from the transaction price, difference between the fair value at initial recognition and the transaction price shall be recognized as gain or loss unless it qualifies for recognition as an asset or liability.
In accordance with Ind AS 113, the fair value of a financial liability with a demand feature is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.
The Companyâs financial liabilities include trade and other payables and loans and borrowings including bank overdrafts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss, unless and to the extent capitalised as part of costs of an asset.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Trade and other payables
For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Off setting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is currently enforceable legal right to offset the recognised amount and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.8 Impairment of Non-financial assets
The carrying amounts of non-financial assets other than inventories are assessed at each reporting date to ascertain whether there is any indication of impairment. If any such indication exists then the assetâs recoverable amount is estimated. An impairment loss is recognised, as an expense in the Statement of Profit and Loss, for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs fair value less cost to sell and value in use. Value in use is ascertained through discounting of the estimated future cash flows using a discount rate that reflects the current market assessments of the time value of money and the risk specific to the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels into cash generating units for which there are separately identifiable cash flows.
Impairment losses recognised in prior years are reversed when there is an indication that the impairment losses recognised no longer exist or have decreased. Such reversals are recognised as an increase in carrying amounts of assets to the extent that it does not exceed the carrying amounts that would have been determined (net of amortization or depreciation) had no impairment loss been recognised in previous years.
1.9 Borrowing costs
Borrowing costs comprises interest expense on borrowings calculated using the effective interest method and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period.
The effective interest rate (EIR) is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. EIR calculation does not include exchange differences.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are included in the cost of those assets. Such borrowing costs are capitalised as part of the cost of the asset when it is probable that they will result in future economic benefits to the entity and the costs can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress.
Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset, if any, for its intended use or sale are interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
1.10 Foreign currency transactions
The financial statements are presented in Indian Rupees (INR), the functional currency of the Company. Items included in the financial statements of the Company are recorded using the currency of the primary economic environment in which the Company operates (the âfunctional currencyâ).
Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of these transactions, and from translation of monetary assets and liabilities at the reporting date exchange rates are recognised in the Statement of Profit and Loss.
Non-monetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction.
1.11 Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Finance lease:
Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Companyâs policy on borrowing cost. Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease:
In respect of assets taken on operating lease, lease rentals are recognized as an expense in the Statement of Profit and Loss on straight line basis over the lease term unless another systematic basis is more representative of the time pattern in which the benefit is derived from the leased asset or the payments to the lessor are structured to increase in the line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
Company as lessor:
Finance lease:
Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Operating lease:
Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease unless either:
[i] another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished, even if the payments to the lessors are not on that basis; or
[ii] the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. If payments to the lessor vary according to factors other than inflation, then this condition is not met.
Where the Company provides incentives for the lessee to enter into the agreement such as an up-front cash payment to the lessee or the reimbursement or assumption by the lessor of costs of the lessee (such as relocation costs, leasehold improvements and costs associated with a preexisting lease commitment of the lessee), such incentives are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the incentiveâs nature or form or the timing of payments. The Company recognises the aggregate cost of incentives as a reduction of rental income over the lease term, on a straight-line basis unless another systematic basis is representative of the time pattern over which the benefit of the leased asset is diminished.
1.12 (a) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition, are accounted for as follows:
- Construction materials, stores and spares: cost includes cost of purchase (viz. the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition and is net of trade discounts, rebates and other similar items) and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on first in first out (FIFO) basis.
- Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on first in first out basis.
- Contract/project work in progress: Cost of work yet to be certified/billed comprising construction costs and other directly attributable overheads is recognised as contract work-in-progress provided it is probable that it will be recovered. This is valued at lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Assessment of net realisable value is made in each subsequent period and when the circumstances that previously caused inventories to be written-down below cost no longer exist or when there is clear evidence of an increase in net realisable value because of changed economic circumstances, the write-down, if any, in the past period is reversed to that extent of the original amount written-down so that the resultant carrying amount is the lower of the cost and the revised net realisable value.
Obsolete, slow moving and defective inventories are identified from time to time and, where necessary, a provision is made for such inventories.
(b) Inventory property
Properties (including under construction) acquired for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory property and is measured at the lower of cost and net realisable value (NRV).
Cost includes: Freehold and leasehold rights for land, amounts paid to contractors/builders for construction linked payments for flats acquired by allotment from builders, property transfer taxes, and other related costs.
Non-refundable commissions paid to sales or marketing agents on the sale of real estate units are expensed when paid.
NRV is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less estimated costs of completion and the estimated costs necessary to make the sale.
The cost of inventory property recognised in profit or loss on disposal is determined with reference to the specific costs incurred on the property sold.
1.13 employee benefits
Short- term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages, social security contributions, short term compensated absences (paid annual leaves) etc. are measured on an undiscounted basis at the amounts expected to be paid when the liabilities are settled and are expensed in the period in which the employee renders the related service.
post-employment benefits :
i) defined contribution plan
The defined contribution plan is post employment benefit plan under which the Company contributes fixed contribution to a government administered fund and will have no obligation to pay further contribution. The Companyâs defined contribution plan comprises of Provident Fund and Employee State Insurance Scheme. The Companyâs contribution to defined contribution plans are recognized in the Statement of Profit and Loss in the period in which employee renders the related service.
ii) Defined benefit plan
The Companyâs obligation towards gratuity liability is funded to an approved gratuity fund, which fully covers the said liability under Group Gratuity Cash Accumulation Policy of Life Insurance Corporation of India (LIC). The present value of the defined benefit obligations is determined based on actuarial valuation using the projected unit credit method. The rate used to discount defined benefit obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations.
The amount recognised as âEmployee benefit expensesâ in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the current year and the costs of individual events such as past/future service benefit changes and settlements (such events are recognised immediately in the Statement of Profit and Loss).
The amount of net interest expense calculated by applying the liability discount rate to the net defined benefit liability or asset is charged or credited to âFinance costsâ in the Statement of Profit and Loss.
Re-measurement of net defined benefit liability/ asset pertaining to gratuity comprise of actuarial gains/ losses (i.e. changes in the present value of the defined benefit obligation resulting from experience adjustments and effects of changes in actuarial assumptions), the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest)and is recognised immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurements are not reclassified to profit or loss account in subsequent periods.
Other long-term employee benefit obligations:
No provision for Leaves is made as accumulation and payment/encashment of unused leaves is not allowed to employees.
1.14 Taxation
Tax expense comprises of current and deferred tax and includes any adjustments related to past periods in current and/or deferred tax adjustments that may become necessary due to certain developments or reviews during the relevant period.
Current income tax:
Tax on income for the current period is determined on the basis of taxable income (or on the basis of book profits wherever minimum alternate tax is applicable) and tax credits computed in accordance with the provisions of the
Income Tax Act 1961, and based on the expected outcome of assessments/appeals.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.
Deferred tax:
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
- When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
- In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses & unabsorbed tax depreciation. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
- When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
- In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Deferred Tax Assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognised as deferred tax assets in the Balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.
1.15 provisions and contingencies provisions:
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.
Contingencies: contingent liabilities
A contingent liability is:
- a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company, or
- a present obligation that arises from past events but is not recognised because :
- it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
- the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognized but disclosed unless the contingency is remote.
Contingent assets
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
Contingent assets are not recognized but are disclosed when the inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognized.
1.16 Segment Reporting
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. Operating Segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The Company has identified two operating segments in which it is primarily engaged i.e. the business of providing construction related activities where risks and returns in all the cases are similar and income from investment properties (lease rentals). They have been considered as the reportable segments.
Others segment comprises real estate trading business. None of the business(es) reported as part of others segment meet aggregation criteria or any of the quantitative thresholds for determining reportable segments in the year ended 31st March, 2018, the year ended 31st March, 2017 or as at 01st April, 2016 .
The Companyâs Chief Operating Decision Maker (CODM) is the Managing Director who evaluates the Companyâs performance and allocates resources based on analysis of various performance indicators.
Geographical information :
The company operates only within India having similar: (i) economic and political conditions, (ii) activities at all project locations and (iii) risk associated with the operations. As such the risks and returns at all project locations are similar. Hence, the geographical information considered for disclosure is not applicable to the Company.
1.17 Related party
A related party is a person or entity that is related to the reporting entity and it includes:
(a) A person or a close member of that personâs family if that person:
(i) has control or joint control over the reporting entity;
(ii) has significant influence over the reporting entity; or
(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
(b) An entity is related to the reporting entity if any of the following conditions apply:
(i) The entity and the reporting entity are members of the same Group.
(ii) One entity is an associate or joint venture of the other entity.
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity has a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
(viii) The entity, or any member of a Group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity.
Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity including:
(a) that personâs children, spouse or domestic partner, brother, sister, father and mother;
(b) children of that personâs spouse or domestic partner; and
(c) dependents of that person or that personâs spouse or domestic partner.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.
Related party transactions and outstanding balances disclosed in the financial statements are in accordance with the above definition as per IndAs 24.
1.18 cash and cash equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at banks & in hand and short term deposits/ investments with an original maturity of three months or less from the date of acquisition, which are subject to an insignificant risk of changes in value. These exclude bank balances (including deposits) held as margin money or security against borrowings, guarantees etc. being not readily available for use by the Company.
For the purpose of the Statement of cash flows, cash and cash equivalents consist of cash and short term deposits and exclude items which are not available for general use as on the date of Balance Sheet, as defined above, net of bank overdrafts which are repayable on demand where they form an integral part of an entityâs cash management.
1.19 dividends to equity holders of the company
The Company recognises a liability to make dividend distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
1.20 Cash Flow Statement
Statement of Cash Flows is prepared segregating the cash flows into operating, investing and financing activities. Cash flow from operating activities is reported using indirect method as set out in Ind AS 7 âStatement of Cash Flowsâ, adjusting the net profit for the effects of:
i. changes during the period in inventories and operating receivables and payables transactions of a non-cash nature;
ii. non-cash items such as depreciation, provisions, deferred taxes, unrealised foreign currency gains and losses, and
iii. all other items for which the cash effects are investing or financing cash flows.
1.21 Earnings per share
The Basic Earnings per equity share (âEPSâ) is computed by dividing the net profit or loss after tax before other comprehensive income for the year attributable to the equity shareholders of the Company by weighted average number of equity shares outstanding during the year.
Diluted earnings per equity share are computed by dividing the net profit or loss before OCI attributable to equity holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares (including options and warrants). The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value. Dilutive potential equity shares are deemed converted as of the beginning of the period unless issued at a later date. Anti-dilutive effects are ignored.
1.22 Events after Reporting date
Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Where the events are indicative of conditions that arose after the reporting period, the amounts are not adjusted, but are disclosed if those non-adjusting events
Mar 31, 2017
1. NATURE OF OPERATIONS
Ahluwalia Contracts (India) Limited (hereinafter referred to as âthe Companyâ) is a Public Ltd. Company in India and incorporated under the provisions of the Companies Act, 1956. The Company is primarily engaged in the business of construction activities. The company has also diversified into Built Operate Transfer (BOT) operations by building and operating commercial complex under lease arrangements.
2. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
Basis of Preparation :- The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) rules, 2014. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.
All the assets and liabilities have been classified as current or non-current, wherever applicable, as per the operating cycle of the Company as per the guidance as set out in the Schedule III to the Companies Act, 2013.
Operating cycle for the business activities of the Company covers the duration of the specific project/ contract/project line/service including the defect liability period, wherever applicable, and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective project.
(B) USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the managementâs best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets and liabilities in future periods.
(C) REVENUE RECOGNITION
(i) Revenue recognition and valuation of the contract Work In Progess are as per Accounting Standard - 7. Work receipts are taken on percentage completion method, stated on the basis of physical measurement of work actually completed at the balance sheet date, taking into account the contractual price and revision thereto. Foreseeable losses are accounted for when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customers or in arbitration.
(ii) Stage/percentage of completion is determined with reference to the certificates given by the Clients / Consultants appointed by Clients as well as on the billing schedule agreed with them for the value of work done during the year.
(iii) I n respect of Real Estate projects the sales are accounted for at the time of handing over the possession of the flat/space to the buyers.
(iv) Revenue from supply contract is recognized when the substantial risk and rewards of ownership is transferred to the buyer and the collectability is reasonably measured. Revenue from product sales are shown as net of all applicable taxes and discounts.
(v) Claims are accounted as income in the period of receipt of arbitration award or acceptance by client or evidence of acceptance received.
(vi) Dividend is recognized when the shareholdersâ right to receive payment is established by the balance sheet date.
(vii) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
(viii) Income from operating lease is recognized as rentals and other related services are accounted for accrual basis.
(D) FIXED ASSETS
(i) Property, Plant & Equipment
Property, plant and equipment are carried at cost of acquisition or construction less accumulated depreciation and/ or accumulated impairment loss, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met, directly attributable cost of bringing the asset to its working condition for the intended use and initial estimate of decommissioning, restoring and similar liabilities. Any trade discounts and rebates are deducted in arriving at the purchase price. Such cost includes the cost of replacing part of the plant and equipment. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
Gains or losses arising from derecognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the assets and are recognized in the statement of profit and loss when the asset is derecognized.
Property, plant and equipment held for sale is valued at lower of their carrying amount and net realizable value. Any write down is recognized in the statement of profit & loss.
Cost of assets not ready for use and administration and other general overhead expenses that are directly attributable to the construction activity of specific asset until commissioning of such assets, are disclosed as Capital work in progress.
(ii) Intangible Fixed Assets
Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less accumulate amortization and any accumulated impairment loss.
Subsequent expenditure is capitalized only when it increases the future economic benefits from the specific assets to which it relates.
(E) DEPRECIATION/AMORTISATION
(i) Property, Plant & Equipment
Depreciation on property, plant and equipment is provided on straight-line method over the estimated useful life of each asset as given below. Estimated useful lives of assets are determined based on internal assessment estimated by management of the Company and supported by technical advises where ever so required. The management believes that useful life currently used, which is prescribed under Schedule II to the Companies Act 2013, fairly reflect its estimates of the useful lives and residual value of fixed assets, through these lives in certain cases are different from lives prescribed under Schedule
II.
Building leasehold is amortized on straight line basis over the primary lease period of 30 years.
Leasehold land is amortized on straight line basis over the period of lease i.e. 90-99 years.
*Based on internal technical evaluation and external advised received, the management believes that the useful lives as considered for arriving at the depreciation rates, best represent the period over which management expect to use these assets. Hence, the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013
Depreciation on addition to fixed assets is provided on pro rata basis from the date on which is ready for use. Depreciation on sale/deduction from fixed assets is provided for up to the date of sale/deduction.
(ii) Intangible Fixed Assets
Intangible assets representing computer software are depreciated over a period of 5 years on a pro rata basis.
(F) CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the balance sheet comprise cash at bank & in hand and short term investments with an original maturity of three months or less.
(G) IMPAIRMENT OF ASSETS
The company makes an assessment of any indicator that may lead to impairment of assets on an annual basis. An impairment loss is recognized wherever the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use valuation is done by the estimated future cash flows (discounted to their present value, based on an appropriate discounting factor) are used. Impairment losses are recognized in the statement of Profit and Loss.
(H) BORROWING COST
Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.
(I) INVESTMENTS
I nvestments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution in value is made to recognize a decline, other than temporary, in the value of such investments.
(J) INVENTORIES
(i) The stock of construction materials, stores and spares are valued at cost, or net realizable value, whichever is lower. Cost is determined on first in first out (FIFO basis) and includes all applicable cost of bringing the goods to their present location and condition.
(ii) Project Work-in-Progress represents site mobilization expenditure including cost of material which is determined on first in first out (FIFO basis) of incomplete contracts and is stated at lower of cost or net realizable value.
(iii) Scraps are valued at estimated realizable value. Net realizable value is the estimated selling price in the ordinary business, less estimated costs of the completion and estimated costs necessary to make the sale.
(K) EMPLOYEE BENEFITS (a) Short-term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period.
(b) Post-employment benefits:
(i) Retirement benefits in the form of the Companyâs contribution to Provident Fund etc. are charged to the statement of Profit & Loss of the year when the contributions to the respective funds are due.
(ii) The Companyâs gratuity benefit scheme is a defined benefit plan. The Companyâs net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans are based on the market yields on government securities as at the balance sheet date.
When the calculation results in a benefit to the company, the recognized asset is limited to the net total of any unrecognized actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.
Actuarial gains and losses are recognized immediately in the statement of profit & loss.
(L) FOREIGN EXCHANGE TRANSACTIONS
(i) Transactions arising in Foreign Currency are converted at the exchange rates prevailing as on date of transactions. Monetary Assets & Liabilities denominated in Foreign Currencies are restated at year end exchange rates. All exchange difference arising on conversion are charged to statement of Profit & Loss.
(ii) Forward Exchange Contracts (Derivative Instruments) not intended for trading or speculation purposes
The Company uses derivative financial instruments including forward exchange contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.
(M) SEGMENT REPORTING POLICIES Identification of Segments :
Primary Segment
Business Segment
The Companyâs operating business are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products & serves different markets. The identified segments are construction activities & lease rentals.
Secondary Segment
Geographical Segment
The analysis of geographical segments is based on the areas in which major operating divisions of the company operates.
Unallocated Items :
Unallocated items include income & expenses which are not allocated to any reportable business segment.
Segment Policies :
The Company prepare its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
(N) INCOME TAXES
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing difference for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences 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 realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the minimum alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountant of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal income tax during the specified period.
(O) PROVISIONS
A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.
(P) LEASES
Where the Company is lessee :
Leases where the less or effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement of Profit & Loss on a straight-line basis over the lease term.
Where the company is less or :
Assets given on operating leases are included under fixed assets. Rent (lease) income is recognized in the statement of Profit and Loss on accrual basis. Direct costs, including depreciation are recognized as an expense in the statement of profit and loss.
(Q) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating Diluted Earnings per Share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential Equity shares.
(R) CONTINGENT LIABILITY
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
a) Terms / Rights attached to equity shares
The company has only one class of equity share having a par value of '' 2/- per share. Each equity shareholder is entitled for one vote per share.
The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors of the company, subject to the approval of the Members/Shareholders of the Company in the ensuing Annual General Meeting.
As per records of the company, including its register of Shareholders/Members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. This distribution will be in proportion to the number of equity shares held by the shareholder.
Term Loans
- Term Loan from SREI Equipment Finance Ltd. of Rs, 12.04 Lacs as on 31.03.2017 (Previous year Rs, 150.34 Lacs) secured by way of hypothecation of specified machinery. The term loan bear interest rate 13.38% as on 31.03.2017. The term loan is repayable in 34 monthly installments commencing from Nov. 2014.
- Vehicle Loan outstanding from HDFC Bank of Rs, 2.38 Lacs as on 31.03.2017 (Previous year Rs, 6.17 Lacs) against vehicle is secured by way of hypothecation of specified vehicle. The term loan bear interest rate 11.50%. The term loan is repayable in 36 monthly installments.
Working Capital loans From various banks are secured by way of
- First pari pasu charges on all existing and future current assets of the company.
- Pari pasu charges on current assets / fixed assets to IDFC Bank Limited so as to provide 1.0x cover.
- Equitable mortgage of following properties with Canara Bank
- A-177, Okhla Industrial Area, Phase-I, New Delhi.
- Commercial property at 3rd floor, 4th floor and parking spaces in lower basement bearing No. 1, 2, 3, 10, 12, 19, 20, 21, V fortune, Plot No.7A, SV Road, Santacruz (West) Mumbai owned by Promoter director.
- Commercial property at 401, 4th floor, Patathu, Business Plaza, CST Road, Kalina, Santacruz, Mumbai owned by promoter director.
- Commercial property at 301, 3rd floor, Patathu, Business Plaza, CST Road, Kalina, Santacruz, Mumbai owned by promoter director.
Equitable mortgage of properties situtated at B-21, Geetanjali Enclave, New Delhi owned by promoter director with Yes Bank Limited.
Pledge of 1,02,71,380 No. of equity shares to Punjab & Sind bank, 20,00,000 equity shares to Bank of Maharashtra, 22,99,000 equity shares with Yes Bank Limited, 7,55,000 equity shares with RBL Bank Limited and 5,40,000 equity shares with IDFC Bank Limited by promoter directors and their relatives.
Personal Guarantees of directors (i) Mr. Bikramjit Ahluwalia (ii) Mr. Shobhit Uppal, and relatives of the director (iii) Mrs. Sudershan Walia and (iv) Mr.Vikaas Ahluwalia.
The working capital loans from Banks bear floating interest rate ranging from MCLR plus 0.75% to 2.00% or Base Rate plus 1.50% to 2.00%.
Unsecured loan from related party bear interest @ 10% p.a. on loan upto Rs, 10.00 crores and loan above Rs, 10.00 crores is interest free. The loan is payable on demand.
Based on discussions with the advocates & consultants, the Company believes that there is fair chance of decisions in its favour in respect of all items listed in (c) to (h) above and hence no provision is considered necessary against the same. The replies/appeals have been filed before appropriate authorities/Courts. Disposal is awaited.
b. COMMITMENTS
i) Capital contracts remaining to be executed (net of payments) and not provided for Rs, 269.33 Lacs (Previous Year Rs, 831.34 Lacs)
ii) For commitments relating to lease arrangements (refer note 38).
31. a. Trade receivables (Non-current) and work in progress includes a sum of Rs, 9,190.60 Lacs (Previous Year Rs, 6,883.41 Lacs) under litigations at various forums for which no provisions has been made as the management believes that the revenue recognized is fully recoverable. As the matter of accounting policy followed by the company the claims are accounted for to the extent the same are settled/awarded in favour of the company.
b. The company had executed Common Wealth Games Village Project awarded by Emaar MGF construction Pvt. Ltd and raised R.A. bills amounting to Rs, 63,887.68 Lacs up to the March, 2011 which have been certified to the extent of Rs, 57,184.68 Lacs. The company has further raised bills and lodged claims of Rs, 52,736.56 Lacs on the client with respect to additional works on account of deviations and other aspects which is disputed by the client. The client has in turn raised a counter claim on the company for Rs, 117,025.56 Lacs. As per the terms of the agreement, both the parties have initiated process of arbitration and appointed arbitrators. The Honâble High Court has appointed a third Arbitrator as presiding Arbitrator. The matter is under arbitration. The management is hopeful of getting a favorable award and recovery of dues.
c. The completion date of SPM Swimming Pool Project had been recorded as 31.08.2010 by the Client (CPWD). The Client released the Final Bill after withholding huge amount & also not admitting our various claims. Due to non-release of full amount against the final bill & other claims to the tune of Rs, 100 Crore, arbitration clause was invoked by company but CPWD did not appoint the Arbitrator timely. The Honâble High Court, Delhi had appointed sole arbitrator for arbitration proceedings. The matter is under arbitration proceedings. The management is hopeful of the getting favorable award.
d. Sri Sumeru Realty Pvt. Ltd. (SSRPL) awarded the work of Construction of all civil & structural works including finishing work at Bangalore. SSRPL did not take interest to resolve the issues and illegally invoked the Bank Guarantees and rescinded the contract. The Court restrained the Bank to release the payment of Bank Guarantees on the condition of deposit equivalent amount with court. As per the terms of the agreement, both the parties have initiated process of arbitration and appointed arbitrators. The company has lodged claims of Rs, 3,491.93 Lacs and the client has in turn raised a counter claim on the company for Rs, 4,300.00 Lacs. The award has been since pronounced on 5.10.2016 in favor of Company for an amount of Rs, 700.00 Lacs and release of FD for an amount of Rs 500.00 Lacs lying with District court. The FD has since been released; however, award has been challenged by the client u/s 34 of Arbitration Act. The management is hopeful of the getting favorable award.
e. The Construction contract of Festival City, Ludhiana was awarded by Aerens Entertainment Zone Pvt. Ltd. (AEZPL) on 10.03.2006 for a contract value of Rs, 11,000.00 Lacs to be completed in a period of 15 months. The project was delayed due to various reasons and under suspension since June 2009. During the course of the execution of the project, the Company had entered into an agreement to create strategic account & agreement to sell in April 2007 for contiguous office space of 28744 sq. ft for a total sale consideration of Rs, 646.75 Lacs.
The Clientâs bankers have taken over possession of the project (Building) under SARFAESI Act and the company had filed a suit with Debt Recovery Tribunal (DRT) for securitization of space allotted under strategic account. DRT passed an order dated 02/09/14 against the company. (ACIL) The company has filed an appeal before Debt Appellate Recovery Tribunal (DART) against DRTâs order, which is pending before the Debt Recovery Appellate Tribunal (DRAT).
ACIL have also initiated arbitration proceedings against AEZPL which is presently before the Ld. Arbitrator. Meanwhile the Honâble High Court had passed the order dated 18.03.2016 against Arenas Entertainment Zone Pvt Ltd for winding up of the Company in some other petition and official liquidator has been appointed to take over the assets of the Company. The Company is also contemplating to filling an application for imploding the Official Liquidator before the Ld. Arbitrator in case of Arbitration. The management believes favorable outcome of proceedings based on legal advice and hopeful for recovery of dues.
Mar 31, 2016
1. NATURE OF OPERATIONS
Ahluwalia Contracts (India) Limited (hereinafter referred to as "the Companyâ) is a Public Ltd. Company in India and incorporated under the provisions of the Companies Act, 1956. The Company is primarily engaged in the business of construction activities. The company has also diversified into Built Operate Transfer (BOT) operations by building and operating commercial complex under concession service arrangements.
2. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
Basis of Preparation The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) rules, 2014. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.
All the assets and liabilities have been classified as current or non-current, wherever applicable, as per the operating cycle of the Company as per the guidance as set out in the Schedule III to the Companies Act, 2013.
Operating cycle for the business activities of the Company covers the duration of the specific project/ contract/project line/service including the defect liability period, wherever applicable, and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective project.
(B) USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the managementâs best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets and liabilities in future periods.
(C) REVENUE RECOGNITION
(i) Revenue recognition and valuation of the contract Work In Progress are as per Accounting Standard-7. Work receipts are taken on percentage completion method, stated on the basis of physical measurement of work actually completed at the balance sheet date, taking into account the contractual price and revision thereto. The site mobilization expenditure is apportioned over the period of contract in proportion to value of work done. Foreseeable losses are accounted for when they are determined except to the extent they are expected to be recovered through claims presented or to be presented to the customers or in arbitration.
(ii) Stage / percentage of completion is determined with reference to the certificates given by the Clients / Consultants appointed by Clients as well as on the billing schedule agreed with them for the value of work done during the year.
(iii) In respect of Real Estate projects the sales are accounted for at the time of handing over the possession of the flat / space to the buyers.
(iv) Revenue from supply contract is recognized when the substantial risk and rewards of ownership is transferred to the buyer and the collectability is reasonably measured. Revenue from product sales are shown as net of all applicable taxes and discounts.
(v) Claims are accounted as income in the period of receipt of arbitration award or acceptance by client or evidence of acceptance received.
(vi) Dividend is recognized when the shareholdersâ right to receive payment is established by the balance sheet date.
(vii) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
(viii) Rent and other related services are accounted for accrual basis.
(D) FIXED ASSETS
(i) Fixed Assets are stated at cost less accumulated depreciation and impairment losses if any.
The cost comprises purchase price and directly attributable cost of bringing the assets to its working condition for the intended use.
Borrowing cost relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
(ii) Intangible assets comprise of license fees, implantation cost for software and other application software acquired for in house use. These assets are stated at cost less accumulated amortization and impairment losses if any.
(iii) Companyâs Land & Buildings have been revalued as on 31.03.1992 by Government approved registered valuer on the basis of prevailing day value. Difference between the total value of these assets on revaluation and written down value as on 31.03.1992 of Rs. 106.91 Lacs had been credited to revaluation reserve account.
(E) DEPRECIATION / AMORTISATION
(i) Depreciation has been provided on straight line method on pro-rata basis in accordance with Schedule II of the Companies Act, 2013.
(ii) The depreciation on Plant & Machinery (shuttering material) has been provided @ 25% on pro-rata basis based on technical estimates of useful life made by the management.
(iii) Lease hold land is amortized over the period of lease.
(iv) Software costs including license fees are amortized on straight line basis over its useful life, which is considered to be a period of five years.
(F) CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the balance sheet comprise cash at bank & in hand and short term investments with an original maturity of three months or less.
(G) IMPAIRMENT OF ASSETS
The company makes an assessment of any indicator that may lead to impairment of assets on an annual basis. An impairment loss is recognized wherever the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use valuation is done by the estimated future cash flows (discounted to their present value, based on an appropriate discounting factor) are used. Impairment losses are recognized in the statement of Profit and Loss.
(H) BORROWING COST
Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.
(I) INVESTMENTS
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution in value is made to recognize a decline, other than temporary, in the value of such investments.
(J) INVENTORIES
(i) The stock of construction materials, stores and spares are valued at cost, or net realizable value, whichever is lower. Cost is determined on first in first out (FIFO basis) and includes all applicable cost of bringing the goods to their present location and condition.
(ii) Project Work-in-Progress represents site mobilization expenditure of incomplete contracts and is stated at lower of cost or net realizable value.
(K) EMPLOYEE BENEFITS
(a) Short-term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period.
(b) Post-employment benefits:
(i) Retirement benefits in the form of the Companyâs contribution to Provident Fund etc. are charged to the statement of Profit & Loss of the year when the contributions to the respective funds are due.
(ii) The Companyâs gratuity benefit scheme is a defined benefit plan. The Companyâs net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, are based on the market yields on government securities as at the balance sheet date.
When the calculation results in a benefit to the company, the recognized asset is limited to the net total of any unrecognized actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.
Actuarial gains and losses are recognized immediately in the statement of profit & loss.
(L) FOREIGN EXCHANGE TRANSACTIONS
(i) Transactions arising in Foreign Currency are converted at the exchange rates prevailing as on date of transactions. Monetary Assets & Liabilities denominated in Foreign Currencies are restated at year end exchange rates. All exchange difference arising on conversion are charged to statement of Profit & Loss.
(ii) Forward Exchange Contracts (Derivative Instruments) not intended for trading or speculation purposes
The Company uses derivative financial instruments including forward exchange contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.
(M) CONCESSION ARRANGEMENT
Judgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are reasonable under the circumstances.
The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal to the related actual results. Significant assumptions used in accounting for the intangible asset are given below:
The intangible assets are measured at cost, i.e. fair value of the construction service. The exchange of construction services for an intangible asset is regarded as a transaction that generates revenue and costs, which will be recognized by reference to the stage of completion of the Construction. The intangible asset is assumed to be received only upon completion of construction and recognized on such completion. Until then, the expenditure incurred on this project will be debited as "Intangible Assets under developmentâ under the main head of "Fixed Assetsâ. The value of the intangible asset shall be amortized over the estimated useful life. The carrying value of intangible asset is reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
(N) INCOME TAXES
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing difference for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences 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 realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the minimum alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountant of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal income tax during the specified period.
(O) PROVISIONS
A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.
(P) LEASES
(i) Where the Company is lessee, Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased items, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.
If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Leases where the less or effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement of Profit & Loss on a straight-line basis over the lease term.
(ii) Where the company is less or, assets subject to operating leases are included under fixed assets or current assets as appropriate. Rent (lease) income is recognized in the statement of Profit and Loss on a straight-line basis over the lease term. Direct costs, including depreciation are recognized as an expense in the statement of profit and loss.
(Q) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating Diluted Earnings per Share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential Equity shares.
(R) CONTINGENT LIABILITY
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Mar 31, 2015
1. NATURE OF OPERATIONS
Ahluwalia Contracts (India) Limited (hereinafter referred to as "the
Company") is a Public Ltd. Company in India and incorporated under the
provisions of the Companies Act, 1956. The Company is primarily engaged
in the business of construction activities. The company has also
diversified into Built Operate Transfer (BOT) operations by building
and operating commercial complex under concession service arrangements.
(A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
(i) Basis of Preparation :- The financial statements of the company
have been prepared in accordance with generally accepted accounting
principles in India (Indian GAAP). The company has prepared these
financial statements to comply in all material respects with the
accounting standards notified under section 133 of the Companies Act,
2013 read together with paragraph 7 of the Companies (Accounts) rules,
2014. The financial statements have been prepared under the historical
cost convention on an accrual basis except in case of assets for which
revaluation is carried out. The accounting policies adopted in the
preparation of financial statements are consistent with those of
previous year, except for the change in Accounting Policy as explained
below.
(ii) Change in Accounting Policy:- Till the year ended March 31, 2014,
schedule XIV to the Companies Act 1956, prescribed requirements
concerning depreciation of fixed assets. From the current year.
Schedule XIV has been replaced by Schedule II to the Companies Act,
2013. The applicability of Schedule II has resulted in the following
changes related to depreciation of fixed assets. Unless stated
otherwise, the impact mentioned for the current year is likely to hold
good for future years also.
(iii) Accounting for Additional Depreciation on Account of Revaluation
of Assets:- Till year ended March 31, 2014, the Guidance Note on
Treatment of Reserve Created on Revaluation of Fixed Assets issued by
the ICAI allowed companies to transfer an amount equivalent to the
additional depreciation arising due to upward revaluation of fixed
assets from revaluation reserve to the statement of profit and loss.
Accordingly, the company was transferring an amount equivalent to
additional depreciation arising due to upward revaluation of building
from revaluation reserve to the statement of profit and loss. In
contrast. Schedule II to the Companies Act, 2013 applicable from the
current year, states that depreciable amount of an asset is the cost of
an asset or other amount substituted for cost. Hence, in case of
revalued assets, depreciation computed on the revalued amount needs to
be charged to the statement of profit and loss, without any recoupment
from revaluation reserve. Consequently, to comply with the Schedule II
requirement, the company has discontinued the practice of recouping the
impact of additional depreciation from revaluation reserve. The
management has decided to apply the revised accounting policy
prospectively from accounting periods commencing on or after April 1,
2014.
Had the company continued its earlier policy of recouping the
additional depreciation arising due to upward revaluation of fixed
assets from revaluation assets, profits for the current year would have
been higher by Rs.1.68 Lacs. However, the change in accounting policy did
not have any impact on reserves and surplus as at March 31, 2015.
(iv) The company generally follows Mercantile System of accounting and
recognizes items of Income and Expenditure on accrual basis except:-
Works contract tax deducted at source included in advances by clients
are charged to statement of profit and loss in the year of deduction
and the refunds, if any, are accounted for in the year of receipt.
(v) Expenditure incurred in respect of additional costs/ delays is
accounted in the year in which they are incurred. Claims made in
respect thereof are accounted as work receipts in the year of receipt
of arbitration award or acceptance by client or evidence of acceptance
received from the client.
(B) USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets and
liabilities in future periods.
(C) REVENUE RECOGNITION
(i) Revenue recognition and valuation of the contract Work In Progess
are as per Accounting Standard - 7. Work receipts are taken on
percentage completion method, stated on the basis of physical
measurement of work actually completed at the balance sheet date,
taking into account the contractual price and revision thereto. The
site mobilisation expenditure is apportioned over the period of
contract in proportion to value of work done. Foreseeable losses are
accounted for when they are determined except to the extent they are
expected to be recovered through claims presented or to be presented to
the customers or in arbitration.
(ii) In respect of Real Estate projects the sales are accounted for at
the time of handing over the possession of the flat / space to the
buyers.
(iii) Stage / percentage of completion is determined with reference to
the certificates given by the Clients / Consultants appointed by
Clients as well as on the billing schedule agreed with them for the
value of work done during the year.
(iv) Dividend is recognized when the shareholders' right to receive
payment is established by the balance sheet date.
(v) Interest income is recognized on a time proportion basis taking
into account the amount outstanding and the applicable interest rate.
(vi) Rent and other related services are accounted for accrual basis.
(D) FIXED ASSETS
(i) Fixed Assets are stated at Cost of acquisition. Fixed Assets
acquired under Hire Purchase Schemes are capitalised at their principal
value and hire (finance) charges are charged off as revenue
expenditure.
Borrowing cost relating to acquisition of fixed assets which take
substantial period of time to get ready for its intended use are also
included to the extent they relate to the period till such assets are
ready to be put to use.
(ii) Company's Land &Buildings have been revalued as on 31 -03-1992 by
Government approved registered valuer on the basis of their prevailing
day value. Difference between the total value of these assets on
revaluation and written down value as on 31.03.1992 of Rs. 10,691,246/-
had been credited to revaluation reserve account.
(E) DEPRECIATION / AMORTISATION
(i) Depreciation has been provided on straight line method on pro-rata
basis in accordance with Schedule II of the Companies Act, 2013.
(ii) The depreciation on Plant & Machinery (shuttering material) has
been provided @ 25% on pro-rata basis based on technical estimates made
by the management
(iii) Lease hold land is amortised over the period of lease.
(iv) Effective from April 01, 2014, the company has charged
depreciation based on the revised remaining useful life of the assets
as per the requirement of schedule II of the Companies Act, 2013. Due
to above, depreciation charged for the year ended March 31,2015 is
higher by Rs. 885.36 lacs. Further based on transitional provision
provided in note 7(b) of schedule II of the Companies Act, 2013, an
amount of Rs. 244.97 lacs (net of deferred tax) has been adjusted with
retained earnings.
(F) INTANGIBLES
Software costs relating to acquisition of initial software licence fee
and installation cost are capitalized in the year of purchase and
amortized on straight line basis over its useful life, which is
considered to be of a period of five years.
(G) IMPAIRMENT OF ASSETS
The company makes an assessment of any indicator that may lead to
impairment of assets on an annual basis. An impairment loss is
recognised wherever the carrying amount of the assets exceeds its
recoverable amount. The recoverable amount is greater of the net
selling price and value in use. In assessing value in use, valuation is
done by the estimated future cash flows (discounted to their present
value, based on an appropriate discounting factor) are used. Impairment
losses are recognised in the statement of Profit and Loss.
(H) BORROWING COST
Borrowing cost includes interest and amortization of ancillary costs
incurred in connection with the arrangement of borrowings. Borrowing
costs directly attributable to the acquisition, construction or
production of an asset that necessarily takes a substantial period of
time to get ready for its intended use or sale are capitalized as part
of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(I) INVESTMENTS
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline, other than temporary, in the value of such investments.
(J) INVENTORIES
(i) Inventories are valued at cost or net realisable value whichever is
lower.
(ii) Unbilled revenue and uncertified bills are considered as
Work-in-progress which is valued on the basis of expenditure directly
related to project.
(K) EMPLOYEE BENEFITS
(a) Short-term employee benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. These
benefits include compensated absences such as paid annual leave.The
undiscounted amount of short- term employee benefits expected to be
paid in exchange for the services rendered by employees is recognized
during the period.
(b) Post-employment benefits:
(i) Retirement benefits in the form of the Company's contribution to
Provident Fund etc. are charged to the statement of Profit & Loss of
the year when the contributions to the respective funds are due.
(ii) The Company's gratuity benefit scheme is a defined benefit plan.
The Company's net obligation in respect of the gratuity benefit scheme
is calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted. The present value of the
obligation under such defined benefit plan is determined based on
actuarial valuation using the projected unit credit method, which
recognizes each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation.
The obligation is measured at the present value the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plans, are based on the market
yields on government securities as at the balance sheet date.
When the calculation results in a benefit to the company, the
recognized asset is limited to the net total of any unrecognized
actuarial losses and past service costs and the present value of any
future refunds from the plan or reductions in future contributions to
the plan.
Actuarial gains and losses are recognized immediately in the statement
of profit & loss.
(L) FOREIGN EXCHANGE TRANSACTIONS
(i) Transactions arising in Foreign Currency are converted at the
exchange rates prevailing as on date of transactions. Monetary Assets &
Liabilities denominated in Foreign Currencies are restated at year end
exchange rates. All exchange difference arising on conversion are
charged to statement of Profit & Loss.
(ii) Forward Exchange Contracts (Derivative Instruments) not intended
for trading or speculation purposes
The Company uses derivative financial instruments including forward
exchange contracts to hedge its risk associated with foreign currency
fluctuations. The premium or discount arising at the inception of
forward exchange contracts is amortized as expense or income over the
life of the contract. Exchange differences on such contracts are
recognized in the statement of profit and loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of forward exchange contract is recognized as income or as
expense for the year.
(M) CONCESSION ARRANGEMENT
Judgments and estimates are continually evaluated and are based on
historical experience and other factors, including expectations of
future events that are reasonable under the circumstances.
The company makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal to the
related actual results. Significant assumptions used in accounting for
the intangible asset are given below:
The intangible assets are measured at cost, i.e. fair value of the
construction service. The exchange of construction services for an
intangible asset is regarded as a transaction that generates revenue
and costs, which will be recognized by reference to the stage of
completion of the Construction. The intangible asset is assumed to be
received only upon completion of construction and recognized on such
completion. Until then, the expenditure incurred on this project will
be debited as "Intangible Assets under development" under the main head
of "Fixed Assets". The value of the intangible asset shall be amortized
over the estimated useful life.
The carrying value of intangible asset is reviewed for impairment when
events or changes in circumstances indicate that the carrying value may
not be recoverable.
(N) INCOME TAXES
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act 1961 enacted in India. The tax rates
and tax laws used to compute the amount are those that are enacted or
substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing difference for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences 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 realized. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
(O) PROVISIONS
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best management estimate
required to settle the obligation at the Balance Sheet date. These are
reviewed at each Balance Sheet date and adjusted to reflect the current
management estimates.
(P) LEASES
(i) Where the Company is lessee, Finance leases, which effectively
transfer to the Company substantially all the risks and benefits
incidental to ownership of the leased items, are capitalized at the
lower of the fair value and present value of the minimum lease payments
at the inception of the lease term and disclosed as leased assets.
Lease payments are apportioned between the finance charges and
reduction of the lease liability based on the implicit rate of return.
Finance charges are charged directly against income. Lease management
fees.
legal charges and other initial direct costs are capitalized.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an
expense in the statement of Profit & Loss on a straight-line basis over
the lease term.
(ii) Where the company is lessor, assets subject to operating leases
are included under fixed assets or current assets as appropriate. Rent
(lease) income is recognized in the statement of Profit and Loss on a
straight-line basis over the lease term. Direct costs, including
depreciation are recognized as an expense in the statement of profit
and loss.
(Q) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. For the purpose of
calculating Diluted Earnings per Share, the net profit or loss for the
year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential Equity shares.
(R) CASH AND CASH EQUIVALENTS
Cash and cash equivalents for the purpose of cash flow statement
comprise cash at bank, cash in hand and short term investments with an
original maturity of three months or less.
(S) CONTINGENT LIABILITY
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
Mar 31, 2014
(a) Basis of Preparation of financial Statements
(i) The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notifed
under the Companies (Accounting Standards) Rules, 2006 (as amended) and
the relevant provisions of the Companies Act, 1956 read with General
Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate
Affairs. The financial statements have been prepared under the
historical cost convention on an accrual basis except in case of assets
for which revaluation is carried out. The accounting policies adopted
in the preparation of financial statements are consistent with those of
previous year.
(ii) The company generally follows Mercantile System of accounting and
recognizes items of Income and Expenditure on accrual basis except:-
Works contract tax deducted at source included in advances by clients
are charged to statement of Profit and loss in the year of deduction and
the refunds, if any, are accounted for in the year of receipt.
(iii) Expenditure incurred in respect of additional costs/ delays is
accounted in the year in which they are incurred. Claims made in
respect thereof are accounted as work receipts in the year of receipt
of arbitration award or acceptance by client or evidence of acceptance
received from the client.
(b) Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets and
liabilities in future periods.
(c) Revenue Recognition
(i) Revenue recognition and valuation of the contract Work In Progess
are as per Accounting Standard AS-7. Work receipts are taken on
percentage completion method, stated on the basis of physical
measurement of work actually completed at the balance sheet date,
taking into account the contractual price and revision thereto. The
site mobilisation expenditure is apportioned over the period of
contract in proportion to value of work done. Foreseeable losses are
accounted for when they are determined except to the extent they are
expected to be recovered through claims presented or to be presented to
the custome or in arbitration. Work receipts are shown net off Service
Tax and Value added taxes.
(ii) In respect of Real Estate projects the sales are accounted for at
the time of handing over the possession of the fat / space to the
buyers.
(iii) Stage / percentage of completion is determined with reference to
the certifcates given by the Clients / Consultants appointed by Clients
as well as on the billing schedule agreed with them for the value of
work done during the year.
(iv) Dividend is recognized when the shareholders'' right to receive
payment is established by the balance sheet date.
(v) Interest income is recognized on a time proportion basis taking
into account the amount outstanding and the applicable interest rate.
(vi) Rent and other related services are accounted for accrual basis.
(d) Fixed Assets
(i) Fixed Assets are stated at Cost of acquisition. Fixed Assets
acquired under Hire Purchase Schemes are capitalised at their principal
value and hire (finance) charges are charged off as revenue expenditure.
(ii) Company''s Land & Buildings have been revalued as on 31-03-1992 by
Government approved registered valuer on the basis of their prevailing
day value. Difference between the total value of these assets on
revaluation and written down value as on 31.03.1992 of Rs. 10,691,246/-
had been credited to revaluation reserve account.
(e) Depreciation / Amortisation
(i) Depreciation is provided on straight line method in accordance with
Schedule XIV of the Companies Act, 1956.
(ii) Depreciation on Addition/Deletion from the assets during the year
is provided on pro-rata basis.
(iii) Fixed assets costing below Rs. 5000/- are provided @ 100% on
prorata basis.
(iv) Depreciation is charged on the historical cost of Fixed Assets
(Except for Revalued Assets) including taxes, duties and installation
costs.
(v) The company has revised the estimated useful life of the Plant &
Machinery (shuttering material) during the year from one year to four
year based on technical estimates made by the management and
accordingly depreciation has been provided @ 25% on prorata basis.
(vi) Lease hold land is amortised over the period of lease.
(F) Intangibles
Software costs relating to acquisition of initial software licence fee
and installation cost are capitalized in the year of purchase and
amortized on straight line basis over its useful life, which is
considered to be of a period of five years.
(g) Impairment of Assets
The company makes an assessment of any indicator that may lead to
impairment of assets on an annual basis. An impairment loss is
recognised wherever the carrying amount of the assets exceeds its
recoverable amount. The recoverable amount is greater of the net
selling price and value in use. In assessing value in use valuation is
done by the estimated future cash flows (discounted to their present
value, based on an appropriate discounting factor) are used. Impairment
losses are recognised in the statement of Profit and Loss.
(h) Borrowing Cost
Borrowing cost includes interest and amortization of ancillary costs
incurred in connection with the arrangement of borrowings. Borrowing
costs directly attributable to the acquisition, construction or
production of an asset that necessarily takes a substantial period of
time to get ready for its intended use or sale are capitalized as part
of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(i) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classifed as current investments. All other
investments are classifed as long term investments. Current investments
are carried at lower of cost and fair value determined on an individual
investment basis. Long term investments are carried at cost. However,
provision for diminution in value is made to recognize a decline, other
than temporary, in the value of such investments.
(J) Inventories
(i) Inventories are valued at cost or net realisable value whichever is
lower.
(ii) Unbilled revenue and uncertified bills are considered as
Work-in-progress which is valued on the basis of expenditure directly
related to project.
(K) Employee Benefits
(a) Short-term employee benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classifed as short-term employee benefits. These benefits
include compensated absences such as paid annual leave. The
undiscounted amount of short- term employee benefits expected to be paid
in exchange for the services rendered by employees is recognized during
the period.
(b) Post-employment benefits:
(i) Retirement benefits in the form of the Company''s contribution to
Provident Fund etc. are charged to the statement of Profit & Loss of the
year when the contributions to the respective funds are due.
(ii) The Company''s gratuity benefit scheme is a defined benefit plan. The
Company''s net obligation in respect of the gratuity benefit scheme is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted. The present value of the
obligation under such defined benefit plan is determined based on
actuarial valuation using the projected unit credit method, which
recognizes each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation.
The obligation is measured at the present value the estimated future
cash flows. The discount rates used for determining the present value of
the obligation under defined benefit plans, are based on the market
yields on government securities as at the balance sheet date.
When the calculation results in a benefit to the company, the recognized
asset is limited to the net total of any unrecognized actuarial losses
and past service costs and the present value of any future refunds from
the plan or reductions in future contributions to the plan.
Actuarial gains and losses are recognized immediately in the statement
of Profit & loss.
(l) Foreign Exchange Transactions
(i) Transactions arising in Foreign Currency are converted at the
exchange rates prevailing as on date of transactions. Monetary Assets &
Liabilities denominated in Foreign Currencies are restated at year end
exchange rates. All exchange difference arising on conversion are
charged to statement of Profit & Loss.
(ii) Forward Exchange Contracts (Derivative Instruments) not intended
for trading or speculation purposes
The Company uses derivative financial instruments including forward
exchange contracts to hedge its risk associated with foreign currency
fuctuations. The premium or discount arising at the inception of
forward exchange contracts is amortized as expense or income over the
life of the contract. Exchange differences on such contracts are
recognized in the statement of Profit and loss in the year in which the
exchange rates change. Any Profit or loss arising on cancellation or
renewal of forward exchange contract is recognized as income or as
expense for the year.
(m) Concession Arrangement
Judgments and estimates are continually evaluated and are based on
historical experience and other factors, including expectations of
future events that are reasonable under the circumstances.
The company makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by defnition, seldom equal to the
related actual results. significant assumptions used in accounting for
the intangible asset are given below:
The intangible assets are measured at cost, i.e. fair value of the
construction service. The exchange of construction services for an
intangible asset is regarded as a transaction that generates revenue
and costs, which will be recognized by reference to the stage of
completion of the Construction. The intangible asset is assumed to be
received only upon completion of construction and recognized on such
completion. Until then, the expenditure incurred on this project will
be debited as "Intangible Assets under development" under the main head
of "Fixed Assets". The value of the intangible asset shall be amortized
over the estimated useful life. The carrying value of intangible asset
is reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable.
(n) income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act 1961 enacted in India. The tax rates
and tax laws used to compute the amount are those that are enacted or
substantively enacted, at the reporting date.
Deferred income taxes refect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing difference for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufcient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
(o) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best management estimate
required to settle the obligation at the Balance Sheet date. These are
reviewed at each Balance Sheet date and adjusted to refect the current
management estimates.
(p) Leases
(i) Where the Company is lessee, Finance leases, which effectively
transfer to the Company substantially all the risks and benefits
incidental to ownership of the leased items, are capitalized at the
lower of the fair value and present value of the minimum lease payments
at the inception of the lease term and disclosed as leased assets.
Lease payments are apportioned between the finance charges and reduction
of the lease liability based on the implicit rate of return. Finance
charges are charged directly against income. Lease management fees,
legal charges and other initial direct costs are capitalized.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classifed as operating
leases. Operating lease payments are recognized as an expense in the
statement of Profit & Loss on a straight-line basis over the lease term.
(ii) Where the company is lessor, assets subject to operating leases
are included under fixed assets or current assets as appropriate. Rent
(lease) income is recognized in the statement of Profit and Loss on a
straight-line basis over the lease term. Direct costs, including
depreciation are recognized as an expense in the statement of Profit and
loss.
(q) Earnings per Share
Basic earnings per share is calculated by dividing the net Profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. For the purpose of
calculating Diluted Earnings per Share, the net Profit or loss for the
year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential Equity shares.
(R) Cash and Cash Equivalents
Cash and cash equivalents for the purpose of cash fow statement
comprise cash at bank and in hand and short term investments with an
original maturity of three months or less.
(S) Contingent Liability
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be required
to settle the obligation. A contingent liability also arises in
extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
Terms / Rights attached to equity shares
The company has only one class of equity share having a par value of Rs.
2/- per share. Each equity shareholder is entitled for one vote per
share.
The Company declares and pays dividend in Indian Rupees. The dividend
proposed by the Board of Directors of the company, subject to the
approval of the Members/Shareholders of the Company in the ensuing
Annual General Meeting.
As per records of the company, including its register of
Shareholders/Members and other declarations received from shareholders
regarding beneficial interest, the above shareholding represents both
legal and beneficial ownerships of shares.
Term Loans
From Punjab & Sind Bank of Rs. 33,81,51,308/- (Previous year Rs.
39,10,39,792/-) is secured by way of
a) Negative lien on licensing rights and future lease rentals
receivable, through ESCROW mechanism of commercial complex with bus
depot and workshop at Kota under Service Concession Arrangement.
b) All future lease rentals to be received on account of commercial
complex at Kota will be charged to bank and company not to raise any
loan against such rent/lease receivables
c) Charge on Escrow accounts: The parking/advertising revenue and lease
rentals to be routed through the Escrow account and bank will have
right to frst appropriate the said cash flows towards recovery of
interest / principal installments of term loan, installment of any
other charges etc.
d) Personal Guarantees of a Director, Mr.Bikramjit Ahluwalia and from
relatives of the directors (i) Mrs. Sudershan Walia (ii) Mr.Vikaas
Ahluwalia
e) The term loan bear foating interest at the rate base rate plus 2.75%
p.a. The term loan repayable in 32 quarterly installments of Rs.
1,31,25,000/-each starting after September 2012
- Term Loan facilities from HDFC Bank of Rs. 2,58,070/- (Rs. 11,05,688/-)
against vehicles are secured by way of hypothecation of specified
vehicles. The term loan bear interest rate 11.50%. The term loans are
repayable in 36 monthly installments till 05.05.2015.
- Other Term Loans from Siemens Financial services Ltd., Magma Fincorp
Ltd., SREI Equipments Finance Pvt. Ltd. & L&T Finance Ltd. are secured
by way of hypothecation of specified machineries / vehicles. The term
loans bear interest rate 10.64% to 16.00%. The terms loans are
repayable in 23, 35, 23 & 36 monthly installments till 01.08.2014,
01.07.2014, 03.10.2015 & 15.12.2016 respectively.
Working Capital loans From various banks are secured by way of
- First pari pasu charges on all existing and future current assets of
the company.
- Equitable mortgage of property situated at A-177, Okhla Industrial
Area, New Delhi
- Equitable mortgage of property situated at C-5/34, S.D. Area, New
Delhi belonging to the promoter director.
- Pledge of 1,02,00,000 No. of equity shares to Punjab & Sind Bank and
pledge of 15,00,000 No. of equity shares to Bank of Maharashtra of the
company by the promoter director.
- Pledge of fixed deposit receipt for Rs. 1,52,00,000/- by a promoter
director.
- Personal guarantees of directors (i) Mr. Bikramjit Ahluwalia (ii) Mr.
Shobhit Uppal and relative(s) of the directors (i) Mrs. Sudershan Walia
& (ii) Mr. Vikaas Ahluwalia.
- The working capital loans from Banks bear foating interest rate
ranging from base rate plus 2% to 5%.
- Unsecured loan from related party is interest free and payable on
demand.
Mar 31, 2012
(A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
(i) The Financial statements are prepared under the historical cost
convention, in accordance with the generally accepted accounting
principles, in compliance with the Accounting Standards issued by the
Institute of Chartered Accountants of India from time to time and
provisions of the Companies Act, 1956 as adopted consistently by the
company, unless otherwise stated.
(ii) The company generally follows Mercantile System of accounting and
recognises items of Income and Expenditure on accrual basis except:-
Works contract tax deducted at source including on advances by clients
are charged to statement of profit and loss in the year of deduction and
the refunds, if any, are accounted for in the year of receipt.
(iii) Expenditure incurred in respect of additional costs/delays is
accounted in the year in which they are incurred. Claims made in
respect thereof are accounted as work receipts in the year of receipt
of arbitration award or acceptance by client or evidence of acceptance
received from the client.
(B) REVENUE RECOGNITION
(i) Revenue recognition and valuation of the contract WIP are as per
Accounting Standard
AS-7. Work receipts are taken on percentage completion method, stated
on the basis of physical measurement of work actually completed at the
balance sheet date, taking into account the contractual price and
revision thereto. The site mobilisation expenditure for site
installation is apportioned over the period of contract in proportion
to value of work done. Foreseeable losses are accounted for 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.
(ii) Sub contracts expenses are accounted on the basis of bills
certified by principal. Cost of sub contract includes the cost of
material wherever applicable.
(iii) In respect of Real Estate projects the sales are accounted for at
the time of handing over the possession of the fat / space to the
buyers.
(iv) Stage / percentage of completion is determined with reference to
the certificates given by the Clients / Consultants appointed by Clients
as well as on the billing schedule agreed with them for the value of
work done during the year.
(v) Dividend is recognized when the shareholders' right to receive
payment is established by the balance sheet date.
(C) FIXED ASSETS
(i) Fixed Assets are stated at Cost of acquisition. Fixed Assets
acquired under Hire Purchase Schemes are capitalised at their principal
value and hire (finance) charges are charged off as revenue expenditure.
(ii) Company's Land & Buildings have been revalued as on 31-03-1992 by
Government approved registered valuer on the basis of their prevailing
day value. Difference between the total value of these assets on
revaluation and written down value as on 31.03.1992 of Rs. 10,691,246/-
had been credited to revaluation reserve account.
(D) DEPRECIATION / AMORTISATION
(i) Depreciation is provided on straight line method in accordance with
Schedule XIV of the Companies Act, 1956.
(ii) Depreciation on Addition/Deletion from the assets during the year
is provided on pro-rata basis.
(iii) Depreciation on shuttering material is provided @ 100% on prorata
basis. Items costing below Rs. 5000/- are provided @ 100% on prorata
basis / charged to the statement of Profit & Loss.
(iv) Depreciation is charged on the historical cost of Fixed Assets
(Except for Revalued Assets) including taxes, duties and installation
costs.
(v) Depreciation on revalued amount of Fixed Assets is being charged to
Revaluation Reserve Account.
(vi) Lease hold land is amortised over the period of lease.
(E) INTANGIBLES
Software costs relating to acquisition of initial software licence fee
and installation cost are capitalized in the year of purchase and
amortized on straight line basis over its useful life, which is
considered to be of a period of five years.
(F) IMPAIRMENT OF ASSETS
The company makes an assessment of any indicator that may lead to
impairment of assets on an annual basis. An impairment loss is
recognised wherever the carrying amount of the assets exceeds its
recoverable amount. The re- coverable amount is greater of the net
selling price and value in use. In assessing value in use valuation is
done by the estimated future cash flows (discounted to their present
value, based on an appropriate discounting factor) are used.
Impairment losses are recognised in the statement of Profit and Loss.
(G) BORROWING COST
Borrowing Costs specifcally related to acquisition of fixed assets are
capitalized as part of the cost of fixed assets till the date ready to
put to use. Other borrowing costs are charged to statement of Profit &
Loss.
(H) INVESTMENTS
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Current investments
are carried at lower of cost and fair value determined on an individual
investment basis. Long term investments are carried at cost. However,
pro- vision for diminution in value is made to recognize a decline,
other than temporary, in the value of such investments.
(I) INVENTORIES
(i) Stocks are valued at cost or net realisable value whichever is
lower.
(ii) Work-in-progress is valued on the basis of expenditure attributed
to project up to the date of Balance sheet.
(J) EMPLOYEE BENEFITS
(a) Short-term employee benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. These
benefits include compensated absences such as paid annual leave. The
undiscounted amount of short-term employee benefits expected to be paid
in exchange for the services rendered by employees is recognized during
the period.
(b) Post-employment benefits:
(i) Retirement benefits in the form of the Company's contribution to
Provident Fund etc. are charged to the statement of Profit & Loss of
the year when the contributions to the respective funds are due.
(ii) The Company's gratuity benefit scheme is a defined benefit plan. The
Company's net obligation in respect of the gratuity benefit scheme is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted. The present value of the
obligation under such defined benefit plan is determined based on
actuarial valuation using the projected unit credit method, which
recognizes each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation is measured at the present value
the estimated future cash flows. The discount rates used for determining
the present value of the obligation under defined benefit plans, are
based on the market yields on government securities as at the balance
sheet date. When the calculation results in a benefit to the company, the
recognized asset is limited to the net total of any unrecognized
actuarial losses and past service costs and the present value of any
future refunds from the plan or reductions in future contributions to
the plan. Actuarial gains and losses are recognized immediately in the
statement of profit & loss.
(K) FOREIGN EXCHANGE TRANSACTIONS
(i) Transactions arising in Foreign Currency are converted at the
exchange rates prevailing as on date of transactions. Monetary Assets &
Liabilities denominated in Foreign Currencies are restated at year end
exchange rates. All exchange difference arising on conversion are
charged to statement of Profit & Loss.
(ii) Forward Exchange Contracts (Derivative Instruments) not intended
for trading or speculation purposes The Company uses derivative
financial instruments including forward exchange contracts to hedge its
risk associated with foreign currency fluctuations. The premium or
discount arising at the inception of forward exchange contracts is
amortized as expense or income over the life of the contract. Exchange
differences on such contracts are recognized in the statement of profit
and loss in the year in which the exchange rates change. Any profit or
loss arising on cancellation or renewal of forward exchange contract
is recognized as income or as expense for the year.
(L) CONCESSION ARRANGEMENT
Judgments and estimates are continually evaluated and are based on
historical experience and other factors, including expectations of
future events that are reasonable under the circumstances.
The company makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the
related actual results. Significant assumptions used in accounting
for the intangible asset are given below:
The intangible assets are measured at cost, i.e. fair value of the
construction service. The exchange of construction services for an
intangible asset is regarded as a transaction that generates revenue
and costs, which will be recognized by reference to the stage of
completion of the Construction. The intangible asset is assumed to be
received only upon completion of construction and recognized on such
completion. Until then, the expenditure incurred on this project will
be debited as "Capital Work in Progress" under the main head of "Fixed
Assets". The value of the intangible asset shall be amortized over the
estimated useful life. The carrying value of intangible asset is
reviewed for impairment when events or changes in circumstances
indicate that the carrying value may be recoverable.
(M) TAXATION
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. Deferred Tax result- ing from timing
differences between book & tax profits is accounted for under the
liability method, at the substantively enacted rate of tax on the
balance sheet date, to the extent that the timing differences are
expected to crystalise/ capable of reversal as deferred tax
charge/benefit in the statement of profit & loss and as deferred tax
liability/assets in the balance sheet.
(N) PROVISIONS
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted
to its present value and are determined based on best management
estimate required to settle the obligation at the Balance Sheet date.
These are reviewed at each Balance Sheet date and adjusted to reflect
the current management estimates.
(O) LEASES
Where the Company is the lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to owner- ship of the leased item,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the fnance
charges and reduction of the lease liability based on the implicit rate
of return. Finance charges are charged directly against income. Lease
management fees, legal charges and other initial direct costs are
capitalised.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as operating
leases. Operating lease payments are recognized as an expense in the
statement of Profit & Loss on a straight-line basis over the lease term.
(P) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the year. For the
purpose of calculating Diluted Earnings per Share, the net profit or
loss for the year attributable to equity shareholders and the weighted
average number of shares outstanding during the year are adjusted for
the effects of all dilutive potential Equity shares.
Mar 31, 2011
(A) BASIS OF PREPARATION OF FINANCIAL STATEMENT
(i) The Financial statements are prepared under the historical cost
convention, in accordance with the generally accepted accounting
principles, in compliance with the Accounting Standards issued by the
Institute of Chartered Accountants of India from time to time and
provisions of the Companies Act, 1956 as adopted consistently by the
company, unless otherwise stated.
(ii) The company generally follows Mercantile System of accounting and
recognises items of Income and Expenditure on accrual basis except:-
Works contract tax deducted at source including on advances by clients
are charged to profit and loss account in the year of deduction and the
refunds, if any, are accounted for in the year of receipt.
(iii) Expenditure incurred in respect of additional costs/delays is
accounted in the year in which they are incurred. Claims made in
respect thereof are accounted as work receipts in the year of receipt
of arbitration award or acceptance by client or evidence of acceptance
received from the client.
(B) REVENUE RECOGNITION
(i) Revenue recognition and valuation of the contract WIP are as per
Accounting Standard AS-7. Work receipts are taken on percentage
completion method, stated on the basis of physical measurement of work
actually completed at the balance sheet date, taking in to account the
contractual price and revision thereto. The site mobilisation
expenditure for site installation is apportioned over the period of
contract in proportion to value of work done. Foreseeable losses are
accounted for 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.
(ii) Sub contracts expenses are accounted on the basis of bills
certified by principal. Cost of sub contract includes the cost of
material wherever applicable.
(iii) In respect of Real Estate projects the sales are accounted for at
the time of handing over the possession of the flat / space to the
buyers.
(iv) Stage / percentage of completion is determined with reference to
the certificates given by the Clients / Consultants appointed by
Clients as well as on the billing schedule agreed with them for the
value of work done during the year.
(C) FIXED ASSETS
(i) Fixed Assets are stated at Cost of acquisition. Fixed Assets
acquired under Hire Purchase Schemes are capitalised at their principal
value and hire (finance) charges are charged off as revenue
expenditure.
(ii) Company's Land & Buildings have been revalued as on 31-03-1992 by
Government approved registered valuer on the basis of their prevailing
day value. Difference between the total value of these assets on
revaluation and written down value as on 31.03.1992 of Rs. 10,691,246/-
had been credited to revaluation reserve account.
(D) DEPRECIATION / AMORTISATION
(i) Depreciation is provided on straight line method in accordance with
Schedule XIV of the Companies Act, 1956.
(ii) Depreciation on Addition/Deletion from the assets during the year
is provided on pro-rata basis.
(iii) Depreciation on shuttering material issued @ 100% on prorata
basis. Items costing below Rs. 5000/- are provided @ 100% on prorata
basis / charged to the Profit & Loss Account.
(iv) Depreciation is charged on the historical cost of Fixed Assets
(Except for Revalued Assets) including taxes, duties and installation
costs.
(v) Depreciation on revalued amount of Fixed Assets is being charged to
Revaluation Reserve Account.
(vi) Lease hold land is amortised over the period of lease.
(E) INTANGIBLES
Software costs relating to acquisition of initial software licence fee
and installation cost are capitalized in the year of purchase and
amortized on straight line basis over its useful life, which is
considered to be of a period of five years.
(F) IMPAIRMENT OF ASSETS
The company makes an assessment of any indicator that may lead to
impairment of assets on an annual basis. An impairment loss is
recognised wherever the carrying amount of the assets exceeds its
recoverable amount. The recoverable amount is greater of the net
selling price and value in use. In assessing value in use valuation is
done by the estimated future cash flows (discounted to their present
value, based on an appropriate discounting factor) are used. Impairment
losses are recognised in the Profit and Loss Account.
(G) BORROWING COST
Borrowing Costs specifically related to acquisition of fixed assets are
capitalized as part of the cost of fixed assets till the date ready to
put to use. Other borrowing costs are charged to Profit & Loss Account
amount.
(H) INVESTMENTS
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline, other than temporary, in the value of such investments.
(I) INVENTORIES
(i) Stocks are valued at cost or net realisable value which ever is
lower.
(ii) Work-in-progress is valued on the basis of expenditure attributed
to project up to the date of Balance sheet.
(J) EMPLOYEE BENEFITS
(a) Short-term employee benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. These
benefits include compensated absences such as paid annual leave .The
undiscounted amount of short-term employee benefits expected to be paid
in exchange for the services rendered by employees is recognized during
the period.
(b) Post-employment benefits:
(i) Retirement benefits in the form of the Company's contribution to
Provident Fund charged to the Profit & Loss Account of the year when
the contributions to the respective funds are due.
(ii) The Company's gratuity benefit scheme is a defined benefit plan.
The Company's net obligation in respect of the gratuity benefit scheme
is calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation using the projected unit credit
method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plan, are based on the market
yields on government securities as at the balance sheet date.
When the calculation results in a benefit to the company, the
recognized asset is limited to the net total of any unrecognized
actuarial losses and past service costs and the present value of any
future refunds from the plan or reductions in future contributions to
the plan.
Actuarial gains and losses are recognized immediately in the profit &
loss account.
(K) FOREIGN EXCHANGE TRANSACTIONS
(i) Transactions arising in Foreign Currency are converted at the
exchange rates prevailing as on date of transactions. Monetary Assets &
Liabilities denominated in Foreign Currencies are restated at year end
exchange rates. All exchange difference arising on conversion are
charged to Profit & Loss Account.
(ii) Forward Exchange Contracts (Derivative Instruments) not intended
for trading or speculation purposes
The Company uses derivative financial instruments including forward
exchange contracts to hedge its risk associated with foreign currency
fluctuations. The premium or discount arising at the inception of
forward exchange contracts is amortized as expense or income over the
life of the contract. Exchange differences on such contracts are
recognized in the statement of profit and loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of forward exchange contract is recognized as income or as
expense for the year.
(L) CONCESSION ARRANGEMENT
Judgments and estimates are continually evaluated and are based on
historical experience and other factors, including expectations of
future events that are reasonable under the circumstances.
The company makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the
related actual results. Significant assumptions used in accounting for
the intangible asset are given below:
The intangible assets are measured at cost, i.e. fair value of the
construction service. The exchange of construction services for an
intangible asset is regarded as a transaction that generates revenue
and costs, which will be recognized by reference to the stage of
completion of the Construction. The intangible asset is assumed to be
received only upon completion of construction and recognized on such
completion. Until then, the expenditure incurred on this project will
be debited as "Capital Work in Progress" under the main head of "Fixed
Assets". The value of the intangible asset shall be amortized over the
estimated useful life. The carrying value of intangible asset is
reviewed for impairment when events or changes in circumstances
indicate that the carrying value may be recoverable.
(M) TAXATION
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. Deferred Tax resulting from timing
differences between book & tax profits is accounted for under the
liability method, at the substantively enacted rate of tax on the
balance sheet date, to the extent that the timing differences are
expected to crystalise/capable of reversal as deferred tax charge/
benefit in the profit & loss account and as deferred tax
liability/assets in the balance sheet.
(N) PROVISIONS
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best management estimate
required to settle the obligation at the Balance Sheet date. These are
reviewed at each Balance Sheet date and adjusted to reflect the current
management estimates.
(O) LEASES
Where the Company is the lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the finance
charges and reduction of the lease liability based on the implicit rate
of return. Finance charges are charged directly against income. Lease
management fees, legal charges and other initial direct costs are
capitalised.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit & Loss Account on a straight-line basis over the lease
term.
(P) SEGMENT REPORTING POLICIES
(i) Identification of segments:
The Company's operating businesses are organized and managed separately
according to the nature of products, with each segment representing a
strategic business unit that offers different products and serves
different markets.
(ii) Inter Segment Transfers:
Inter segment transfers have been priced based on market prices charged
to external customers for similar goods. These are then eliminated.
(iii) Unallocated items:
Common unallocable costs and corporate income and expenses are
considered as a part of un-allocable income and expense, which are not
identifiable to any business segment.
(Q) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. For the purpose of
calculating Diluted Earnings per Share, the net profit or loss for the
year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential Equity shares.
Mar 31, 2010
(A) BASISOF PREPARATION OF FINANCIAL STATEMENT
(i) The Financial statements are prepared under the historical cost
convention, in accordance with the generally accepted accounting
principles, in compliance with the Accounting Standards issued by the
Institute of Chartered Accountants of India from time to time and
provisions of the Companies Act, 1956 as adopted consistently by the
company, unless otherwise stated.
(ii) The company generally follows Mercantile System of accounting and
recognises items of Income and Expenditure on accrual basis except:-
Works contract tax deducted at source including on advances by clients
are charged to proft and loss account in the year of deduction and the
refunds, if any, are accounted for in the year of receipt.
(iii) Expenditure incurred in respect of additional costs/delays is
accounted in the year in which they are incurred. Claims made in
respect thereof are accounted as work receipts in the year of receipt
of arbitration award or acceptance by client or evidence of acceptance
received from the client.
(B) REVENUE RECOGNITION
(i) Work Receipts are taken on percentage completion method, stated on
the basis of physical measurement of work actually completed at the
balance sheet date, taking in to account the contractual price and
revision thereto. The site mobilisation expenditure for site
installation is apportioned over the period of contract in proportion
to value of work done. Foreseeable losses are accounted for 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.
(ii) Sub contracts expenses are accounted on the basis of bills
certifed by principal. Cost of sub contract includes the cost of
material wherever applicable.
(iii) In respect of Real Estate projects the sales are accounted for at
the time of handing over the possession of the fat / space to the
buyers.
(C) FIXED ASSETS
(i) Fixed Assets are stated at Cost of Acquisition. Fixed Assets
acquired under Hire Purchase Schemes are capitalised at their principal
value and hire (fnance) charges are charged of as revenue expenditure.
Fixed Assets taken on lease are not treated as assets of the company
and lease rentals are charged of as revenue expenditure.
(ii) CompanyÃs Land & Buildings have been revalued as on 31-03-1992 by
Government approved registered valuer on the basis of their prevailing
day value. Diference between the total value of these assets on
revaluation and written down value as on 31.03.1992 of Rs. 10,691,246/-
had been credited to revaluation reserve account.
(D) DEPRECIATION / AMORTISATION
(i) Depreciation is provided on straight line method in accordance with
Schedule XIV of the Companies Act, 1956.
(ii) Depreciation on Addition/Deletion from the assets during the year
is provided on pro-rata basis.
(iii) Depreciation on shuttering material and on items costing below
Rs. 5000/- have been provided @ 100% on prorata basis.
(iv) Depreciation is charged on the historical cost of Fixed Assets
(Except for Revalued Assets) including taxes, duties and installation
costs.
(v) Depreciation on revalued amount of Fixed Assets is being charged to
Revaluation Reserve Account.
(vi) Lease hold land is amortised over the period of lease.
(E) INTANGIBLES
Software costs relating to acquisition of initial software licence fee
and installation cost are capitalized in the year of purchase and
amortized on straight line basis over its useful life, which is
considered to be of a period of fve years.
(F) IMPAIRMENT OF ASSETS
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
companyÃs assets. If any indication exists, the recoverable amount of
such assets is estimated. An impairment loss
is recognised wherever the carrying amount of the assets exceeds its
recoverable amount. The recoverable amount is greater of the net
selling price and value in use. In assessing value in use valuation is
done by the estimated future cash fows (discounted to their present
value, based on an appropriate discounting factor) are used. Impairment
losses are recognised in the Proft and Loss Account.
(G) BORROWING COST
Borrowing Costs specifcally related to acquisition of fxed assets are
capitalized as part of the cost of fxed assets till the date ready to
put to use. Other borrowing costs are charged to Proft & Loss Account
amount.
(H) INVESTMENTS
Investments are stated at cost and provision is made for diminution in
value of investments at each balance sheet date.
(I) INVENTORIES
(i) Stocks are valued at cost or net realisable value which ever is
lower.
(ii) Real Estate Projects are determined on the basis of expenses
incurred on the project. All Financial, Administrative, and other
expenses directly incurred on various Real Estate Projects are debited
to the cost of the Projects.
(iii) Work-in-progress is valued on the basis of expenditure attributed
to project up to the date of Balance sheet.
(J) EMPLOYEE BENEFITS
a) Short-term employee benefts:
All employee benefts payable wholly within twelve months of rendering
the service are classifed as short-term employee benefts. These benefts
include compensated absences such as paid annual leave .The
undiscounted amount of short-term employee benefts expected to be paid
in exchange for the services rendered by employees is recognized during
the period.
b) Post-employment benefts:
(i) Retirement benefts in the form of the CompanyÃs makes contribution
to Provident Fund charged to the Proft & Loss Account of the year when
the contributions to the respective funds are due.
(ii) The CompanyÃs gratuity beneft scheme is a defned beneft plan. The
CompanyÃs net obligation in respect of the gratuity beneft scheme is
calculated by estimating the amount of future beneft that employees
have earned in return for their service in the current and prior
periods; that beneft is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defned beneft plan is
determined based on actuarial valuation using the projected unit credit
method, which recognizes each period of service as giving rise to
additional unit of employee beneft entitlement and measures each unit
separately to build up the fnal obligation.
The obligation is measured at the present value the estimated future
cash fows. The discount rates used for determining the present value of
the obligation under defned beneft plan, are based on the market yields
on government securities as at the balance sheet date.
When the calculation results in a beneft to the company, the recognized
asset is limited to the net total of any unrecognized actuarial losses
and past service costs and the present value of any future refunds from
the plan or reductions in future contributions to the plan.
Actuarial gains and losses are recognized immediately in the proft &
loss account.
(K) FOREIGN EXCHANGETRANSACTIONS
(i) Transactions arising in Foreign Currency are converted at the
exchange rates prevailing as on date of transactions. Monetary Assets &
Liabilities denominated in Foreign Currencies are restated at year end
exchange rates. All exchange diference arising on conversion are
charged to Proft & Loss Account.
(ii) Forward Exchange Contracts (Derivative Instruments) not intended
for trading or speculation purposes
The Company uses derivative fnancial instruments including forward
exchange contracts to hedge its risk associated with foreign currency
fuctuations. The premium or discount arising at the inception of
forward exchange contracts is amortized as expense or income over the
life of the contract. Exchange diferences on such contracts are
recognized in the statement of proft and loss in the year in which the
exchange rates change. Any proft or loss arising on cancellation or
renewal of forward exchange contract is recognized as income or as
expense for the year.
(L) ACCOUNTING FOR INTERESTSINJOINTVENTURES
(i) CompanyÃs share in profts or losses of Integrated Joint Ventures is
accounted on determination of the profts or losses by the Joint
Ventures.
(ii) Investments in Integrated Joint Ventures are carried at cost net
of CompanyÃs share in recognized profts or losses.
(M) TAXATION
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. Deferred Tax resulting from timing
diferences between book & tax profts is accounted for under the
liability method, at the substantively enacted rate of tax on the
balance sheet date, to the extent that the timing diferences are
expected to crystalise/capable of reversal as deferred tax
charge/beneft in the proft & loss account and as deferred tax
liability/assets in the balance sheet.
(N) PROVISIONS
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outfow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best management estimate
required to settle the obligation at the Balance Sheet date. These are
reviewed at each Balance Sheet date and adjusted to refect the current
management estimates
(O) SEGMENT REPORTING POLICIES
(i) Identifcation of segments:
The CompanyÃs operating businesses are organized and managed separately
according to the nature of products, with each segment representing a
strategic business unit that ofers diferent products and serves
diferent markets.
(ii) Inter Segment Transfers:
Inter segment transfers have been priced based on market prices charged
to external customers for similar goods. These are then eliminated.
(iii) Unallocated items:
Common unallocable costs and corporate income and expenses are
considered as a part of un-allocable income and expense, which are not
identifable to any business segment.
(P) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net proft or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during
the year. For the purpose of calculating Diluted Earnings per Share,
the net proft or loss for the year attributable to equity shareholders
and the weighted average number of shares outstanding during the year
are adjusted for the efects of all dilutive potential Equity shares.
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