Accounting Policies of Engineers India Ltd. Company
Mar 31, 2023
1. NATURE OF PRINCIPAL ACTIVITIES
Engineers India Limited and (referred to as "EIL" or "the Company") is a Government of India Enterprise under Ministry of Petroleum and Natural Gas. The Company operates into two major segments namely Consultancy & Engineering projects and Turnkey projects.
2. GENERAL INFORMATION AND STATEMENT OF COMPLIANCE
The Company has its registered office situated at 1 Bhikaji Cama Place, New Delhi 110066, India. The shares of the Company are listed on the National Stock Exchange and the Bombay Stock Exchange.
The financial statements of the Company have been prepared in accordance with the Companies (Indian Accounting Standards) Rules 2015 (''Ind AS'') and relevant amended rules issued thereafter. These are Company''s standalone financial statements. The Company also prepared consolidated financial statements separately.
The financial statements for the year ended 31 March 2023 were authorized and approved for issue by the Board of Directors on 26 May, 2023.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESA. ACCOUNTING CONCEPTS
The financial statements have been prepared using the significant accounting policies and measurement bases summarised below. These were used throughout all periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS. The accounts are prepared on historical cost concept based on accrual method of accounting as a going concern.
B. REVENUE RECOGNTION REVENUE RECOGNTION
Revenue is recognised upon transfer of control of promised services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those services. The services performed by the company fall into the criteria of the transfer of control over a period of time and as such company satisfy the performance obligation and revenue over a period of time.
Revenue is measured based on the transaction price, which is the consideration, adjusted for variable considerations, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
Arrangements with customers are either on a cost plus, rate plus jobs, lump sum services, turnkey contracts and Inspection contracts. Revenue from services is accounted as follows:
i) In the case of cost plus and rate plus jobs on the basis of services rendered and amount billable under the contract
ii) In the case of lump sum services and turnkey contracts as proportion of actual direct costs of the work performed to latest estimated total direct cost of the work performed i.e. percentage completion method.
iii) In the case of inspection contracts providing for a percentage fee on project cost, on the basis of physical progress duly certified.
Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price (or both). The accounting for modifications of contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis, while those that are distinct are accounted for prospectively, either as a separate contract, if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price.
Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.
Other claims including interest on outstanding are accounted for when there is probability of ultimate collection. TURNOVER/WORK-IN-PROGRESS
a) No income has been taken into account on jobs for which:
i. The terms of consideration receivable by the Company have not been settled and/or scope of work has not been clearly defined and therefore, it is not possible in the absence of settled terms to determine whether there is a profit or loss on such jobs. However, in cases where minimum undisputed terms have been agreed to by the clients, income has been accounted for on the basis of such undisputed terms though the final terms are still to be settled.
ii. The terms have been agreed to at lumpsum services/turnkey contracts and outcome of job cannot be estimated reliably.
b) The cost of such jobs as stated in ''a'' above is carried forward as work-in- progress at actual direct cost.
EXPORT BENEFIT
Export benefits constituting Service Export from India Scheme are accounted for on accrual basis when there is reasonable assurance that the company will comply with the conditions attached to them and the export benefits will be received.
DIVIDEND INCOME
Dividend on units/shares is accounted for when right to receive payment is established.
C. INTANGIBLE ASSETS Recognition
Intangible assets (softwares) are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent measurement (amortisation)
The cost of capitalized software is amortized over a period of three years from the date of its acquisition. However, software individually costing upto '' 500,000 is fully amortized during the year of its acquisition.
D. PROPERTY, PLANT AND EQUIPMENT Recognition
Properties plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. The cost of any software purchased initially along with the computer hardware is being capitalized along with the cost of the hardware. Any subsequent acquisition/up-gradation of software is being capitalized as an intangible asset.
Whenever any new office space is acquired and partitions/fixtures and fittings are provided to make it suitable for use, the expenditure on the same is capitalized and depreciation is charged. Whenever significant parts of the property, plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Subsequent measurement (depreciation)
Depreciation on property, plant and equipment is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013, whichever is higher.
100% depreciation is provided on library books in the year of purchase.
Property, plant and equipment individually costing less than INR 5,000 are fully depreciated in the year of acquisition.
The residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognised in the statement of profit and loss when the asset is derecognised.
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.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonable certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term or useful life of the underlying asset except for perpetual lease. Right of use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rate.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows
Company as a lessor Operating lease
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Assets leased out under operating leases are capitalized.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub lease separately. The sublease is classified as a finance lease or operating lease by reference to the right of use asset arising from the head lease.
Rental income is recognized on straight line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
F. INVESTMENT PROPERTIES Recognition
Investment properties are properties held to earn rentals or for capital appreciation, or both. Owned Investment properties are measured initially at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. An Investment property held as right-of use asset are measured initially at its cost in accordance with Ind AS 116.
When significant parts of the property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Subsequent measurement (depreciation)
Depreciation on investment properties is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013, whichever is higher.
Premium paid on land where lease agreements have been executed for specified period are written off over the period of lease proportionately.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in statement of profit and loss in the year of de-recognition.
Functional and presentation currency
The financial statements are presented in INR, which is also the functional currency of the Company.
Foreign currency transactions and balances Initial recognition
Foreign currency transactions are accounted for at average monthly rates based on market rates for preceding month in respect of Pound Sterling, US Dollars, Euro, Australian Dollar, Canadian Dollar, Swiss Franc and Japanese Yen and in respect of other currencies at Government rates prevailing in the month. However, foreign currency transactions in respect of sub-contractors/vendors are recorded at bank rate prevailing on the date of transaction.
Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
For the foreign operation of the Company, all assets and liabilities are translated into INR using the exchange rate in effect at the balance sheet date and for revenue and expense items using the average exchange rate for respective period.
Exchange differences
Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.
For the foreign operation of the Company, gain/(loss) arising on conversion of branch financial statements is recognised as exchange translation gain/(loss) under other comprehensive income and accumulated as foreign exchange translation reserve under the head other equity.
H. IMPAIRMENT OF NON-FINANCIAL ASSETS
Impairment of cash generating assets are reviewed for impairment whenever an event or changes in circumstances indicate that carrying amount of such assets may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of assets. If it is found that some of the impairment losses already recognized needs to be reversed the same are recognized in the statement of profit and loss in the year of reversal and is restricted to the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
I. FINANCIAL INSTRUMENTS Financial assets
Initial recognition and measurement
All financial assets are recognized initially at fair value, plus in case of financial Assets not recorded at Fair value through Profit or loss (FVTPL), transaction cost that are attributable to the acquisition of the financial asset, except for trade receivables which are initially measured at transaction price
Subsequent measurement
i. Debt instruments at amortised cost-A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows,and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. Equity investments - All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL).
iii. Mutual funds - All mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL).
De-recognition of financial assets
A financial asset is primarily de-recognized when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial liabilities is also adjusted. These liabilities are classified as amortised cost.
Subsequent measurement
Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method. This category generally applies to long-term payables and deposits.
De-recognition of financial liabilities
A financial liability is de-recognised 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 de-recognition 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 and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Forward contracts
A forward contract is recognised as an asset or a liability on the commitment date. Outstanding forward contracts as at reporting date are restated using the mark to market information and resultant gain/(loss) is accounted in statement of profit and loss.
J. IMPAIRMENT OF FINANCIAL ASSETS
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for financial assets.
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 Company expects to receive. When estimating the cash flows, the Company is required to consider -
⢠All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables
As a practical expedient the Company has adopted ''simplified approach'' using the provision matrix method for recognition of expected loss on trade receivables. The provision matrix is based on historical default rates observed over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical default rates are updated and changes in the forwardlooking estimates are analysed. Further receivables are segmented for this analysis where the credit risk characteristics of the receivable are similar.
Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
K. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A provision is recognized when the Company has a present obligation as a result of 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 determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
The provision for estimated liabilities on account of guarantees and warranties etc. in respect of lumpsum services and turnkey contracts awarded to the Company are being made on the basis of management''s assessment of risk and consequential probable liabilities on each such jobs.
Provisions are discounted to their present values, where the time value of money is material.
Contingent liabilities are disclosed by way of note unless the possibility of outflow is remote. Contingent assets are disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable. However, when realization of income is virtually certain, related asset is recognized.
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
⢠When the grant relates to a revenue item, it is recognized in statement of profit and loss on a systematic basis over the periods in which the related costs are expensed. The grant can either be presented separately or can deduct from related reported expense.
⢠When the grant relates to an asset, it is recognised as income on a systematic basis over the expected useful life of the related asset.
When the Company receives grant as a non-monetary asset, the asset and the grant are recorded at fair value. The amount is then recognised in statement of profit and loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset.
M. OIL AND GAS EXPLORATION ACTIVITIES
The Company follows ''Successful Efforts Method'' in accounting for Oil and Gas exploration and production activities as detailed below:
⢠Survey costs are charged as expense in the year of its incurrence.
⢠Acquisition costs, cost of incomplete/undecided exploratory wells and development costs are carried as intangible assets under development till these are either transferred to producing properties on completion or expensed in the year when determined to be dry, as the case may be.
The Company''s share of proved oil and gas reserves are disclosed when notified by the operator of the relevant block.
The Company''s proportionate share in the assets, liabilities, income and expenditure of jointly controlled assets are accounted for as per the participating interest.
Capitalization of Producing Properties
Producing Properties are capitalised as "completed wells/producing wells" when the wells in the area/field are ready to commence commercial production on establishment of proved developed Oil and Gas reserves.
Cost of Producing Properties includes cost of successful exploratory wells, developed wells, initial depreciation of support equipment & facilities and estimated future abandonment cost.
Depletion of producing Properties
Producing Properties are depleted using the "Unit of Production Method (UOP)". The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.
Production Cost of producing Properties
Company''s share of production costs as indicated by Operator consists of pre well head and post well head expenses including depreciation and applicable operating cost of support equipment and facilities.
N. RESEARCH AND DEVELOPMENT EXPENDITURE
Revenue expenditure on Research and Development is charged to statement of profit and loss in the year the expenditure is incurred. Capital Expenditure on Research and Development is capitalized under property, plant and equipment.
O. FINANCIAL GUARANTEES Financial guarantee contracts
Financial guarantee contracts are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument.
Initial recognition
Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.
Subsequent recognition
Subsequently, the liability is measured at the higher of the amount of expected loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.
Inventories in respect of stores, spares and chemicals etc. are valued at lower of cost and net realizable value.
Cost includes the cost of purchase (discounted to their present values, if the time value of money is material) and other cost incurred in bringing the inventories to their present location and condition. Cost is determined on "First In, First Out" basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.
Calculation of current tax is based on tax rates and tax laws that have been enacted for the reporting period. Current income tax relating to items recognised outside profit and loss is recognised outside profit and loss (either in other comprehensive income or in equity).Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
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 assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. 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 and loss is recognised outside profit and loss (either in other comprehensive income or in equity).
R. INVESTMENT IN EQUITY INSTRUMENTS OF CONSOLIDATED ENTITIES
The Company''s investment in equity instruments of subsidiaries, associates and joint ventures are accounted for at cost.
S. INVESTMENT IN JOINTLY CONTROLLED OPERATIONS
A joint operation is one whereby the jointly controlling parties, known as the joint operators, have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint operation is generally not structured through a separate legal vehicle.
The particulars of joint operations considered in the financial statements are as under:
|
S. No. |
Name of the Company |
Country of Incorporation |
Relationship |
31 March 2023 |
31 March 2022 |
|
1 |
CB-ONN-2010/11 |
India |
Joint Operation |
23.53% |
23.53% |
|
2 |
CB-ONN-2010/08 |
India |
Joint Operation |
22.22% |
22.22% |
The Company accounts for proportionate share in the assets, liabilities, income and expenditure of the said jointly controlled operations as participating interest.
Cash comprises cash on hand and demand deposits i.e. balances held with banks in current accounts for unrestrictive use. Cash equivalents are short term, highly liquid investments that are readily convertible into known amount of cash and which are subject to an insignificant risk of changes in value. The Company considers unrestrictive time deposits with banks having an original maturity of three months or less as cash equivalent.
U. POST-EMPLOYMENT BENEFITS AND SHORT-TERM EMPLOYEE BENEFITS Defined benefit plans
Under the defined benefit plans, the amount that an employee will receive on retirement is defined by reference to the employee''s length of service and final salary. The legal obligation for any benefits remains with the Company, even if plan assets for funding the defined benefit plan have been set aside. Plan assets may include assets specifically designated to a long-term benefit fund as well as qualifying insurance policies. Defined benefit plans include gratuity, post-retirement medical benefit and other retirement benefit plans.
The liability recognised in the statement of financial position for defined benefit plans is the present value of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of plan assets.
Management estimates the DBO annually with the assistance of independent actuaries. Actuarial gains/losses resulting from remeasurements of the liability/asset are included in other comprehensive income.
Other long-term benefits
The liabilities for leave (earned and half pay leave) and are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. The Company has secured these liabilities against the plan assets. The liability is recognised in the statement of financial position basis the present value of expected future payments to be made in respect of services provided by employees upto the end of reporting period(using the projected unit credit method) less the fair value of plan assets.
Liability in respect of long-service awards is recognised in the statement of financial position basis the present value of expected future payments to be made in respect of services provided by employees upto the end of reporting period(using the projected unit credit method).
Short-term employee benefits
Short term benefits comprise of employee costs such as salaries, bonus etc. are accrued in the year in which the associated service are rendered by employees.
Defined contribution plans
Contributions with respect to provident fund and superannuation fund, defined contribution plans, are made to the trust set-up by the Company for the purpose.
Other benefits
Voluntary retirement expenses are charged to statement of profit and loss in the year of its incurrence.
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
W. RECENT ACCOUNTING PRONOUNCEMENT
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
Ind AS 1 - Presentation of Financial Statements - This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The company does not expect any significant impact of the amendment on its financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The effective date for adoption of this amendment is annual period beginning on or after April 1,2023. The company does not expect any significant impact of this amendment on its financial statements.
Ind AS 12 - Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transaction that give rise to equal and offsetting temporary difference. The effective date of adoption of this amendment is annual period beginning on or after April 1, 2023. The company is evaluating the impact, if any, in its financial statements.
X. SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION UNCERTAINTY Significant management judgements
When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.
The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements.
Revenue - For Lumpsum services and Turnkey Contracts the Company recognises revenue using the percentage completion method. Use of the percentage completion method requires the company to estimate the cost incurred relative to total expected cost to the satisfaction of performance obligation. This requires estimates to be made of the outcomes of long-term construction and service contracts, which require assessments and judgements to be made on changes in work scopes, balance efforts, cost and time to complete the contract including probability of levy for liquidated damages and price reduction for delay to the extent they are probable and they are capable of being reliably measured. Cost and time incurred have been used to measure progress towards completion as there is a direct relationship between input and satisfaction of performance obligation.
Recognition of deferred tax assets- The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized.
Estimation uncertainty
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
Recoverability of advances/receivables - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.
Defined benefit obligation (DBO)- Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Provisions - At each balance sheet date, based on the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However the actual future outcome may be different from this judgement.
Leases - Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to company operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the Company has concluded that no changes are required to lease period relating to the existing lease contracts.
Mar 31, 2022
1. NATURE OF PRINCIPAL ACTIVITIES
Engineers India Limited and (referred to as "EIL" or "the Company") is a Government of India Enterprise under Ministry of Petroleum and Natural Gas. The Company operates into two major segments namely Consultancy & Engineering projects and Turnkey projects.
2. GENERAL INFORMATION AND STATEMENT OF COMPLIANCE
The Company has its registered office situated at 1 Bhikaji Cama Place, New Delhi 110066, India. The shares of the Company are listed on the National Stock Exchange and the Bombay Stock Exchange.
The financial statements of the Company have been prepared in accordance with the Companies (Indian Accounting Standards) Rules 2015 (''Ind AS'') and relevant amended rules issued thereafter. These are Company''s standalone financial statements. The Company also prepared consolidated financial statements separately.
The financial statements for the year ended 31 March 2022 were authorized and approved for issue by the Board of Directors on 27 May, 2022.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESA. ACCOUNTING CONCEPTS
The financial statements have been prepared using the significant accounting policies and measurement bases summarised below. These were used throughout all periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS. The accounts are prepared on historical cost concept based on accrual method of accounting as a going concern.
REVENUE RECOGNTION
Revenue is recognised upon transfer of control of promised services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those services. The services performed by the company fall into the criteria of the transfer of control over a period of time and as such company satisfy the performance obligation and revenue over a period of time.
Revenue is measured based on the transaction price, which is the consideration, adjusted for variable considerations, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
Arrangements with customers are either on a cost plus, rate plus jobs, lump sum services, turnkey contracts and Inspection contracts.
Revenue from services is accounted as follows:
i) In the case of cost plus and rate plus jobs on the basis of services rendered and amount billable under the contract
ii) In the case of lump sum services and turnkey contracts as proportion of actual direct costs of the work performed to latest estimated total direct cost of the work performed i.e. percentage completion method.
iii) In the case of inspection contracts providing for a percentage fee on project cost, on the basis of physical progress duly certified.
Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price (or both). The accounting for modifications of contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis, while those that are distinct are accounted for prospectively, either as a separate contract, if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price.
Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.
Other claims including interest on outstanding are accounted for when there is probability of ultimate collection. TURNOVER/WORK-IN-PROGRESS
a) No income has been taken into account on jobs for which:
i. The terms of consideration receivable by the Company have not been settled and/or scope of work has not been clearly defined and therefore, it is not possible in the absence of settled terms to determine whether there is a profit or loss on such jobs. However, in cases where minimum undisputed terms have been agreed to by the clients, income has been accounted for on the basis of such undisputed terms though the final terms are still to be settled.
ii. The terms have been agreed to at lumpsum services/turnkey contracts and outcome of job cannot be estimated reliably.
b) The cost of such jobs as stated in ''a'' above is carried forward as work-in- progress at actual direct cost.
EXPORTBENEFIT
Export benefits constituting Service Export from India Scheme are accounted for on accrual basis when there is reasonable assurance that the company will comply with the conditions attached to them and the export benefits will be received.
DIVIDEND INCOME
Dividend on units/shares is accounted for when right to receive payment is established.
C. INTANGIBLE ASSETS Recognition
Intangible assets (softwares) are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent measurement (amortisation)
The cost of capitalized software is amortized over a period of three years from the date of its acquisition. However, software individually costing upto '' 500,000 is fully amortized during the year of its acquisition.
D. PROPERTY, PLANT AND EQUIPMENT Recognition
Properties plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. The cost of any software purchased initially along with the computer hardware is being capitalized along with the cost of the hardware. Any subsequent acquisition/up-gradation of software is being capitalized as an intangible asset.
Whenever any new office space is acquired and partitions/fixtures and fittings are provided to make it suitable for use, the expenditure on the same is capitalized and depreciation is charged. Whenever significant parts of the property, plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Subsequent measurement (depreciation)
Depreciation on property, plant and equipment is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013, whichever is higher.
100% depreciation is provided on library books in the year of purchase.
Property, plant and equipment individually costing less than I NR 5,000 are fully depreciated in the year of acquisition.
The residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognised in the statement of profit and loss when the asset is derecognised.
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.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonable certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term or useful life of the underlying asset except for perpetual lease. Right of use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rate.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows
Company as a lessor
Operating lease
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Assets leased out under operating leases are capitalized.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub lease separately. The sublease is classified as a finance lease or operating lease by reference to the right of use asset arising from the head lease.
Rental income is recognized on straight line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
F. INVESTMENT PROPERTIES Recognition
Investment properties are properties held to earn rentals or for capital appreciation, or both. Owned Investment properties are measured initially at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. An Investment property held as right-of use asset are measured initially at its cost in accordance with Ind AS 116.
When significant parts of the property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Subsequent measurement (depreciation)
Depreciation on investment properties is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013, whichever is higher.
Premium paid on land where lease agreements have been executed for specified period are written off over the period of lease proportionately.
De-recognition
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in statement of profit and loss in the year of de-recognition.
Functional and presentation currency
The financial statements are presented in INR, which is also the functional currency of the Company.
Foreign currency transactions and balances Initial recognition
Foreign currency transactions are accounted for at average monthly rates based on market rates for preceding month in respect of Pound Sterling, US Dollars, Euro, Australian Dollar, Canadian Dollar, Swiss Franc and Japanese Yen and in respect of other currencies at Government rates prevailing in the month. However, foreign currency transactions in respect of sub-contractors/vendors are recorded at bank rate prevailing on the date of transaction.
Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
For the foreign operation of the Company, all assets and liabilities are translated into INR using the exchange rate in effect at the balance sheet date and for revenue and expense items using the average exchange rate for respective period.
Exchange differences
Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.
For the foreign operation of the Company, gain/(loss) arising on conversion of branch financial statements is recognised as exchange translation gain/(loss) under other comprehensive income and accumulated as foreign exchange translation reserve under the head other equity.
H. IMPAIRMENT OF NON-FINANCIAL ASSETS
Impairment of cash generating assets are reviewed for impairment whenever an event or changes in circumstances indicate that carrying amount of such assets may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of assets .If it is found that some of the impairment losses already recognized needs to be reversed the same are recognized in the statement of profit and loss in the year of reversal and is restricted to the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
I. FINANCIAL INSTRUMENTS Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial asset is also adjusted.
Subsequent measurement
i. Debt instruments at amortised cost- A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows,and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. Equity investments - All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL).
iii. Mutual funds - All mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL).
De-recognition of financial assets
A financial asset is primarily de-recognised when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial liabilities is also adjusted. These liabilities are classified as amortised cost.
Subsequent measurement
Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method. This category generally applies to long-term payables and deposits.
De-recognition of financial liabilities
A financial liability is de-recognised 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 de-recognition 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 and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Forward contracts
A forward contract is recognised as an asset or a liability on the commitment date. Outstanding forward contracts as at reporting date are restated using the mark to market information and resultant gain/(loss) is accounted in statement of profit and loss.
J. IMPAIRMENT OF FINANCIAL ASSETS
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for financial assets.
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 Company expects to receive. When estimating the cash flows, the Company is required to consider -
⢠All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables
As a practical expedient the Company has adopted ''simplified approach'' using the provision matrix method for recognition of expected loss on trade receivables. The provision matrix is based on historical default rates observed over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical default rates are updated and changes in the forward-looking estimates are analysed. Further receivables are segmented for this analysis where the credit risk characteristics of the receivable are similar.
Otherfinancial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
K. PROVISIONS,CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A provision is recognized when the Company has a present obligation as a result of 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 determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
The provision for estimated liabilities on account of guarantees and warranties etc. in respect of lumpsum services and turnkey contracts awarded to the Company are being made on the basis of management''s assessment of risk and consequential probable liabilities on each such jobs.
Provisions are discounted to their present values, where the time value of money is material.
Contingent liabilities are disclosed by way of note unless the possibility of outflow is remote. Contingent assets are disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable. However, when realization of income is virtually certain, related asset is recognized.
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
⢠When the grant relates to a revenue item, it is recognized in statement of profit and loss on a systematic basis over the periods in which the related costs are expensed. The grant can either be presented separately or can deduct from related reported expense.
⢠When the grant relates to an asset, it is recognised as income on a systematic basis over the expected useful life of the related asset.
When the Company receives grant as a non-monetary asset, the asset and the grant are recorded at fair value. The amount is then recognised in statement of profit and loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset.
M. OILAND GAS EXPLORATION ACTIVITIES
The Company follows ''Successful Efforts Method'' in accounting for Oil and Gas exploration and production activities as detailed below:
⢠Survey costs are charged as expense in the year of its incurrence.
⢠Acquisition costs, cost of incomplete/undecided exploratory wells and development costs are carried as intangible assets under development till these are either transferred to producing properties on completion or expensed in the year when determined to be dry, as the case may be.
The Company''s share of proved oil and gas reserves are disclosed when notified by the operator of the relevant block.
The Company''s proportionate share in the assets, liabilities, income and expenditure of jointly controlled assets are accounted for as per the participating interest.
N. RESEARCH AND DEVELOPMENT EXPENDITURE
Revenue expenditure on Research and Development is charged to statement of profit and loss in the year the expenditure is incurred. Capital Expenditure on Research and Development is capitalized under property, plant and equipment.
Financial guarantee contracts
Financial guarantee contracts are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument.
Initial recognition
Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.
Subsequent recognition
Subsequently, the liability is measured at the higher of the amount of expected loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.
Inventories in respect of stores, spares and chemicals etc. are valued at lower of cost and net realizable value.
Cost includes the cost of purchase (discounted to their present values, if the time value of money is material) and other cost incurred in bringing the inventories to their present location and condition. Cost is determined on "First In, First Out" basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.
Calculation of current tax is based on tax rates and tax laws that have been enacted for the reporting period. Current income tax relating to items recognised outside profit and loss is recognised outside profit and loss (either in other comprehensive income or in equity).Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
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 assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. 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 and loss is recognised outside profit and loss (either in other comprehensive income or in equity).
R. INVESTMENT IN EQUITY INSTRUMENTS OF CONSOLIDATED ENTITIES
The Company''s investment in equity instruments of subsidiaries, associates and joint ventures are accounted for at cost.
S. INVESTMENT IN JOINTLY CONTROLLED OPERATIONS
A joint operation is one whereby the jointly controlling parties, known as the joint operators, have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint operation is generally not structured through a separate legal vehicle.
The particulars of joint operations considered in the financial statements are as under:
|
Sl. No. |
Name of the Company |
Country of Incorporaton |
Relatonship |
31 March 2022 |
31 March 2021 |
|
1 |
CB-ONN-2010/11 |
India |
Joint Operation |
23.53% |
23.53% |
|
2 |
CB-ONN-2010/08 |
India |
Joint Operation |
22.22% |
22.22% |
The Company accounts for proportionate share in the assets, liabilities, income and expenditure of the said jointly controlled operations as participating interest.
Cash comprises cash on hand and demand deposits i.e. balances held with banks in current accounts for unrestrictive use. Cash equivalents are short term, highly liquid investments that are readily convertible into known amount of cash and which are subject to an insignificant risk of
changes in value. The Company considers unrestrictive time deposits with banks having an original maturity of three months or less as cash equivalent.
U. POST-EMPLOYMENT BENEFITS AND SHORT-TERM EMPLOYEE BENEFITS
Defined benefit plans
Under the defined benefit plans, the amount that an employee will receive on retirement is defined by reference to the employee''s length of service and final salary. The legal obligation for any benefits remains with the Company, even if plan assets for funding the defined benefit plan have been set aside. Plan assets may include assets specifically designated to a long-term benefit fund as well as qualifying insurance policies. Defined benefit plans include gratuity, post-retirement medical benefit and other retirement benefit plans.
The liability recognised in the statement of financial position for defined benefit plans is the present value of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of plan assets.
Management estimates the DBO annually with the assistance of independent actuaries. Actuarial gains/losses resulting from remeasurements of the liability/asset are included in other comprehensive income.
Other long-term benefits
The liabilities for leave (earned and half pay leave) and are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. The Company has secured these liabilities against the plan assets. The liability is recognised in the statement of financial position basis the present value of expected future payments to be made in respect of services provided by employees upto the end of reporting period(using the projected unit credit method) less the fair value of plan assets.
Liability in respect of long-service awards is recognised in the statement of financial position basis the present value of expected future payments to be made in respect of services provided by employees upto the end of reporting period(using the projected unit credit method).
Short-term employee benefits
Short term benefits comprise of employee costs such as salaries, bonus etc. are accrued in the year in which the associated service are rendered by employees.
Defined contribution plans
Contributions with respect to provident fund and superannuation fund, defined contribution plans, are made to the trust set-up by the Company for the purpose.
Other benefits
Voluntary retirement expenses are charged to statement of profit and loss in the year of its incurrence.
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
W. RECENT ACCOUNTING PRONOUNCEMENT
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from April 1st, 2022, as below:
Ind AS 16 -Property Plant and equipment-
The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022. The Company does not expect any significant impact of the amendment on its financial statements.
Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets -
The amendment specifies that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract'' .Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The Company does not expect any significant impact of the amendment on its financial statements.
X. SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION UNCERTAINTY
Estimation of uncertainties relating to the global health pandemic from COVID-19:
The management has assessed the potential impact of COVID-19 based on the current circumstances and expects no significant impact on the continuity of operations of the business on long term basis. The Company will continue to closely monitor the situation of Covid-19 and take steps, wherever require to optimize the business operations.
The management has made assessment of its liquidity position and recoverability/carrying amount of trade receivables, unbilled revenue, investments and other advances at balance sheet date and expects to cover its carrying amount.
The entity shall continue to operate on going concern basis.
Significant management judgements
When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.
The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements.
Revenue - For Lumpsum services and Turnkey Contracts the Company recognises revenue using the percentage completion method. Use of the percentage completion method requires the company to estimate the cost incurred relative to total expected cost to the satisfaction of performance obligation. This requires estimates to be made of the outcomes of long-term construction and service contracts, which require assessments and judgements to be made on changes in work scopes, balance efforts, cost and time to complete the contract including probability of levy for liquidated damages and price reduction for delay to the extent they are probable and they are capable of being reliably measured. Cost and time incurred have been used to measure progress towards completion as there is a direct relationship between input and satisfaction of performance obligation.
Recognition of deferred tax assets- The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized.
Estimation uncertainty
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
Recoverability of advances/receivables - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.
Defined benefit obligation (DBO)- Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Provisions - At each balance sheet date, based on the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However the actual future outcome may be different from this judgement.
Leases - Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to company operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the Company has concluded that no changes are required to lease period relating to the existing lease contracts.
Mar 31, 2018
A. ACCOUNTING CONCEPTS
The financial statements have been prepared using the significant accounting policies and measurement bases summarised below. These were used throughout all periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS. The accounts are prepared on historical cost concept based on accrual method of accounting as a going concern.
B. REVENUE RECOGNTION
REVENUE RECOGNTION
Revenue from services rendered is accounted for at fair value of consideration received or receivable, excluding taxes and rebates. In most cases, the consideration is in the form of cash or cash equivalents received or receivable. However, when the inflow of cash or cash equivalents is deferred, the fair value of the consideration may be less than the nominal amount of cash received or receivable and is determined by discounting all expected receipts using an imputed rate of interest.
Revenue from services is accounted as follows:
- In the case of cost plus and rate plus jobs, on the basis of amount billable under the contracts
- In the case of lumpsum services and turnkey contracts as proportion of actual direct costs of the work performed to latest estimated total direct cost of the work performed
- In case of inspection contracts providing for a percentage fee on project cost, on the basis of physical progress duly certified.
Any expected loss shall be recognised as an expense immediately.
Other claims including interest on outstanding are accounted for when there is probability of ultimate collection. TURNOVER/WORK-IN-PROGRESS
a) No income has been taken into account on jobs for which:
i. The terms of consideration receivable by the Company have not been settled and/or scope of work has not been clearly defined and therefore, it is not possible in the absence of settled terms to determine whether there is a profit or loss on such jobs. However, in cases where minimum undisputed terms have been agreed to by the clients, income has been accounted for on the basis of such undisputed terms though the final terms are still to be settled.
ii. The terms have been agreed to at lumpsum services/turnkey contracts and outcome of job cannot be estimated reliably.
b) The cost of such jobs as stated in âaâ above is carried forward as work-in- progress at actual direct cost.
EXPORTBENEFIT
Export benefits constituting Service Export from India Scheme are accounted for on accrual basis when there is reasonable assurance that the company will comply with the conditions attached to them and the export benefits will be received
DIVIDEND INCOME
Dividend on units/shares is accounted for when right to receive payment is established.
C. INTANGIBLE ASSETS
Recognition
Intangible assets (softwares) are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent measurement (amortisation)
The cost of capitalized software is amortized over a period of three years from the date of its acquisition. However, software individually costing upto Rs.500,000 is fully amortized during the year of its acquisition.
D. PROPERTY, PLANT AND EQUIPMENT
Recognition
Properties plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. The cost of any software purchased initially along with the computer hardware is being capitalized along with the cost of the hardware. Any subsequent acquisition/up-gradation of software is being capitalized as an intangible asset.
Whenever any new office space is acquired and partitions/fixtures and fittings are provided to make it suitable for use, the expenditure on the same is capitalized and depreciation is charged. Whenever significant parts of the property, plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Subsequent measurement (depreciation)
Depreciation on property, plant and equipment is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013, whichever is higher.
Premium paid on land where lease agreements have been executed for specified period are written off over the period of lease proportionately.
100% depreciation is provided on library books in the year of purchase.
Property, plant and equipment individually costing less than INR 5,000 are fully depreciated in the year of acquisition.
The residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognised in the statement of profit and loss when the asset is derecognised.
E. LEASES
Company as a lessee
Finance leases
Management applies judgment in considering the substance of a lease agreement and whether it gives substantially all the risks and rewards incidental to ownership of the leased asset. Key factors considered include the length of the lease term in relation to the economic life of the asset, the present value of the minimum lease payments in relation to the assetâs fair value, and whether the Company obtains ownership of the asset at the end of the lease term.
A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease. Finance leases are capitalised at the commencement of the lease, at the inception date at fair value of the leased property or, if lower, at the present value of the minimum lease payments.
The interest element of lease payments is charged to statement of profit and loss, as finance costs over the period of the lease. The leased asset is depreciated over the useful life of the asset or lease term whichever is lower.
Operating leases
Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rental are charged to statement of profit and loss on straightline basis except where scheduled increase in rent compensate the lessor for expected inflationary costs.
Company as a lessor
Operating lease
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Assets leased out under operating leases are capitalized. Rental income is recognized on straightline basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
F. INVESTMENT PROPERTIES
Recognition
Investment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
When significant parts of the property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Subsequent measurement (depreciation)
Depreciation on investment properties is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013, whichever is higher.
De-recognition
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in statement of profit and loss in the year of de-recognition.
G. FOREIGN CURRENCY
Functional and presentation currency
The financial statements are presented in I NR, which is also the functional currency of the Company.
Foreign currency transactions and balances Initial recognition
Foreign currency transactions are accounted for at average monthly rates based on market rates for preceding month in respect of Pound Sterling, US Dollars, Euro, Australian Dollar, Canadian Dollar, Swiss Franc and Japanese Yen and in respect of other currencies at Government rates prevailing in the month. However, foreign currency transactions in respect of sub-contractors/vendors are recorded at bank rate prevailing on the date of transaction.
Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
For the foreign operation of the Company, all assets and liabilities are translated into INR using the exchange rate in effect at the balance sheet date and for revenue and expense items using the average exchange rate for respective period.
Exchange differences
Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.
For the foreign operation of the Company, gain/(loss) arising on conversion of branch financial statements is recognised as exchange translation gain/(loss) under other comprehensive income and accumulated as foreign exchange translation reserve under the head other equity.
H. IMPAIRMENT OF NON-FINANCIAL ASSETS
Impairment of cash generating assets are reviewed for impairment whenever an event or changes in circumstances indicate that carrying amount of such assets may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of assets. If it is found that some of the impairment losses already recognized needs to be reversed the same are recognized in the statement of profit and loss in the year of reversal and is restricted to the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
I. FINANCIAL INSTRUMENTS
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial asset is also adjusted.
Subsequent measurement
i. Debt instruments at amortised cost - A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. Equity investments - All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL).
iii. Mutual funds - All mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL).
De-recognition of financial assets
A financial asset is primarily de-recognised when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial liabilities is also adjusted. These liabilities are classified as amortised cost.
Subsequent measurement
Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method. This category generally applies to long-term payables and deposits.
De-recognition of financial liabilities
A financial liability is de-recognised 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 de-recognition 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 and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Forward contracts
A forward contract is recognised as an asset or a liability on the commitment date. Outstanding forward contracts as at reporting date are restated using the mark to market information and resultant gain/(loss) is accounted in statement of profit and loss.
J. IMPAIRMENT OF FINANCIAL ASSETS
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for financial assets.
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 Company expects to receive. When estimating the cash flows, the Company is required to consider -
- All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms Trade receivables
As a practical expedient the Company has adopted âsimplified approachâ using the provision matrix method for recognition of expected loss on trade receivables. The provision matrix is based on historical default rates observed over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical default rates are updated and changes in the forward-looking estimates are analysed. Further receivables are segmented for this analysis where the credit risk characteristics of the receivable are similar.
Otherfinancial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
K. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A provision is recognized when the Company has a present obligation as a result of 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 determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
The provision for estimated liabilities on account of guarantees and warranties etc. in respect of lumpsum services and turnkey contracts awarded to the Company are being made on the basis of managementâs assessment of risk and consequential probable liabilities on each such jobs.
Provisions are discounted to their present values, where the time value of money is material.
Contingent liabilities are disclosed by way of note unless the possibility of outflow is remote. Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized.
L. GOVERNMENT GRANTS
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
- When the grant relates to a revenue item, it is recognized in statement of profit and loss on a systematic basis over the periods in which the related costs are expensed. The grant can either be presented separately or can deduct from related reported expense.
- When the grant relates to an asset, it is recognised as income on a systematic basis over the expected useful life of the related asset.
When the Company receives grant as a non-monetary asset, the asset and the grant are recorded at fair value. The amount is then recognised in statement of profit and loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset.
M. OIL AND GAS EXPLORATION ACTIVITIES
The Company follows âSuccessful Efforts Methodâ in accounting for Oil and Gas exploration and production activities as detailed below:
- Survey costs are charged as expense in the year of its incurrence.
- Acquisition costs, cost of incomplete/undecided exploratory wells and development costs are carried as intangible assets under development till these are either transferred to producing properties on completion or expensed in the year when determined to be dry, as the case may be.
The Companyâs share of proved oil and gas reserves are disclosed when notified by the operator of the relevant block.
The Companyâs proportionate share in the assets, liabilities, income and expenditure of jointly controlled assets are accounted for as per the participating interest.
N. RESEARCH AND DEVELOPMENT EXPENDITURE
Revenue expenditure on Research and Development is charged to statement of profit and loss in the year the expenditure is incurred. Capital Expenditure on Research and Development is capitalized under property, plant and equipment.
O. FINANCIAL GUARANTEES
Financial guarantee contracts
Financial guarantee contracts are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument.
Initial recognition
Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.
Subsequent recognition
Subsequently, the liability is measured at the higher of the amount of expected loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.
P. INVENTORIES
Inventories in respect of stores, spares and chemicals etc. are valued at lower of cost and net realizable value
Cost includes the cost of purchase (discounted to their present values, if the time value of money is material) and other cost incurred in bringing the inventories to their present location and condition. Cost is determined on âFirst In, First Outâ basis
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Q. INCOME TAXES
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.
Calculation of current tax is based on tax rates and tax laws that have been enacted for the reporting period. Current income tax relating to items recognised outside profit and loss is recognised outside profit and loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
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 assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. 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 and loss is recognised outside profit and loss (either in other comprehensive income or in equity).
R. INVESTMENT IN EQUITY INSTRUMENTS OF CONSOLIDATED ENTITIES
The Companyâs investment in equity instruments of subsidiaries and joint ventures are accounted for at cost.
S. INVESTMENT IN JOINTLY CONTROLLED OPERATIONS
A joint operation is one whereby the jointly controlling parties, known as the joint operators, have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint operation is generally not structured through a separate legal vehicle.
The particulars of joint operations considered in the financial statements are as under:
The Company accounts for proportionate share in the assets, liabilities, income and expenditure of the said jointly controlled operations as participating interest.
T. CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits i.e. balances held with banks in current accounts for unrestrictive use. Cash equivalents are short term, highly liquid investments that are readily convertible into known amount of cash and which are subject to an insignificant risk of changes in value. The Company considers unrestrictive time deposits with banks having an original maturity of three months or less as cash equivalent.
U. POST-EMPLOYMENT BENEFITS AND SHORT-TERM EMPLOYEE BENEFITS
Defined benefit plans
Under the defined benefit plans, the amount that an employee will receive on retirement is defined by reference to the employeeâs length of service and final salary. The legal obligation for any benefits remains with the Company, even if plan assets for funding the defined benefit plan have been set aside. Plan assets may include assets specifically designated to a long-term benefit fund as well as qualifying insurance policies. Defined benefit plans include gratuity, post-retirement medical benefit and other retirement benefit plans.
The liability recognised in the statement of financial position for defined benefit plans is the present value of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of plan assets.
Management estimates the DBO annually with the assistance of independent actuaries. Actuarial gains/losses resulting from remeasurements of the liability/asset are included in other comprehensive income.
Other long-term benefits
The liabilities for leave (earned and half pay leave) and are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. The Company has secured these liabilities against the plan assets. The liability is recognised in the statement of financial position basis the present value of expected future payments to be made in respect of services provided by employees upto the end of reporting period (using the projected unit credit method) less the fair value of plan assets.
Liability in respect of long-service awards is recognised in the statement of financial position basis the present value of expected future payments to be made in respect of services provided by employees upto the end of reporting period(using the projected unit credit method).
Short-term employee benefits
Short term benefits comprise of employee costs such as salaries, bonus etc. are accrued in the year in which the associated service are rendered by employees.
Defined contribution plans
Contributions with respect to provident fund and superannuation fund, defined contribution plans, are made to the trust set-up by the Company for the purpose
Other benefits
Voluntary retirement expenses are charged to statement of profit and loss in the year of its incurrence.
V. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
W. RECENT ACCOUNTING PRONOUNCEMENT
Ministry of Corporate Affairs (âMCAâ) through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind ASs which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018:
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018.
The company is evaluating the impact of this amendment on its financial statements.
Ind AS 115- Revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch -up approach) The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.
The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be not material.
X. SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION UNCERTAINTY
Significant management judgements
When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.
The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements.
Revenue - The Company recognises revenue using the stage of completion method. This requires estimates to be made of the outcomes of long-term construction and service contracts, which require assessments and judgements to be made on changes in work scopes, balance efforts, cost and time to complete the contract including probability of levy for liquidated damages and price reduction for delay to the extent they are probable and they are capable of being reliably measured.
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilized.
Estimation uncertainty
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
Recoverability of advances/receivables - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.
Defined benefit obligation (DBO) - Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Provisions - At each balance sheet date, based on the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However the actual future outcome may be different from this judgement.
Mar 31, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ACCOUNTING CONCEPTS
The financial statements have been prepared using the significant accounting policies and measurement bases summarised below. These were used throughout all periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS. The accounts are prepared on historical cost concept based on accrual method of accounting as a going concern.
B. REVENUE RECOGNITION
REVENUE RECOGNITION
Revenue from services rendered is accounted for at fair value of consideration received or receivable, excluding taxes and rebates. In most cases, the consideration is in the form of cash or cash equivalents received or receivable. However, when the inflow of cash or cash equivalents is deferred, the fair value of the consideration may be less than the nominal amount of cash received or receivable and is determined by discounting all expected receipts using an imputed rate of interest.
Revenue from services is accounted as follows:
- In the case of cost plus and rate plus jobs, on the basis of amount billable under the contracts
- In the case of lumpsum services and turnkey contracts as proportion of actual direct costs of the work performed to latest estimated total direct cost of the work performed
- In case of inspection contracts providing for a percentage fee on project cost, on the basis of physical progress duly certified. Any expected loss shall be recognised as an expense immediately.
Other claims including interest on outstanding are accounted for when there is probability of ultimate collection.
TURNOVER/WORK-IN-PROGRESS
a) No income has been taken into account on jobs for which:
i. The terms of consideration receivable by the Company have not been settled and/or scope of work has not been clearly defined and therefore, it is not possible in the absence of settled terms to determine whether there is a profit or loss on such jobs. However, in cases where minimum undisputed terms have been agreed to by the clients, income has been accounted for on the basis of such undisputed terms though the final terms are still to be settled.
ii. The terms have been agreed to at lumpsum services/turnkey contracts and outcome of job cannot be estimated reliably.
b) The cost of such jobs as stated in âaâ above is carried forward as work-in- progress at actual direct cost.
EXPORT BENEFIT
Export benefits constituting Service Export from India Scheme are accounted for on accrual basis when there is reasonable assurance that the Company will comply with the conditions attached to them and the export benefits will be received.
DIVIDEND INCOME
Dividend on units/shares is accounted for when right to receive payment is established.
C. INTANGIBLE ASSETS Recognition
Intangible assets (softwares) are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent measurement (amortisation)
The cost of capitalized software is amortized over a period of three years from the date of its acquisition. However, software individually costing upto Rs.500,000 is fully amortized during the year of its acquisition.
D. PROPERTY, PLANT AND EQUIPMENT Recognition
Properties plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. The cost of any software purchased initially along with the computer hardware is being capitalized along with the cost of the hardware. Any subsequent acquisition/up-gradation of software is being capitalized as an intangible asset.
Whenever any new office space is acquired and partitions/fixtures and fittings are provided to make it suitable for use, the expenditure on the same is capitalized and depreciation is charged. Whenever significant parts of the property, plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Subsequent measurement (depreciation)
Depreciation on property, plant and equipment is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013, whichever is higher.
Premium paid on land where lease agreements have been executed for specified period are written off over the period of lease proportionately.
100% depreciation is provided on library books in the year of purchase.
Property, plant and equipment individually costing less than INR 5,000 are fully depreciated in the year of acquisition.
The residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognised in the statement of profit and loss when the asset is derecognised.
E. LEASES
Company as a lessee
Finance leases
Management applies judgment in considering the substance of a lease agreement and whether it gives substantially all the risks and rewards incidental to ownership of the leased asset. Key factors considered include the length of the lease term in relation to the economic life of the asset, the present value of the minimum lease payments in relation to the assetâs fair value, and whether the Company obtains ownership of the asset at the end of the lease term.
A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease. Finance leases are capitalised at the commencement of the lease, at the inception date at fair value of the leased property or, if lower, at the present value of the minimum lease payments.
The interest element of lease payments is charged to statement of profit and loss, as finance costs over the period of the lease. The leased asset is depreciated over the useful life of the asset or lease term whichever is lower.
Operating leases
Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rental are charged to statement of profit and loss on straightline basis except where scheduled increase in rent compensate the lessor for expected inflationary costs.
Company as a lessor
Operating lease
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Assets leased out under operating leases are capitalized. Rental income is recognized on straightline basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
F. INVESTMENT PROPERTIES Recognition
Investment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
When significant parts of the property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Subsequent measurement (depreciation)
Depreciation on investment properties is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013, whichever is higher.
De-recognition
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in statement of profit and loss in the year of de-recognition.
G. FOREIGN CURRENCY
Functional and presentation currency
The financial statements are presented in INR, which is also the functional currency of the Company.
Foreign currency transactions and balances Initial recognition
Foreign currency transactions are accounted for at average monthly rates based on market rates for preceding month in respect of Pound Sterling, US Dollars, Euro, Australian Dollar, Canadian Dollar, Swiss Franc and Japanese Yen and in respect of other currencies at Government rates prevailing in the month. However, foreign currency transactions in respect of sub-contractors/vendors are recorded at bank rate prevailing on the date of transaction.
Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
For the foreign operation of the Company, all assets and liabilities are translated into INR using the exchange rate in effect at the balance sheet date and for revenue and expense items using the average exchange rate for respective period.
Exchange differences
Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.
For the foreign operation of the Company, gain/(loss) arising on conversion of branch financial statements is recognised as exchange translation gain/(loss) under other comprehensive income and accumulated as foreign exchange translation reserve under the head other equity.
H. IMPAIRMENT OF NON-FINANCIAL ASSETS
Impairment of cash generating assets are reviewed for impairment whenever an event or changes in circumstances indicate that carrying amount of such assets may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of assets. If it is found that some of the impairment losses already recognized needs to be reversed the same are recognized in the statement of profit and loss in the year of reversal and is restricted to the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
I. FINANCIAL INSTRUMENTS Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial asset is also adjusted.
Subsequent measurement
i. Debt instruments at amortised cost - A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. Equity investments - All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL).
iii. Mutual funds - All mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL). De-recognition of financial assets
A financial asset is primarily de-recognised when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial liabilities is also adjusted. These liabilities are classified as amortised cost.
Subsequent measurement
Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method. This category generally applies to long-term payables and deposits.
De-recognition of financial liabilities
A financial liability is de-recognised 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 de-recognition 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 and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Forward contracts
A forward contract is recognised as an asset or a liability on the commitment date. Outstanding forward contracts as at reporting date are restated using the mark to market information and resultant gain/(loss) is accounted in statement of profit and loss.
J. IMPAIRMENT OF FINANCIAL ASSETS
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for financial assets.
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 Company expects to receive. When estimating the cash flows, the Company is required to consider -
- All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables
As a practical expedient the Company has adopted âsimplified approachâ using the provision matrix method for recognition of expected loss on trade receivables. The provision matrix is based on historical default rates observed over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical default rates are updated and changes in the forward-looking estimates are analysed. Further receivables are segmented for this analysis where the credit risk characteristics of the receivable are similar.
Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
K. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A provision is recognized when the Company has a present obligation as a result of 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 determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
The provision for estimated liabilities on account of guarantees and warranties etc. in respect of lumpsum services and turnkey contracts awarded to the Company are being made on the basis of managementâs assessment of risk and consequential probable liabilities on each such jobs.
Provisions are discounted to their present values, where the time value of money is material.
Contingent liabilities are disclosed by way of note unless the possibility of outflow is remote. Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized.
L. GOVERNMENT GRANTS
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
- When the grant relates to a revenue item, it is recognized in statement of profit and loss on a systematic basis over the periods in which the related costs are expensed. The grant can either be presented separately or can deduct from related reported expense.
- When the grant relates to an asset, it is recognised as income on a systematic basis over the expected useful life of the related asset.
When the Company receives grant as a non-monetary asset, the asset and the grant are recorded at fair value. The amount is then recognised in statement of profit and loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset.
M. OIL AND GAS EXPLORATION ACTIVITIES
The Company follows âSuccessful Efforts Methodâ in accounting for Oil and Gas exploration and production activities as detailed below:
- Survey costs are charged as expense in the year of its incurrence.
- Acquisition costs, cost of incomplete/undecided exploratory wells and development costs are carried as intangible assets under development till these are either transferred to producing properties on completion or expensed in the year when determined to be dry, as the case may be.
The Companyâs share of proved oil and gas reserves are disclosed when notified by the operator of the relevant block.
The Companyâs proportionate share in the assets, liabilities, income and expenditure of jointly controlled assets are accounted for as per the participating interest.
N. RESEARCH AND DEVELOPMENT EXPENDITURE
Revenue expenditure on Research and Development is charged to statement of profit and loss in the year the expenditure is incurred. Capital Expenditure on Research and Development is capitalized under property, plant and equipment.
O. FINANCIAL GUARANTEES
Financial guarantee contracts
Financial guarantee contracts are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument.
Initial recognition
Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.
Subsequent recognition
Subsequently, the liability is measured at the higher of the amount of expected loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.
P. INVENTORIES
Inventories in respect of stores, spares and chemicals etc. are valued at lower of cost and net realizable value
Cost includes the cost of purchase (discounted to their present values, if the time value of money is material) and other cost incurred in bringing the inventories to their present location and condition. Cost is determined on âFirst In, First Outâ basis
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Q. INCOME TAXES
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.
Calculation of current tax is based on tax rates and tax laws that have been enacted for the reporting period. Current income tax relating to items recognised outside profit and loss is recognised outside profit and loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
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 assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. 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 and loss is recognised outside profit and loss (either in other comprehensive income or in equity).
R. INVESTMENT IN EQUITY INSTRUMENTS OF CONSOLIDATED ENTITIES
The Companyâs investment in equity instruments of subsidiaries and joint ventures are accounted for at cost.
S. INVESTMENT IN JOINTLY CONTROLLED OPERATIONS
A joint operation is one whereby the jointly controlling parties, known as the joint operators, have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint operation is generally not structured through a separate legal vehicle.
The Company accounts for proportionate share in the assets, liabilities, income and expenditure of the said jointly controlled operations as participating interest.
T. CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits i.e. balances held with banks in current accounts for unrestrictive use. Cash equivalents are short term, highly liquid investments that are readily convertible into known amount of cash and which are subject to an insignificant risk of changes in value. The Company considers unrestrictive time deposits with banks having an original maturity of three months or less as cash equivalent.
U. POST-EMPLOYMENT BENEFITS AND SHORT-TERM EMPLOYEE BENEFITS
Defined benefit plans
Under the defined benefit plans, the amount that an employee will receive on retirement is defined by reference to the employeeâs length of service and final salary. The legal obligation for any benefits remains with the Company, even if plan assets for funding the defined benefit plan have been set aside. Plan assets may include assets specifically designated to a long-term benefit fund as well as qualifying insurance policies. Defined benefit plans include gratuity, post-retirement medical benefit and other retirement benefit plans.
The liability recognised in the statement of financial position for defined benefit plans is the present value of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of plan assets.
Management estimates the DBO annually with the assistance of independent actuaries. Actuarial gains/losses resulting from remeasurements of the liability/asset are included in other comprehensive income.
Other long-term benefits
The liabilities for leave (earned and half pay leave) and are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. The Company has secured these liabilities against the plan assets. The liability is recognised in the statement of financial position basis the present value of expected future payments to be made in respect of services provided by employees upto the end of reporting period (using the projected unit credit method) less the fair value of plan assets.
Liability in respect of long-service awards is recognised in the statement of financial position basis the present value of expected future payments to be made in respect of services provided by employees upto the end of reporting period(using the projected unit credit method).
Short-term employee benefits
Short term benefits comprise of employee costs such as salaries, bonus etc. are accrued in the year in which the associated service are rendered by employees.
Defined contribution plans
Contributions with respect to provident fund and superannuation fund, defined contribution plans, are made to the trust set-up by the Company for the purpose
Other benefits
Voluntary retirement expenses are charged to statement of profit and loss in the year of its incurrence.
V. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
W. RECENT ACCOUNTING PRONOUNCEMENT
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, âStatement of cash flowsâ. The amendments are applicable to the Company from 1 April 2017.
Amendment to Ind AS 7
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
X. SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION UNCERTAINTY
Significant management judgments
When preparing the financial statements, management undertakes a number of judgments, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.
The following are significant management judgments in applying the accounting policies of the Company that have the most significant effect on the financial statements.
Revenue - The Company recognises revenue using the stage of completion method. This requires estimates to be made of the outcomes of long-term construction and service contracts, which require assessments and judgments to be made on changes in work scopes, balance efforts, cost and time to complete the contract including probability of levy for liquidated damages and price reduction for delay to the extent they are probable and they are capable of being reliably measured.
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilized.
Estimation uncertainty
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
Recoverability of advances/receivables - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.
Defined benefit obligation (DBO) - Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Provisions - At each balance sheet date, based on the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However the actual future outcome may be different from this judgment.
Mar 31, 2016
1.1 ACCOUNTING CONCEPTS
The accounts are prepared on historical cost concept based on accrual
method of accounting as a going concern, consistent with generally
accepted accounting principles in accordance with the mandatory
accounting standards and disclosure requirements as per the provisions
of the Companies Act, 2013.
1.2 REVENUE RECOGNITION
(A) Revenue from services rendered is accounted for:
(a) In the case of cost plus jobs, on the basis of amount billable
under the contracts;
(b) In the case of lumpsum services and turnkey contracts, as
proportion of actual direct costs of the work to latest estimated total
direct cost of the work; and
(c) In the case of inspection contracts providing for a percentage fee
on equipment/project cost, on the basis of physical progress duly
certified.
(B) Other claims including interest on outstandings are accounted for
when there is virtual certainty of ultimate collection.
1.3 TURNOVER/WORK-IN-PROGRESS
(A) No income has been taken into account on jobs for which:
a) The terms of remuneration receivable by the Company have not been
settled and/or scope of work has not been clearly defined and,
therefore, it is not possible in the absence of settled terms to
determine whether there is a profit or loss on such jobs. However, in
cases where minimum undisputed terms have been agreed to by the
clients, income has been accounted for on the basis of such undisputed
terms though the final terms are still to be settled.
b) The terms have been agreed to at lumpsum services / turnkey
contracts and outcome of job cannot be estimated reliably
(B) The Cost of such jobs as stated in ''A'' above is carried forward as
work-in- progress at actual direct cost.
1.4 CASH & CASH EQUIVALENT
i) Cash comprises cash on hand and demand deposits i.e. balances held
with banks in current accounts for unrestrictive use;
ii) Cash equivalents are short term, highly liquid investments that are
readily convertible into known amount of cash and which are subject to
an insignificant risk of changes in value. The Company considers
unrestrictive time deposits with banks having an original maturity of
three months or less as cash equivalent.
1.5 FIXED ASSETS
a) Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation. Cost of acquisition is inclusive of freight,
duties, taxes and other incidental expenses.
b) The cost of any software purchased initially along with the computer
hardware is being capitalised along with the cost of the hardware. Any
subsequent acquisition / upgradation of software is being capitalized
as an intangible asset.
c) Whenever any new office space is acquired and partitions/fixtures
and fittings are provided to make it suitable for use, the expenditure
on the same is capitalised and depreciation charged as per Para 1.6 (a)
below. All expenditure on subsequent modifications and repairs of
partitions/fixtures and fittings are charged to revenue in the year it
is incurred.
1.6 DEPRECIATION & AMORTIZATION
a) Depreciation on fixed assets is charged on straight line method
either on the basis of rates arrived at with reference to the useful
life of the assets evaluated by the Committee consisting of Technical
experts and approved by the Management or rates arrived at based on
useful life prescribed under Part C of Schedule II of the Companies
Act, 2013, whichever is higher.
b) No depreciation has been provided in the case of land which is on
perpetual lease or where no lease deeds have been executed. Premium
paid on land where lease agreements have been executed are written off
over the period of lease proportionately.
c) The cost of capitalized software is amortized over a period of three
years from the date of its acquisition. However, software individually
costing upto Rs.5 lakhs is fully amortized during the year of its
acquisition.
d) 100% depreciation is provided on library books in the year of
purchase since individual books are low value items.
e) Assets individually costing less than Rs.5,000 are fully depreciated
in the year of acquisition.
1.7 IMPAIRMENT OF ASSETS
Impairment of cash generating assets are reviewed for impairment
whenever an event or changes in circumstances indicate that carrying
amount of such assets may not be recoverable. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the
fair value of assets. If it is found that some of the impairment losses
already recognized needs to be reversed the same are recognized in the
statement of Profit & Loss Account in the year of reversal.
1.8 INVENTORIES
Inventories in respect of stores, spares and chemicals etc. are valued
at cost or net realisable value whichever is less. Cost is determined
on "First In, First Out" basis.
1.9 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are liabilities involving substantial degree of estimation
are recognized when there is a present obligation as a result of past
event having probability of outflow of resources and a reliable
estimate can be made of such an obligation. Contingent liabilities are
disclosed by way of note unless the possibility of outflow is remote.
Contingent assets are neither recognized nor disclosed in the financial
statements.
1.10 PROVISION FOR CONTRACTUAL OBLIGATIONS
The provision for estimated liabilities on account of guarantees &
warranties etc. in respect of lumpsum services and turnkey contracts
awarded to the Company are being made on the basis of management''s
assessment of risk and consequential probable liabilities on each such
job.
1.11 FOREIGN CURRENCY TRANSACTIONS
a) Fixed assets are incorporated at the rates in force when transaction
takes place.
b) Current Assets and Current Liabilities including Cash and Bank
balances are carried at the year end exchange rates. Any gain or loss
on account of exchange difference is charged to the Profit & Loss
Account.
c) Foreign currency transactions (Income & Expenditure) are accounted
for at average monthly rates based on market rates for preceding month
in respect of Pound Sterling, US Dollars, Euro, Australian Dollar,
Canadian Dollar, Swiss Franc & Japanese Yen and in respect of other
currencies at Government rates prevailing in the month. Payments to
sub-contractors/vendors from Foreign Currency (FCN) account are
recorded at bank rate prevailing on the date of transaction.
d) Premium/discount arising at the inception of the forward contracts
entered into to hedge the foreign currency risks are amortized as
expense/income over the life of the contract. Outstanding forward
contracts as at reporting date are restated at the exchange rate
prevailing on that date.
1.12 RESEARCH AND DEVELOPMENT EXPENDITURE/GOVERNMENT GRANT
(a) Revenue expenditure on Research and Development is charged to
Profit and Loss Account in the year the expenditure is incurred.
Capital Expenditure on Research and Development is capitalized under
respective fixed assets.
(b) Government grant of capital nature for promotion and setting up of
R&D Centre is treated as Capital Reserve and shown separately under
Reserves and Surplus.
(c) Government grant against specific fixed asset is deducted from the
gross value of the concerned asset.
(d) Funds received from Government Agencies to carry out Research and
Development activities are shown under the Head ''other income'' as
adjustment against expenditure incurred. Unutilised funds are shown
under other liabilities.
1.13 RETIREMENT / OTHER LONG TERM EMPLOYEE BENEFITS
a) Liability in respect of Gratuity, a defined benefit plan, is being
paid to a fund maintained by LIC and administered through a separate
irrevocable trust set up by the Company. Difference between the fund
balance and accrued liability at the end of the year based on actuarial
valuation is charged to Profit & Loss Account.
b) Liability towards carried forward leave and post retirement medical
benefits, being defined benefit plans, is paid to a fund maintained by
LIC and difference between the fund balance and accrued liability at
the end of the year based on actuarial valuation is charged to Profit &
Loss Account.
c) Contributions with respect to Provident Fund, a defined contribution
plan, are made to the trust set-up by the Company for the purpose.
d) Contribution with respect to Superannuation Scheme, a defined
contribution plan for employees is paid to a fund maintained by the
Life Insurance Corporation of India and administered through separate
irrecoverable Trust set up by the Company.
e) Liability in respect of other long term/terminal employee benefits,
being defined benefit plans, is recognized on the basis of actuarial
valuation.
f) Voluntary retirement expenses are charged to Profit & Loss Account
in the year of its incurrence.
1.14 OPERATING LEASES
i) Assets acquired on leases where a significant portion of risk and
rewards of ownership are retained by the lessor are classified as
operating leases. Lease rental are charged to statement of profit and
loss on accrual basis.
ii) Assets leased out under operating leases are capitalized. Rental
income is recognized on accrual basis over the lease term.
1.15 Expenses/Income booked to Profit and Loss Account are after
adjustment of excess/short provisions. However, in cases of specific
provisions where no expenses/income has been incurred/received against
such provisions, the same are adjusted as excess provisions of previous
years written back/Miscellaneous income.
1.16 Dividend on Units/Shares is accounted for on declaration made upto
the close of the accounting year. Income distributed/undistributed
surplus on investment in an AOP is recognised as income as per
intimation received.
1.17 TAXES ON INCOME
Current tax is determined as the amount of tax payable in respect of
taxable income for the period. Deferred tax is recognized on timing
difference, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods. Deferred Tax Asset is recognized only to
the extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred assets can
be realised.
1.18 INVESTMENT
Long-term investments are carried at cost. However, when there is a
decline, other than temporary, in the value of a long-term investment,
the carrying amount is reduced to recognise the decline.
Current Investments i.e. investments which are intended to be held for
not more than twelve months from the date of investment are carried at
the lower of cost or market value.
1.19 OIL & GAS EXPLORATION ACTIVITIES
A) The Company follows ''Successful Efforts Method'' in accounting for
Oil & Gas exploration and production activities as detailed below:
a) Survey costs are charged as expense in the year of its incurrence.
b) Acquisition costs, cost of incomplete/ undecided exploratory wells
and development costs are carried as capital work in progress till
these are either transferred to producing properties on completion or
expensed in the year when determined to be dry as the case may be.
B) The Company''s share of proved oil and gas reserves are disclosed
when notified by the operator of the relevant block.
C) The Company''s proportionate share in the assets, liabilities, income
and expenditure of jointly controlled assets are accounted for as per
the participating interest.
Mar 31, 2015
1 ACCOUNTING CONCEPTS
The accounts are prepared on historical cost concept based on accrual
method of accounting as a going concern, consistent with generally
accepted accounting principles in accordance with the mandatory
accounting standards and disclosure requirements as per the provisions
of the Companies Act, 2013.
2 REVENUE RECOGNITION
(A) Revenue from services rendered Is accounted for:
(a) In the case of cost plus jobs, on the basis of amount billable
under the contracts;
(b) In the case of lumpsum services and turnkey contracts, as
proportion of actual direct costs of the work to latest estimated total
direct cost of the work; and
(c) In the case of inspection contracts providing for a percentage fee
on equipment/project cost, on the basis of physical progress duly
certified.
(B) Other claims including interest on outstandings are accounted for
when there is virtual certainty of ultimate collection.
3 TURNOVER/WORK-IN-PROGRESS
(A) No income has been taken into account on jobs for which:
a) The terms of remuneration receivable by the Company have not been
settled and/or scope of work has not been clearly defined and,
therefore, it is not possible in the absence of settled terms to
determine whether there is a profit or loss on such jobs. However, in
cases where minimum undisputed terms have been agreed to by the
clients, income has been accounted for on the basis of such undisputed
terms though the final terms are still to be settled.
b) The terms have been agreed to at lumpsum services / turnkey
contracts and outcome of job cannot be estimated reliably.
(B) The Cost of such jobs as stated in 'A' above is carried forward as
work-in- progress at actual direct cost.
4 CASH & CASH EQUIVALENT
i) Cash comprises cash on hand and demand deposits i.e. balances held
with banks in current accounts for unrestrictive use;
ii) Cash equivalents are short term, highly liquid investments that are
readily convertible into known amount of cash and which are subject to
an insignificant risk of changes in value. The company considers
unrestrictive time deposits with banks having an original maturity of
three months or less as cash equivalent.
5 FIXED ASSETS
a) Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation. Cost of acquisition is inclusive of freight,
duties, taxes and other incidental expenses.
b) The cost of any software purchased initially along with the computer
hardware is being capitalised along with the cost of the hardware. Any
subsequent acquisition / upgradation of software is being capitalized
as an intangible asset.
c) Whenever any new office space is acquired and partitions/fixtures
and fittings are provided to make it suitable for use, the expenditure
on the same is capitalised and depreciation charged as per Para 1.6 (a)
below. All expenditure on subsequent modifications and repairs of
partitions/fixtures and fittings are charged to revenue in the year it
is incurred.
6 DEPRECIATION & AMORTIZATION
a) Depreciation on fixed assets is charged on straight line method
either on the basis of rates arrived at with reference to the useful
life of the assets evaluated by the Committee consisting of Technical
experts and approved by the Management or rates arrived at based on
useful life prescribed under Part C of Schedule II of the Companies
Act, 2013, whichever is higher.
b) No depreciation has been provided in the case of land which is on
perpetual lease or where no lease deeds have been executed. Premium
paid on land where lease agreements have been executed are written off
over the period of lease proportionately.
c) The cost of capitalized software is amortized over a period of three
years from the date of its acquisition. However, software individually
costing upto Rs.5 lakhs is fully amortized during the year of its
acquisition.
d) 100% depreciation is provided on library books in the year of
purchase since individual books are low value items.
e) Assets individually costing less than Rs.5,000 are fully depreciated
in the year of acquisition.
7 IMPAIRMENT OF ASSETS
Impairment of cash generating assets are reviewed for impairment
whenever an event or changes in circumstances indicate that carrying
amount of such assets may not be recoverable. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the
fair value of assets. If it is found that some of the impairment losses
already recognized needs to be reversed the same are recognized in the
statement of Profit & Loss Account in the year of reversal.
8 INVENTORIES
Inventories in respect of stores, spares and chemicals etc. are valued
at cost or net realisable value whichever is less. Cost is determined
on "First In, First Out" basis.
9 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are liabilities involving substantial degree of estimation
are recognized when there is a present obligation as a result of past
event having probability of outflow of resources and a reliable
estimate can be made of such an obligation. Contingent liabilities are
disclosed by way of note unless the possibility of outflow is remote.
Contingent assets are neither recognized nor disclosed in the financial
statements.
10 PROVISION FOR CONTRACTUAL OBLIGATIONS
The provision for estimated liabilities on account of guarantees &
warranties etc. in respect of lumpsum services and turnkey contracts
awarded to the Company are being made on the basis of management's
assessment of risk and consequential probable liabilities on each such
job.
11 FOREIGN CURRENCY TRANSACTIONS
a) Fixed assets are incorporated at the rates in force when transaction
takes place.
b) Current Assets and Current Liabilities including Cash and Bank
balances are carried at the year end exchange rates. Any gain or loss
on account of exchange difference is charged to the Profit & Loss
Account.
c) Foreign currency transactions (Income & Expenditure) are accounted
for at average monthly rates based on market rates for preceding month
in respect of Pound Sterling, US Dollars, Euro, Australian Dollar,
Canadian Dollar, Swiss Franc & Japanese Yen and in respect of other
currencies at Government rates prevailing in the month. Payments to
sub-contractors/vendors from Foreign Currency (FCN) account are
recorded at bank rate prevailing on the date of transaction.
d) Premium/discount arising at the inception of the forward contracts
entered into to hedge the foreign currency risks are amortized as
expense/income over the life of the contract. Outstanding forward
contracts as at reporting date are restated at the exchange rate
prevailing on that date.
12 RESEARCH AND DEVELOPMENT EXPENDITURE/GOVERNMENT GRANT
(a) Revenue expenditure on Research and Development is charged to
Profit and Loss Account in the year the expenditure is incurred.
Capital Expenditure on Research and Development is capitalized under
respective fixed assets.
(b) Government grant of capital nature for promotion and setting up of
R&D Centre is treated as Capital Reserve and shown separately under
Reserves and Surplus.
(c) Government grant against specific fixed asset is deducted from the
gross value of the concerned asset.
(d) Funds received from Government Agencies to carry out Research and
Development activities are shown under the Head 'other income' as
adjustment against expenditure incurred. Unutilised funds are shown
under other liabilities.
13 RETIREMENT/OTHER LONG TERM EMPLOYEE BENEFITS
a) Liability in respect of Gratuity, a defined benefit plan, is being
paid to a fund maintained by LIC and administered through a separate
irrevocable trust set up by the company. Difference between the fund
balance and accrued liability at the end of the year based on actuarial
valuation is charged to Profit & Loss Account.
b) Liability towards carried forward leave and post retirement medical
benefits, being defined benefit plans, is paid to a fund maintained by
LIC and difference between the fund balance and accrued liability at
the end of the year based on actuarial valuation is charged to Profit &
Loss Account.
c) Contributions with respect to Provident Fund, a defined contribution
plan, are made to the trust set-up by the Company for the purpose.
d) Contribution with respect to Superannuation Scheme, a defined
contribution plan for employees is paid to a fund maintained by the
Life Insurance Corporation of India and administered through separate
irrecoverable Trust set up by the Company.
e) Liability in respect of other long term/terminal employee benefits,
being defined benefit plans, is recognized on the basis of actuarial
valuation.
f) Voluntary retirement expenses are charged to Profit & Loss Account
in the year of its incurrence.
14 OPERATING LEASES
i) Assets acquired on leases where a significant portion of risk and
rewards of ownership are retained by the lessor are classified as
operating leases. Lease rental are charged to statement of profit and
loss on accrual basis.
ii) Assets leased out under operating leases are capitalized. Rental
income is recognized on accrual basis over the lease term.
15 Expenses/Income booked to Profit and Loss Account are after
adjustment of excess/short provisions. However, in cases of specific
provisions where no expenses/income has been incurred/received against
such provisions, the same are adjusted as excess provisions of previous
years written back/Miscellaneous income.
16 Dividend on Units/Shares is accounted for on declaration made upto
the close of the accounting year. Income distributed/undistributed
surplus on investment in an AOP is recognised as income as per
intimation received.
17 TAXES ON INCOME
Current tax is determined as the amount of tax payable in respect of
taxable income for the period. Deferred tax is recognized on timing
difference, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods. Deferred Tax Asset is recognized only to
the extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred assets can
be realised.
18 INVESTMENT
Long-term investments are carried at cost. However, when there is a
decline, other than temporary, in the value of a long-term investment,
the carrying amount Is reduced to recognise the decline.
Current Investments i.e. investments which are intended to be held for
not more than twelve months from the date of investment are carried at
the lower of cost or market value.
19 OIL & GAS EXPLORATION ACTIVITIES
A) The Company follows 'Successful Efforts Method' in accounting for
Oil & Gas exploration and production activities as detailed below:
a) Survey costs are charged as expense in the year of its incurrence.
b) Acquisition costs, cost of incomplete/ undecided exploratory wells
and development costs are carried as capital work in progress till
these are either transferred to producing properties on completion or
expensed in the year when determined to be dry as the case may be.
B) The Company's share of proved oil and gas reserves are disclosed
when notified by the operator of the relevant block.
C) The Company's proportionate share in the assets, liabilities, income
and expenditure of jointly controlled assets are accounted for as per
the participating interest.
Mar 31, 2014
1.1 ACCOUNTING CONCEPTS
The accounts are prepared on historical cost concept based on accrual
method of accounting as a going concern in accordance with generally
accepted accounting principles in India, accounting standards notified
under Companies (Accounting Standards) Rules, 2006 read with General
Circular 15/2013 dated 13th September, 2013 of the Ministry of
Corporate Affairs, provisions of the Companies Act, 1956 and the
Companies Act, 2013 (to the extent notified and applicable).
1.2 REVENUE RECOGNITION
(A) Revenue from services rendered is accounted for:
(a) In the case of cost plus jobs, on the basis of amount billable
under the contracts;
(b) In the case of lumpsum services and turnkey contracts, as
proportion of actual direct costs of the work to latest estimated total
direct cost of the work; and
(c) In the case of inspection contracts providing for a percentage fee
on equipment/project cost, on the basis of physical progress duly
certified.
(B) Other claims including interest on outstandings are accounted for
when there is virtual certainty of ultimate collection.
1.3 TURNOVER/WORK-IN-PROGRESS
(A) No income has been taken into account on jobs for which:
a) The terms of remuneration receivable by the Company have not been
settled and/or scope of work has not been clearly defined and,
therefore, it is not possible in the absence of settled terms to
determine whether there is a profit or loss on such jobs. However, in
cases where minimum undisputed terms have been agreed to by the
clients, income has been accounted for on the basis of such undisputed
terms though the final terms are still to be settled.
b) The terms have been agreed to at lumpsum services / turnkey
contracts and outcome of job cannot be estimated reliably
(B) The Cost of such jobs as stated in ''A'' above is carried forward as
work-in- progress at actual direct cost.
1.4 CASH & CASH EQUIVALENT
i) Cash comprises cash on hand and demand deposits i.e. balances held
with banks in current accounts for unrestrictive use;
ii) Cash equivalents are short term, highly liquid investments that are
readily convertible into known amount of cash and which are subject to
an insignificant risk of changes in value. The company considers
unrestrictive time deposits with banks having an original maturity of
three months or less as cash equivalent.
1.5 FIXED ASSETS
a) Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation. Cost of acquisition is inclusive of freight,
duties, taxes and other incidental expenses.
b) The cost of any software purchased initially along with the computer
hardware is being capitalised along with the cost of the hardware. Any
subsequent acquisition / upgradation of software is being capitalized
as an intangible asset.
c) Whenever any new office space is acquired and partitions/fixtures
and fittings are provided to make it suitable for use, the expenditure
on the same is capitalised and depreciation charged as per Para 1.6 (a)
below. All expenditure on subsequent modifications and repairs of
partitions/fixtures and fittings are charged to revenue in the year it
is incurred.
1.6 DEPRECIATION & AMORTIZATION
a) Depreciation on fixed assets is charged on straight line method
either on the basis of rates arrived at with reference to the useful
life of the assets evaluated by the Committee consisting of Technical
experts and approved by the Management, or the minimum rates prescribed
under Schedule XIV of the Companies Act, 1956, whichever is higher.
b) No depreciation has been provided in the case of land which is on
perpetual lease or where no lease deeds have been executed. Premium
paid on land where lease agreements have been executed are written off
over the period of lease proportionately.
c) The cost of capitalized software is amortized over a period of three
years from the date of its acquisition. However, software individually
costing upto Rs. 5 lakhs is fully amortized during the year of its
acquisition.
d) 100% depreciation is provided on library books in the year of
purchase since individual books are low value items.
e) Assets individually costing less than Rs. 5,000 are fully depreciated
in the year of acquisition.
1.7 IMPAIRMENT OF ASSETS
Impairment of cash generating assets are reviewed for impairment
whenever an event or changes in circumstances indicate that carrying
amount of such assets may not be recoverable. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the
fair value of assets. If it is found that some of the impairment losses
already recognized needs to be reversed the same are recognized in the
statement of Profit & Loss Account in the year of reversal.
1.8 INVENTORIES
Inventories in respect of stores, spares and chemicals etc. are valued
at cost or net realisable value whichever is less. Cost is determined
on "First In, First Out basis.
1.9 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are liabilities involving substantial degree of estimation
are recognized when there is a present obligation as a result of past
event having probability of outflow of resources and a reliable
estimate can be made of such an obligation. Contingent liabilities are
disclosed by way of note unless the possibility of outflow is remote.
Contingent assets are neither recognized nor disclosed in the financial
statements.
1.10 PROVISION FOR CONTRACTUAL OBLIGATIONS
The provision for estimated liabilities on account of guarantees &
warranties etc. in respect of lumpsum services and turnkey contracts
awarded to the Company are being made on the basis of management''s
assessment of risk and consequential probable liabilities on each such
job.
1.11 FOREIGN CURRENCY TRANSACTIONS
a) Fixed assets are incorporated at the rates in force when transaction
takes place.
b) Current Assets and Current Liabilities including Cash and Bank
balances are carried at the year end exchange rates. Any gain or loss
on account of exchange difference is charged to the Profit & Loss
Account.
c) Foreign currency transactions (Income & Expenditure) are accounted
for at average monthly rates based on market rates for preceding month
in respect of Pound Sterling, US Dollars, Euro, Australian Dollar,
Canadian Dollar, Swiss Franc & Japanese Yen and in respect of other
currencies at Government rates prevailing in the month. Payments to
sub-contractors/vendors from Foreign Currency (FCN) account are
recorded at bank rate prevailing on the date of transaction.
1.12 RESEARCH AND DEVELOPMENT EXPENDITURE/GOVERNMENT GRANT
(a) Revenue expenditure on Research and Development is charged to
Profit and Loss Account in the year the expenditure is incurred.
Capital Expenditure on Research and Development is capitalized under
respective fixed assets.
(b) Government grant of capital nature for promotion and setting up of
R&D Centre is treated as Capital Reserve and shown separately under
Reserves and Surplus.
(c) Government grant against specific fixed asset is deducted from the
gross value of the concerned asset.
(d) Funds received from Government Agencies to carry out Research and
Development activities are shown under the Head ''other income'' as
adjustment against expenditure incurred. Unutilised funds are shown
under other liabilities.
1.13 RETIREMENT / OTHER LONG TERM EMPLOYEE BENEFITS
a) Liability in respect of Gratuity, a defined benefit plan, is being
paid to a fund maintained by LIC and administered through a separate
irrevocable trust set up by the company. Difference between the fund
balance and accrued liability at the end of the year based on actuarial
valuation is charged to Profit & Loss Account.
b) Liability towards carried forward leave and post retirement medical
benefits, being defined benefit plans, is paid to a fund maintained by
LIC and difference between the fund balance and accrued liability at
the end of the year based on actuarial valuation is charged to Profit &
Loss Account.
c) Contributions with respect to Provident Fund, a defined contribution
plan, are made to the trust set-up by the Company for the purpose.
d) Contribution with respect to Superannuation Scheme, a defined
contribution plan for employees is paid to a fund maintained by the
Life Insurance Corporation of India and administered through separate
irrecoverable Trust set up by the Company.
e) Liability in respect of other long term/terminal employee benefits,
being defined benefit plans, is recognized on the basis of actuarial
valuation.
f) Voluntary retirement expenses are charged to Profit & Loss Account
in the year of its incurrence.
1.14 OPERATING LEASES
i) Assets acquired on leases where a significant portion of risk and
rewards of ownership are retained by the lessor are classified as
operating leases. Lease rental are charged to statement of profit and
loss on accrual basis.
ii) Assets leased out under operating leases are capitalized. Rental
income is recognized on accrual basis over the lease term.
1.15 Expenses/Income booked to Profit and Loss Account are after
adjustment of excess/short provisions. However, in cases of specific
provisions where no expenses/income has been incurred/received against
such provisions, the same are adjusted as excess provisions of previous
years written back/Miscellaneous income.
1.16 Dividend on Units/Shares is accounted for on declaration made upto
the close of the accounting year. Income distributed/undistributed
surplus on investment in an AOP is recognised as income as per
intimation received.
1.17 TAXES ON INCOME
Current tax is determined as the amount of tax payable in respect of
taxable income for the period. Deferred tax is recognized on timing
difference, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods. Deferred Tax Asset is recognized only to
the extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred assets can
be realised.
1.18 INVESTMENT
Long-term investments are carried at cost. However, when there is a
decline, other than temporary, in the value of a long-term investment,
the carrying amount is reduced to recognise the decline.
Current Investments i.e. investments which are intended to be held for
not more than twelve months from the date of investment are carried at
the lower of cost or market value.
1.19 OIL & GAS EXPLORATION ACTIVITIES
A) The Company follows ''Successful Efforts Method'' in accounting for
Oil & Gas exploration and production activities as detailed below:
a) Survey costs are charged as expense in the year of its incurrence.
b) Acquisition costs, cost of incomplete/ undecided exploratory wells
and development costs are carried as capital work in progress till
these are either transferred to producing properties on completion or
expensed in the year when determined to be dry as the case may be.
B) The Company''s share of proved oil and gas reserves are disclosed
when notified by the operator of the relevant block.
C) The Company''s proportionate share in the assets, liabilities, income
and expenditure of jointly controlled assets are accounted for as per
the participating interest.
Mar 31, 2013
1.1 ACCOUNTING CONCEPTS
The accounts are prepared on historical cost concept based on accrual
method of accounting as a going concern, and consistent with generally
accepted accounting principles in accordance with the mandatory
accounting standards and disclosure requirements as per the provisions
of the Companies Act, 1956.
1.2 REVENUE RECOGNITION
(A) Revenue from services rendered is accounted for:
(a) In the case of cost plus jobs, on the basis of amount billable
under the contracts;
(b) In the case of lumpsum services and turnkey contracts, as
proportion of actual direct costs of the work to latest estimated total
direct cost of the work; and
(c) In the case of inspection contracts providing for a percentage fee
on equipment/project cost, on the basis of physical progress duly
certified.
(B) Other claims including interest on outstandings are accounted for
when there is virtual certainty of ultimate collection.
1.3 TURNOVER/WORK-IN-PROGRESS
(A) No income has been taken into account on jobs for which:
a) The terms of remuneration receivable by the Company have not been
settled and/or scope of work has not been clearly defined and,
therefore, it is not possible in the absence of settled terms to
determine whether there is a profit or loss on such jobs. However, in
cases where minimum undisputed terms have been agreed to by the
clients, income has been accounted for on the basis of such undisputed
terms though the final terms are still to be settled.
b) The terms have been agreed to at lumpsum services / turnkey
contracts and physical progress is less than 25%.
(B) The Cost of such jobs as stated in ''A'' above is carried forward as
work-in- progress at actual direct cost.
1.4 CASH & CASH EQUIVALENT
i) Cash comprises cash on hand and demand deposits i.e. balances held
with banks in current accounts for unrestrictive use;
ii) Cash equivalents are short term, highly liquid investments that are
readily convertible into known amount of cash and which are subject to
an insignificant risk of changes in value. The company considers
unrestrictive time deposits with banks having an original maturity of
three months or less as cash equivalent.
1.5 FIXED ASSETS
a) Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation. Cost of acquisition is inclusive of freight,
duties, taxes and other incidental expenses.
b) The cost of any software purchased initially along with the computer
hardware is being capitalised along with the cost of the hardware. Any
subsequent acquisition / upgradation of software is being capitalized
as an intangible asset.
c) Whenever any new office space is acquired and partitions/fixtures
and fittings are provided to make it suitable for use, the expenditure
on the same is capitalised and depreciation charged as per Para 1.6 (a)
below. All expenditure on subsequent modifications and repairs of
partitions/fixtures and fittings are charged to revenue in the year it
is incurred.
1.6 DEPRECIATION & AMORTIZATION
a) Depreciation on fixed assets is charged on straight line method
either on the basis of rates arrived at with reference to the useful
life of the assets evaluated by the Committee consisting ofTechnical
experts and approved by the Management, or the minimum rates prescribed
under Schedule XIV of the Companies Act, 1956, whichever is higher.
b) No depreciation has been provided in the case of land which is on
perpetual lease or where no lease deeds have been executed. Premium
paid on land where lease agreements have been executed are written off
over the period of lease proportionately.
c) The cost of capitalized software is amortized over a period of three
years from the date of its acquisition. However, software individually
costing upto Rs.5 lakhs is fully amortized during the year of its
acquisition.
d) 100% depreciation is provided on library books in the year of
purchase since individual books are low value items.
e) Assets individually costing less than Rs.5,000 are fully depreciated
in the year of acquisition.
1.7 IMPAIRMENT OF ASSETS
Impairment of cash generating assets are reviewed for impairment
whenever an event or changes in circumstances indicate that carrying
amount of such assets may not be recoverable. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the
fair value of assets. If it is found that some of the impairment losses
already recognized needs to be reversed the same are recognized in the
statement of Profit & Loss Account in the year of reversal.
1.8 INVENTORIES
Inventories in respect of stores, spares and chemicals etc. are valued
at cost or net realisable value whichever is less. Cost is determined
on"First In, First Out" basis.
1.9 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are liabilities involving substantial degree of estimation
are recognized when there is a present obligation as a result of past
event having probability of outflow of resources and a reliable
estimate can be made of such an obligation. Contingent liabilities are
disclosed by way of note unless the possibility of outflow is remote.
Contingent assets are neither recognized nor disclosed in the financial
statements.
1.10 PROVISION FOR CONTRACTUAL OBLIGATIONS
The provision for estimated liabilities on account of guarantees &
warranties etc. in respect of lumpsum services and turnkey contracts
awarded to the Company are being made on the basis of management''s
assessment of risk and consequential probable liabilities on each such
job.
1.11 FOREIGN CURRENCY TRANSACTIONS
a) Fixed assets are incorporated at the rates in force when transaction
takes place.
b) Current Assets and Current Liabilities including Cash and Bank
balances are carried at the year end exchange rates. Any gain or loss
on account of exchange difference is charged to the Profit & Loss
Account.
c) Foreign currency transactions (Income & Expenditure) are accounted
for at average monthly rates based on market rates for preceding month
in respect of Pound Sterling, US Dollars, Euro, Australian Dollar,
Canadian Dollar, Swiss Franc & Japanese Yen and in respect of other
currencies at Government rates prevailing in the month. Payments to
sub-contractors/vendors from Foreign Currency (FCN) account are
recorded at bank rate prevailing on the date of transaction.
1.12 RESEARCH AND DEVELOPMENT EXPENDITURE/GOVERNMENT GRANT
(a) Revenue expenditure on Research and Development is charged to
Profit and Loss Account in the year the expenditure is incurred.
Capital Expenditure on Research and Development is capitalized under
respective fixed assets.
(b) Government grant of capital nature for promotion and setting up of
R&D Centre is treated as Capital Reserve and shown separately under
Reserves and Surplus.
(c) Funds received from Government Agencies to carry out Research and
Development activities are shown under the Head ''other income'' as
adjustment against expenditure incurred. Unutilised funds are shown
under other liabilities.
1.13 RETIREMENT / OTHER LONG TERM EMPLOYEE BENEFITS
a) Liability in respect of Gratuity, a defined benefit plan, is being
paid to a fund maintained by LIC and administered through a separate
irrevocable trust set up by the company. Difference between the fund
balance and accrued liability at the end of the year based on actuarial
valuation is charged to Profit & Loss Account.
b) Liability towards carried forward leave and post retirement medical
benefits, being defined benefit plans, is paid to a fund maintained by
LIC and difference between the fund balance and accrued liability at
the end of the year based on actuarial valuation is charged to Profit &
Loss Account.
c) Contributions with respect to Provident Fund, a defined contribution
plan, are made to the trust set-up by the Company for the purpose.
d) Contribution with respect to Superannuation Scheme, a defined
contribution plan for employees is paid to a fund maintained by the
Life Insurance Corporation of India and administered through separate
irrecoverable Trust set up by the Company.
e) Liability in respect of other long term/terminal employee benefits,
being defined benefit plans, is recognized on the basis of actuarial
valuation.
f) Voluntary retirement expenses are charged to Profit & Loss Account
in the year of its incurrence.
1.14 Expenses/Income booked to Profit and Loss Account are after
adjustment of excess/short provisions. However, in cases of specific
provisions where no expenses/income has been incurred/received against
such provisions, the same are adjusted as excess provisions of previous
years written back/Miscellaneous income.
1.15 Dividend on Units/Shares is accounted for on declaration made upto
the close of the accounting year. Income distributed/undistributed
surplus on investment in an AOP is recognised as income as per
intimation received.
1.16 TAXES ON INCOME
Current tax is determined as the amount of tax payable in respect of
taxable income for the period. Deferred tax is recognized on timing
difference, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods. Deferred Tax Asset is recognized only to
the extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred assets can
be realised.
1.17 INVESTMENT
Long-term investments are carried at cost. However, when there is a
decline, other than temporary, in the value of a long-term investment,
the carrying amount is reduced to recognise the decline.
Current Investments i.e. investments which are intended to be held for
not more than twelve months from the date of investment are carried at
the lower of cost or market value.
1.18 OIL & GAS EXPLORATION ACTIVITIES
A) The Company follows ''Successful Efforts Method'' in accounting for
Oil & Gas exploration and production activities as detailed below:
a) Survey costs are charged as expense in the year of its incurrence.
b) Acquisition costs, cost of incomplete/ undecided exploratory wells
and development costs are carried as capital work in progress till
these are either transferred to producing properties on completion or
expensed in the year when determined to be dry as the case may be.
B) The Company''s share of proved oil and gas reserves are disclosed
when notified by the operator of the relevant block.
C) The Company''s proportionate share in the assets, liabilities, income
and expenditure of jointly controlled assets are accounted for as per
the participating interest.
Mar 31, 2012
1.1 ACCOUNTING CONCEPTS
The accounts are prepared on historical cost concept based on accrual
method of accounting as a going concern, and consistent with generally
accepted accounting principles in accordance with the mandatory
accounting standards and disclosure requirements as per the provisions
of the Companies Act, 1956.
1.2 REVENUE RECOGNITION
(A) Revenue from services rendered is accounted for:
(a) In the case of cost plus jobs, on the basis of amount billable
under the contracts;
(b) In the case of lumpsum services and turnkey contracts, as
proportion of actual direct costs of the work to latest estimated total
direct cost of the work; and
(c) In the case of contracts providing for a percentage fee on
equipment/project cost, on the basis of physical progress duly
certified.
(B) Other claims including interest on outstandings are accounted for
when there is virtual certainty of ultimate collection.
1.3 TURNOVER/WORK-IN-PROGRESS
(A) No income has been taken into account on jobs for which:
a) The terms of remuneration receivable by the Company have not been
settled and/or scope of work has not been clearly defined and,
therefore, it is not possible in the absence of settled terms to
determine whether there is a profit or loss on such jobs. However, in
cases where minimum undisputed terms have been agreed to by the
clients, income has been accounted for on the basis of such undisputed
terms though the final terms are still to be settled.
b) The terms have been agreed to at lumpsum services / turnkey
contracts and physical progress is less than 25%.
(B) The Cost of such jobs as stated in 'A' above is carried forward as
work-in- progress at actual direct cost.
1.4 CASH & CASH EQUIVALENT
i) Cash comprises cash on hand and demand deposits i.e. balances held
with banks in current accounts for unrestrictive use;
ii) Cash equivalents are short term, highly liquid investments that are
readily convertible into known amount of cash and which are subject to
an insignificant risk of changes in value. The company considers
unrestrictive time deposits with banks having an original maturity of
three months or less as cash equivalent.
1.5 FIXED ASSETS
a) Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation. Cost of acquisition is inclusive of freight,
duties, taxes and other incidental expenses.
b) The cost of any software purchased initially along with the computer
hardware is being capitalised along with the cost of the hardware. Any
subsequent acquisition / upgradation of software is being capitalized
as an intangible asset.
c) Whenever any new office space is acquired and partitions/fixtures
and fittings are provided to make it suitable for use, the expenditure
on the same is capitalised and depreciation charged as per Para 1.6 (a)
below. All expenditure on subsequent modifications and repairs of
partitions/fixtures and fittings are charged to revenue in the year it
is incurred.
1.6 DEPRECIATION & AMORTIZATION
a) Depreciation on fixed assets is charged on straight line method
either on the basis of rates arrived at with reference to the useful
life of the assets evaluated by the Committee consisting of Technical
experts and approved by the Management, or the minimum rates prescribed
under Schedule XIV of the Companies Act, 1956, whichever is higher.
b) No depreciation has been provided in the case of land which is on
perpetual lease or where no lease deeds have been executed. Premium
paid on land where lease agreements have been executed are written off
over the period of lease proportionately.
c) The cost of capitalized software is amortized over a period of three
years from the date of its acquisition. However, software individually
costing upto Rs5 lakhs is fully amortized during the year of its
acquisition.
d) 100% depreciation is provided on library books in the year of
purchase since individual books are low value items.
e) Assets individually costing less than Rs 5,000 are fully depreciated
in the year of acquisition.
1.7 IMPAIRMENT OF ASSETS
Impairment of cash generating assets are reviewed for impairment
whenever an event or changes in circumstances indicate that carrying
amount of such assets may not be recoverable. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the
fair value of assets. If it is found that some of the impairment losses
already recognized needs to be reversed the same are recognized in the
statement of Profit & Loss Account in the year of reversal.
1.8 INVENTORIES
Inventories in respect of stores, spares and chemicals etc. are valued
at cost or net realisable value whichever is less. Cost is determined
on "First In, First Out" basis.
1.9 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are liabilities involving substantial degree of estimation
are recognized when there is a present obligation as a result of past
event having probability of outflow of resources and a reliable
estimate can be made of such an obligation. Contingent liabilities are
disclosed by way of note unless the possibility of outflow is remote.
Contingent assets are neither recognized nor disclosed in the financial
statements.
1.10 PROVISION FOR CONTRACTUAL OBLIGATIONS
The provision for estimated liabilities on account of guarantees &
warranties etc. in respect of lumpsum services and turnkey contracts
awarded to the Company are being made on the basis of management's
assessment of risk and consequential probable liabilities on each such
job.
1.11 FOREIGN CURRENCY TRANSACTIONS
a) Fixed assets are incorporated at the rates in force when transaction
takes place.
b) Current Assets and Current Liabilities including Cash and Bank
balances are carried at the year end exchange rates. Any gain or loss
on account of exchange difference is charged to the Profit & Loss
Account.
c) Foreign currency transactions (Income & Expenditure) are accounted
for at average monthly rates based on market rates for preceding month
in respect of Pound Sterling, US Dollars, Euro, Australian Dollar,
Canadian Dollar, Swiss Franc & Japanese Yen and in respect of other
currencies at Government rates prevailing in the month. Payments to
sub- contractors/vendors from Foreign Currency (FCN) account are
recorded at bank rate prevailing on the date of transaction.
1.12 RESEARCH AND DEVELOPMENT EXPENDITURE/GOVERNMENT GRANT
(a) Revenue expenditure on Research and Development is charged to
Profit and Loss Account in the year the expenditure is incurred.
Capital Expenditure on Research and Development is capitalized under
respective fixed assets.
(b) Government grant of capital nature for promotion and setting up of
R&D Centre is treated as Capital Reserve and shown separately under
Reserves and Surplus.
(c) Funds received from Government Agencies to carry out Research and
Development activities are shown under the Head 'other income' as
adjustment against expenditure incurred. Unutilised funds are shown
under other liabilities.
1.13 RETIREMENT / OTHER LONG TERM EMPLOYEE BENEFITS
a) Liability in respect of Gratuity, a defined benefit plan, is being
paid to a fund maintained by LIC and administered through a separate
irrevocable trust set up by the company. Difference between the fund
balance and accrued liability at the end of the year based on actuarial
valuation is charged to Profit & Loss Account.
b) Liability towards carried forward leave and post retirement medical
benefits, being defined benefit plans, is paid to a fund maintained by
LIC and difference between the fund balance and accrued liability at
the end of the year based on actuarial valuation is charged to Profit &
Loss Account.
c) Contributions with respect to Provident Fund, a defined contribution
plan, are made to the trust set-up by the Company for the purpose.
d) Contribution with respect to Superannuation Scheme, a defined
contribution plan for employees is paid to a fund maintained by the
Life Insurance Corporation of India and administered through separate
irrecoverable Trust set up by the Company.
e) Liability in respect of other long term/terminal employee benefits,
being defined benefit plans, is recognized on the basis of actuarial
valuation.
f) Voluntary retirement expenses are charged to Profit & Loss Account
in the year of its incurrence.
1.14 Expenses/Income booked to Profit and Loss Account are after
adjustment of excess/short provisions. However, in cases of specific
provisions where no expenses/income has been incurred/received against
such provisions, the same are adjusted as excess provisions of previous
years written back/Miscellaneous income.
1.15 Dividend on Units/Shares is accounted for on declaration made upto
the close of the accounting year. Income distributed/undistributed
surplus on investment in an AOP is recognised as income as per
intimation received.
1.16 TAXES ON INCOME
Current tax is determined as the amount of tax payable in respect of
taxable income for the period. Deferred tax is recognized on timing
difference, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods. Deferred Tax Asset is recognized only to
the extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred assets can
be realised.
1.17 INVESTMENT
Long-term investments are carried at cost. However, when there is a
decline, other than temporary, in the value of a long- term investment,
the carrying amount is reduced to recognise the decline.
Current Investments i.e. investments which are intended to be held for
not more than twelve months from the date of investment are carried at
the lower of cost or market value.
Mar 31, 2011
1. Accounting Concepts The accounts are prepared on historical cost
concept based on accrual method of accounting as a going concern, and
consistent with generally accepted accounting principles in accordance
with the mandatory accounting standards and disclosure requirements as
per the provisions of the Companies Act, 1956.
2. Income Recognition
(A) Income from services rendered is accounted for:
(a) In the case of cost plus jobs, on the basis of amount billable
under the contracts;
(b) In the case of lumpsum services and lumpsum Turnkey contracts, as
proportion of actual direct costs of the work to latest estimated total
direct cost of the work; and
(c) In the case of contracts providing for a percentage fee on
equipment/project cost, on the basis of physical progress duly
certified.
(B) Other claims including interest on outstandings are accounted for
when there is virtual certainty of ultimate collection.
3. Turnover/work-in-progress
(A) No income has been taken into account on jobs for which:
a) The terms of remuneration receivable by the Company have not been
settled and/or scope of work has not been clearly defined and,
therefore, it is not possible in the absence of settled terms to
determine whether there is a profit or loss on such jobs. However, in
cases where minimum undisputed terms have been agreed to by the
clients, income has been accounted for on the basis of such undisputed
terms though the final terms are still to be settled.
b) The terms have been agreed to at lumpsum services / lumpsum turnkey
contracts and physical progress is less than 25%.
(B) The Cost of such jobs as stated in 'A' above is carried forward as
work-in-progress at actual direct cost.
4. Fixed Assets
a) Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation. Cost of acquisition is inclusive of freight,
duties, taxes and other incidental expenses.
b) The cost of any software purchased initially along with the computer
hardware is being capitalised along with the cost of the hardware. Any
subsequent acquisition / upgradation of software is being capitalized
as an asset.
c) Whenever any new office space is acquired and partitions/fixtures
and fittings are provided to make it suitable for use, the expenditure
on the same is capitalised and depreciation charged as per Para 5 (a)
below. All expenditure on subsequent modifications and repairs of
partitions/fixtures and fittings are charged to revenue in the year it
is incurred.
5. Depreciation
a) Depreciation on fixed assets is charged on straight line method
either on the basis of rates arrived at with reference to the useful
life of the assets evaluated by the Committee consisting of Technical
experts and approved by the Management, or the minimum rates prescribed
under Schedule XIV of the Companies Act, 1956, whichever is higher.
b) No depreciation has been provided in the case of land which is on
perpetual lease or where no lease deeds have been executed. Premium
paid on land where lease agreements have been executed are written off
over the period of lease proportionately.
c) The cost of capitalized software is amortized over a period of three
years from the date of its acquisition. However, software individually
costing upto Rs. 5 lakhs is fully amortized during the year of its
acquisition.
d) 100% depreciation is provided on library books in the year of
purchase since individual books are low value items.
e) Assets individually costing less than Rs. 5,000 are fully depreciated
in the year of acquisition.
6. Impairment of Assets Impairment of cash generating assets are
reviewed for impairment whenever an event or changes in circumstances
indicate that carrying amount of such assets may not be recoverable. If
such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of
the assets exceeds the fair value of assets. If it is found that some
of the impairment losses already recognized needs to be reversed the
same are recognized in the statement of Profit & Loss Account in the
year of reversal.
7. Inventories Inventories in respect of stores, spares and chemicals
etc. are valued at cost or net realisable value which ever is less.
Cost is determined on "First In First Out" Basis.
8. Provision for Contractual Obligations The provision for estimated
liabilities on account of guarantees & warranties etc. in respect of
lumpsum services and lumpsum turnkey contracts awarded to the Company
are being made on the basis of assessment of risk and consequential
probable
liabilities on each such job made by the management.
9. Foreign Currency Transactions
a) Fixed assets are incorporated at the rates in force when transaction
takes place.
b) Current Assets and Current Liabilities including Cash and Bank
balances are carried at the year end exchange rates. Any gain or loss
on account of exchange difference is charged to the Profit & Loss
Account.
c) Foreign currency transactions (Income & Expenditure) are accounted
for at average monthly rates based on market rates for preceding month
in respect of Pound Sterling, US Dollars, Euro, Australian Dollar,
Canadian Dollar, Swiss Franc & Japanese Yen and in respect of other
currencies at Government rates prevailing in the month. Payments to
sub- contractors/vendors from Foreign Currency (FCN) account are
recorded at bank rate prevailing on the date of transaction.
10. Research and Development Expenditure/Government Grant
(a) Revenue expenditure on Research and Development is charged to
Profit and Loss Account in the year the expenditure is incurred.
Capital Expenditure on Research and Development is capitalized under
respective fixed assets.
(b) Government grant of capital nature for promotion and setting up of
R&D Centre is treated as Capital Reserve and shown separately under
Reserves and Surplus.
(c ) Funds received from Government Agencies to carry out Research and
Development activities are shown under the Head 'other income' as
adjustment against expenditure incurred. Unutilised funds are shown
under other liabilities.
11. Retirement / Other Long Term Employee Benefits
a) Liability in respect of Gratuity, a defined benefit plan, is being
paid to a fund maintained by LIC and administered through a separate
irrevocable trust set up by the company. Difference between the fund
balance and accrued liability at the end of the year based on actuarial
valuation is charged to Profit & Loss Account.
b) Liability towards carried forward leave and post retirement medical
benefits, being defined benefit plans, is paid to a fund maintained by
LIC and difference between the fund balance and accrued liability at
the end of the year based on actuarial valuation is charged to Profit &
Loss Account.
c) Contributions with respect to Provident Fund, a defined contribution
plan, are made to the trust set-up by the Company for the purpose.
d) Contribution with respect to Superannuation Scheme, a defined
contribution plan for employees is paid to a fund maintained by the
Life Insurance Corporation of India and administered through separate
irrecoverable Trust set up by the Company.
e) Liability in respect of other long term/terminal employee benefits,
being defined benefit plans, is recognized on the basis of actuarial
valuation.
f) Voluntary retirement expenses are charged to Profit & Loss Account
in the year of its incurrence.
12. Expenses/Income booked to Profit and Loss Account are after
adjustment of excess/short provisions. However, in cases of specific
provisions where no expenses/income has been incurred/received against
such provisions, the same are adjusted as excess provisions of previous
years written back/Miscellaneous income.
13. Dividend on Units/Shares is accounted for on declaration made upto
the close of the accounting year. Income distributed/undistributed
surplus on investment in an AOP is recognised as income as per
intimation received.
14. Taxes On Income
Current tax is determined as the amount of tax payable in respect of
taxable income for the period. Deferred tax is recognized on timing
difference, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods. Deferred Tax Asset is recognized only to
the extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred assets can
be realised.
15. Investment
Long-term investments are carried at cost. However, when there is a
decline, other than temporary, in the value of a long-term investment,
the carrying amount is reduced to recognise the decline. Current
Investments are carried at the lower of cost or market value.
Mar 31, 2010
1. Accounting Concepts
The accounts are prepared on historical cost concept based on accrual
method of accounting as a going concern, and consistent with generally
accepted accounting principles in accordance with the mandatory
accounting standards and disclosure requirements as per the provisions
of the Companies Act, 1956.
2. Income Recognition
(A) Income from services rendered is accounted for:
(a) In the case of cost plus jobs, on the basis of amount billable
under the contracts;
(b) In the case of lumpsum services and lumpsum Turnkey contracts, as
proportion of actual direct costs of the work to latest estimated total
direct cost of the work; and
(c) In the case of contracts providing for a percentage fee on
equipment/project cost, on the basis of physical progress duly
certified.
(B) Other claims including interest on outstandings are accounted for
when there is virtual certainty of ultimate collection.
3. Turnover/Work-in-progress
(A) No income has been taken into account on jobs for which:
a) The terms of remuneration receivable by the Company have not been
settled and/or scope of work has not been clearly defined and,
therefore, it is not possible in the absence of settled terms to
determine whether there is a profit or loss on such jobs. However, in
cases where minimum undisputed terms have been agreed to by the
clients, income has been accounted for on the basis of such undisputed
terms though the final terms are still to be settled.
b) The terms have been agreed to at lumpsum services / lumpsum turnkey
contracts and physical progress is less than 25%.
(B) The Cost of such jobs as stated in A above is carried forward as
work-in- progress at actual direct cost.
4. Fixed Assets
a) Fixed Assets are stated at cost of acquisition or construction less
accumulated depreciation. Cost of acquisition is inclusive of freight,
duties, taxes and other incidental expenses.
b) The cost of any software purchased initially along with the computer
hardware is being capitalised along with the cost of the hardware. Any
subsequent acquisition / upgradation of software is being capitalized
as an asset.
c) Whenever any new office space is acquired and partitions/fixtures
and fittings are provided to make it suitable for use, the expenditure
on the same is capitalised and depreciation charged as per Para 5 (a)
below. All expenditure on subsequent modifications and repairs of
partitions/fixtures and fittings are charged to revenue in the year it
is incurred.
5. Depreciation
a) Depreciation on fixed assets is charged on straight line method
either on the basis of rates arrived at with reference to the useful
life of the assets evaluated by the Committee consisting of Technical
experts and approved by the Management, or the minimum rates prescribed
under Schedule XIV of the Companies Act, 1956, whichever is higher.
b) No depreciation has been provided in the case of land which is on
perpetual lease or where no lease deeds have been executed. Premium
paid on land where lease agreements have been executed are written off
over the period of lease proportionately.
c) The cost of capitalized software is amortized over a period of three
years from the date of its acquisition. However, software individually
costing upto Rs.5 lakhs is fully amortized during the year of its
acquisition.
d) 100% depreciation is provided on library books in the year of
purchase since individual books are low value items.
e) Assets individually costing less than Rs.5,000 are fully depreciated
in the year of acquisition.
6. Impairment of Assets
Impairment of cash generating assets are reviewed for impairment
whenever an event or changes in circumstances indicate that carrying
amount of such assets may not be recoverable. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the
fair value of assets. If it is found that some of the impairment losses
already recognized needs to be reversed the same are recognized in the
statement of Profit & Loss Account in the year of reversal.
7. Inventories
Inventories in respect of stores, spares and chemicals etc. are valued
at cost or net realisable value which ever is less. Cost is determined
on "First In First Out" Basis.
8. Provision for Contractual Obligations
9. Foreign Currency Transactions
a) Fixed assets are incorporated at the rates in force when transaction
takes place.
b) Current Assets and Current Liabilities including Cash and Bank
balances are carried at the year end exchange rates. Any gain or loss
on account of exchange difference is charged to the Profit & Loss
Account.
c) Foreign currency transactions (Income & Expenditure) are accounted
for at average monthly rates based on market rates for preceding month
in respect of Pound Sterling, US Dollars, Euro, Australian Dollar,
Canadian Dollar, Swiss Franc & Japanese Yen and in respect of other
currencies at Government rates prevailing in the month. Payments to
sub-contractors/vendors from Foreign Currency (FCN) account are
recorded at bank rate prevailing on the date of transaction.
10. Research and Development Expenditure/ Government Grant
(a) Revenue expenditure on Research and Development is charged to
Profit and Loss Account in the year the expenditure is incurred.
Capital Expenditure on Research and Development is capitalized under
respective fixed assets.
(b) Government grant of capital nature for promotion and setting up of
R&D Centre is treated as Capital Reserve and shown separately under
Reserves and Surplus.
(c ) Funds received from Government Agencies to carry out Research and
Development activities are shown under the Head other income as
adjustment against expenditure incurred. Unutilised funds are shown
under other liabilities.
11. Retirement/Other Long Term Employee Benefits
a) Liability in respect of Gratuity, a defined benefit plan, is being
paid to a fund maintained by LIC and administered through a separate
irrevocable trust set up by the company. Difference between the fund
balance and accrued liability at the end of the year based on actuarial
valuation is charged to Profit & Loss Account.
b) Liability towards carried forward leave and post retirement medical
benefits, being defined benefit plans, is paid to a fund maintained by
LIC and difference between the fund balance and accrued liability at
the end of the year based on actuarial valuation is charged to Profit &
Loss Account.
c) Contributions with respect to Provident Fund, a defined contribution
plan, are made to the trust set-up by the Company for the purpose.
d) Contribution with respect to Superannuation Scheme, a defined
contribution plan for employees is paid to a fund maintained by the
Life Insurance Corporation of India and administered through separate
irrevocable Trust set up by the Company.
e) Liability in respect of other long term/terminal employee benefits,
being defined benefit plans, is recognized on the basis of actuarial
valuation.
f) Voluntary retirement expenses are amortised over a period of five
years or over a period till 31st March, 2010, whichever is shorter.
12. Expenses/Income booked to Profit and Loss Account are after
adjustment of excess/short provisions. However, in cases of specific
provisions where no expenses/income has been incurred/received against
such provisions, the same are adjusted as excess provisions of previous
years written back/Miscellaneous income.
13. Dividend on Units/Shares is accounted for on declaration made upto
the close of the accounting year. Income distributed/undistributed
surplus on investment in an AOP is recognised as income as per
intimation received.
14. Taxes On Income
Current tax is determined as the amount of tax payable in respect of
taxable income for the period. Deferred tax is recognized on timing
difference, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods. Deferred Tax Asset is recognized only to
the extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred assets can
be realised.
15. Investment
Long-term investments are carried at cost. However, when there is a
decline, other than temporary, in the value of a long- term investment,
the carrying amount is reduced to recognise the decline. Current
Investments are carried at the lower of cost or market value.
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