Mar 31, 2016
A. Significant Accounting Policies :
1 Basis of preparation of Financial Statements :
(a) The financial statements have been prepared to comply in all material respects with the notified accounting standards by the Companies Accounting Standards Rules, 2006 (which are deemed to be applicable as per section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention, on an accrual basis of accounting.
(b) The classification of assets and liabilities of the Company is done into current and non-current based on the operating cycle of the business of the Company. The operating cycle of the business of the Company is less than twelve months and therefore all current and non-current classifications are done based on the status of reliability and expected settlement of the respective asset and liability within a period of twelve months from the reporting date as required by Schedule III to the Companies Act, 2013.
(c) The accounting policies discussed more fully below, are consistent with those used in the previous year.
2 Use of Estimates :
The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known.
3 Revenue Recognition :
(a) On Construction Contracts :
Long term contracts including Joint Ventures are progressively evaluated at the end of each accounting period. On contracts under execution which have reasonably progressed, profit is recognized by evaluation of the percentage of work completed at the end of the accounting period, whereas, foreseeable losses are fully provided for in the respective accounting period. The percentage of work completed is determined by the expenditure incurred on the job till each review date to total expected expenditure of the job.
Additional claims (including for escalation), which in the opinion of the management are recoverable on the contract, are recognized at the time of evaluating the job.
(b) On supply of materials related to the transmission towers, revenue is recognized upon the delivery of goods to the client in accordance with the terms of contract. Sales include Excise Duty and other receivable from the customers but exclude VAT, wherever applicable.
(c) Insurance claims are accounted for on cash basis.
(d) Interest income is recognized on time proportion method basis taking into account the amounts outstanding and the rate applicable.
(e) Dividend Income is accounted when the right to receive the same is established.
4 Turnover :
Turnover represents work certified upto and after taking into consideration the actual cost incurred and profit evaluated by adopting the percentage of the work completion method of accounting.
Turnover also includes the revenue from the supply of material in the transmission tower contracts in accordance with the terms of contract.
5 Joint Venture :
(a) Joint Venture Contracts under Consortium are accounted as independent contracts to the extent of work completion.
(b) In Joint Venture Contracts under Profit Sharing Arrangement, services rendered to Joint Ventures are accounted as income on accrual basis, profit or loss is accounted as and when determined by the Joint Venture and net investment in Joint Venture is reflected as investments or loans and advances or current liabilities.
6 Research and Development Expenses :
All expenditure of revenue nature is charged to the Statement of Profit and Loss of the period. All expenditure of capital nature is capitalized and depreciation provided thereon, at the rates as applied to Other Assets of similar nature.
7 Employee Retirement Benefits :
Retirement benefits in the form of provident fund and superannuation is a defined contribution scheme and contributions are charged to the Statement of Profit and Loss for the year / period when the contributions are due.
Gratuity a defined benefit obligation is provided on the basis of an actuarial valuation made at the end of each year / period on projected Unit Credit Method.
Leave encashment is recognized on the basis of an actuarial valuation made at the end of each year on projected Unit Credit Method.
Actuarial gains / losses are immediately taken to Statement of Profit and Loss and are not deferred.
8 Fixed Assets and Depreciation :
Fixed Assets are valued and stated at cost of acquisition less accumulated depreciation thereon. Revalued Assets are stated at the revalued amount. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition of its intended use.
Depreciation for the accounting period is provided on :
(a) Straight Line Method, for assets purchased after 2nd April, 1987, at the rates specified in Schedule II to the Companies Act, 2013 based on useful life of Assets
(b) Written Down Value Method, for assets acquired on or prior to 2nd April, 1987, at the rates specified in Schedule II to the Companies Act, 2013 based on useful life of Assets
(c) Depreciation on revalued component of the assets is charged to Profit and Loss Account.
(d) Depreciation on assets used for construction has been treated as period cost.
(e) Depreciation on assets situated in countries outside India are accounted at the rates of depreciation prescribed as per the relevant local laws of such countries which are as follows :
9 Impairment of Assets :
On annual basis the Company makes an assessment of any indicator that may lead to impairment of assets. An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired.
The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
10 Investments :
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of long term investments.
11 Cash and Cash Equivalents :
Cash and Cash Equivalents in the Balance Sheet comprise cash at bank and in hand and short term investments with an original maturity of three months or less.
12 Inventories :
(a) Raw materials are valued at cost, net of Excise Duty and Value Added Tax, wherever applicable. Stores and Spares, loose tools are valued at cost except unserviceable and obsolete items that are valued at estimated realizable value thereof. Costs are determined on Weighted Average Method.
(b) Stores and Spares and material at construction site are valued and stated at lower of cost or net realizable value. The Weighted Average Method of inventory valuation is used to determine the cost.
(c) Work In Progress on construction contracts reflects value of material inputs and expenses incurred on contracts including estimated profits in evaluated jobs.
(d) Work In Progress from manufacturing operation is valued at cost and costs are determined on Weighted Average Method.
(e) Finished Goods are valued at cost or net realizable value, whichever is lower. Costs are determined on Weighted Average Method.
13 Foreign Currency Translation :
(a) Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transactions.
(b) Current Assets and Current Liabilities are translated at the yearend rate or forward contract rate.
(c) Any gain or loss on account of exchange difference either on settlement or translation is recognized in the Statement of Profit and Loss.
(d) Fixed Assets acquired in foreign currencies are translated at the rate prevailing on the date of Bill of Lading.
(e) The transactions of branches at Kenya, Nigeria, Algeria, Bhutan and Italy are accounted as integral operation.
(f) The exchange gain / loss on long term loans to non integral operations being subsidiaries are restated to Foreign Exchange Translation Reserve Account and will be transferred to the Statement of Profit and Loss in the year when the disposal or otherwise transfer of the operations are done.
14 Borrowing Cost
Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalized. Other borrowing costs are recognized as expenses in the period in which they are incurred. In determining the amount of borrowing costs eligible for capitalization during a period, any income earned on the temporary investment of those borrowings is deducted from the borrowing costs incurred.
15 Employee Stock Option Scheme :
Employee stock options are evaluated and accounted on intrinsic value method as per the accounting treatment prescribed under Guidance Note on "Accounting for Employee Share-Based Payments" issued by the ICAI read with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 issued by Securities and Exchange Board of India. Accordingly the excess of market value of the stock options as on the date of grant over the exercise price of the options is recognized as deferred employee compensation and is charged to Statement of Profit and Loss on graded vesting basis over the vesting period of the options. The un-amortized portion of the deferred employee compensation is reduced from Employee Stock Option Outstanding which is shown under Reserves and Surplus.
16 Taxation :
Tax expense comprises current and Deferred Tax. Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 and the Income Computation and Disclosure Standards issued by the Central Board of Direct Taxes and tax laws prevailing in the respective tax jurisdictions where the Group operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current Income Tax relating to items recognized directly in equity is recognized in equity and not in the Statement of Profit and Loss.
Deferred Income Taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred Tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred Tax Assets and Deferred Tax Liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the Deferred Tax Assets and the Deferred Tax Liabilities related to the taxes on income levied by same governing taxation laws. Deferred Tax Assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all Deferred Tax Assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
At each Balance Sheet date the Company re-assesses unrecognized Deferred Tax Assets. It recognizes unrecognized Deferred Tax Assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized.
The carrying amount of Deferred Tax Assets are reviewed at each Balance Sheet date. The Company writes down the carrying amount of a Deferred Tax Asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which Deferred Tax Asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
17 Sales Tax / Cenvat Credit / VAT / WCT :
Sales Tax / VAT / Works Contract Tax on construction contracts are accounted on payment basis. The Cost of Material (inputs) is accounted at purchase cost net of Excise Duty and Value Added Tax, wherever applicable. The Excise Duty elements of materials (inputs) is debited to "Modvat Credit Receivable A/c" and Value Added Tax element of materials (inputs) is debited to "VAT Credit Receivable A/c", under the head "Loans and Advances". The Excise Duty and Value Added Tax payable on dispatch of goods are credited to "Modvat Credit Receivable A/c" and "VAT Credit Receivable A/c" by debiting the same to Excise Duty and Value Added Tax (Sales Tax), respectively in Statement of Profit and Loss.
18 Provision, Contingent Liabilities and Contingent Assets :
Provisions involving substantial degree of estimation in measurement are recognized when an enterprise has a present obligation as a result of past event. it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
Contingent Liabilities are not recognized but are disclosed in the notes to accounts. Disputed demands in respect of Central Excise, Customs, Income Tax and Sales Tax are disclosed as Contingent Liabilities. Payment in respect of such demands, if any, is shown as advance, till the final outcome of the matter.
Contingent Assets are neither recognized nor disclosed in the financial statements.
19 Earning Per Share :
Basic and Diluted earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of Equity Shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and weighted average number of Equity Shares outstanding during the period is adjusted for the effects of all dilutive potential Equity Shares.
20 Prior Period Items :
Prior period items are included in the respective head of accounts and material items are disclosed by way of notes to accounts.
(d) Shares reserved under option to be given
Nil (Previous Period NIL) Equity Shares have been reserved for issue as ESOP. Refer Note 34 for details of the ESOP shares and Scheme.
(e) Terms / rights attached to Equity Shares
The Company has only one class of Equity Shares having a par value of Rs. 2/- each. Each holder of equity share is entitled to one vote per share. The distribution will be in proportion to the number of Equity Shares held by the shareholder.
In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of Equity Shares held by the shareholders.
(a) The General Reserve is created to comply with the Companies (Transfer of Profit and Reserve Rules 1975).
(b) The Foreign Currency Translation Reserve is created in terms of Accounting Standard 11 ''''The effect of changes in foreign exchange rates" issued under the Companies Accounting Standard Rules 2006.
(c) Based on significant evaluation and progress of projects the management is of the opinion that amount kept under Special Contingency Reserve is no longer required and hence transferred to General Reserve.
(d) In accordance with the Companies (Share Capital and Debenture) Rules 2014 the Company is maintaining the Debenture Redemption Reserve to the extent of 25% of the Outstanding Debentures. The Company has however not set aside or earmarked liquid assets of Rs. 9.15 Crore (Previous Period Rs. 0.82 Crore) being 15% of the amount of Debenture due for redemption before 31st March, 2017 as required by the aforesaid Circular in view of the financial crunch faced by the Company.
(a) The Company''s Corporate Debt Restructuring (CDR) package was approved by the CDR Empowered Group (EG) in its meeting held on 24th June, 2013 and communicated to the Company vide its letter of approval dated 29th June, 2013. The Company executed the Master Restructuring Agreement (MRA) with the CDR lenders on 24th September, 2013. Substantial securities have been created in favour of the CDR lenders.
Key features of the CDR proposal are as follows :
- Reschedulement of Short Term Loans and Rupee Term Loans (RTL) and NCD payable over a period of ten years.
- Repayment of Rupee Term Loans (RTL) after moratorium of 27 months from cutoff date being 1st January, 2013 in structured quarterly installments commencing from April 2015.
- Conversion of various irregular / outstanding / devolved financial facilities into Working Capital Term Loan (WCTL).
- Repayment of WCTL after moratorium of 27 Months from cut off date in structured quarterly installments commencing from April 2015, subject to mandatory prepayment obligation on realization of proceeds from certain asset sale and capital infusion.
- Restructuring of existing and fresh fund based and non fund based financial facilities, subject to renewal and reassessment every year.
- Interest accrued but not paid on certain financial facilities till March 2014 is converted into Funded Interest Term Loan (FITL).
- Waiver of existing events of defaults, penal interest and charges etc. in accordance with MRA.
- Right of Recompense to CDR Lenders for the relief and sacrifice extended, subject to provisions of CDR Guidelines and MRA.
- Contribution of Rs.100 Crore in the Company by Promoters, in lieu of bank sacrifice, in the form of Promoters Contribution, which can be converted to equity.
Sep 30, 2014
1 Basis of preparation of Financial Statements :
(a) The financial statements have been prepared to comply in all
material respects with the notified accounting standards by the
Companies Accounting Standards Rules, 2006 and the relevant provisions
of the Companies Act, 1956 read with the General Circular 15/2013 dated
13 September 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013. The financial statements have
been prepared under the historical cost convention, on an accrual basis
of accounting.
(b) The classification of assets and liabilities of the Company is done
into current and non-current based on the criterion specified in the
Revised Schedule VI notified under the Companies Act, 1956.
(c) The accounting policies discussed more fully below, are consistent
with those used in the previous year.
2 Use of Estimates :
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known.
3 Revenue Recognition :
(a) On Construction Contracts :
Long term contracts including Joint Ventures are progressively
evaluated at the end of each accounting period. On contracts under
execution which have reasonably progressed, profit is recognised by
evaluation of the percentage of work completed at the end of the
accounting period, whereas, foreseeable losses are fully provided for
in the respective accounting period. The percentage of work completed
is determined by the expenditure incurred on the job till each review
date to total expected expenditure of the job.
Additional claims (including for escalation), which in the opinion of
the management are recoverable on the contract, are recognised at the
time of evaluating the job.
(b) On supply of materials related to the transmission towers, revenue
is recognized upon the delivery of goods to the client in accordance
with the terms of contract. Sales include Excise Duty & other
receivable from the customers but exclude VAT, wherever applicable.
(c) Insurance claims are accounted for on cash basis.
(d) Interest income is recognised on time proportion method basis
taking into account the amounts outstanding and the rate applicable.
(e) Dividend Income is accounted when the right to receive the same is
established.
4 Turnover :
Turnover represents work certified upto and after taking into
consideration the actual cost incurred and profit evaluated by adopting
the percentage of the work completion method of accounting.
Turnover also includes the revenue from the supply of material in the
transmission tower contracts in accordance with the terms of contract.
5 Joint Venture :
(a) Joint Venture Contracts under Consortium are accounted as
independent contracts to the extent of work completion.
(b) In Joint Venture Contracts under Profit Sharing Arrangement,
services rendered to Joint Ventures are accounted as income on accrual
basis, profit or loss is accounted as and when determined by the Joint
Venture and net investment in Joint Venture is reflected as investments
or loans & advances or current liabilities.
6 Research and Development Expenses :
All expenditure of revenue nature is charged to the Statement of Profit
and Loss of the period. All expenditure of capital nature is
capitalised and depreciation provided thereon, at the rates as applied
to other assets of similar nature.
7 Employee Retirement Benefits :
Retirement benefits in the form of provident fund and superannuation is
a defined contribution scheme and contributions are charged to the
Statement of Profit and Loss for the year / period when the
contributions are due.
Gratuity a defined benefit obligation is provided on the basis of an
actuarial valuation made at the end of each year / period on projected
Unit Credit Method.
Leave encashment is recognised on the basis of an actuarial valuation
made at the end of each year on projected Unit Credit Method.
Actuarial gains / losses are immediately taken to Statement of Profit
and Loss and are not deferred.
8 Fixed Assets and Depreciation :
Fixed Assets are valued and stated at cost of acquisition less
accumulated depreciation thereon. Revalued Assets are stated at the
revalued amount. Cost comprises the purchase price and any attributable
cost of bringing the asset to its working condition of its intended
use.
Depreciation for the accounting period is provided on :
(a) Straight Line Method, for assets purchased after 2 April 1987, at
the rates and in the manner specified in Schedule XIV to the Companies
Act, 1956.
(b) Written Down Value Method, for assets acquired on or prior to 2
April 1987, at the rates as specified in Schedule XIV to the Companies
Act, 1956.
(c) Depreciation on revalued component of the assets is withdrawn from
the Revaluation Reserve.
(d) Depreciation on assets used for construction has been treated as
period cost.
(e) Depreciation on assets situated in countries outside India are
accounted at the rates of depreciation prescribed as per the relevant
local laws of such countries which are as follows :
Assets
Category Ethiopia Kenya Nigeria Rwanda Algeria Bhutan
Computers 25% 30% - 50% 15% 15%
Computers 25% - - - - -
Software
Furniture 20% 13% 10% 25% 15% 15%
and
Fittings
Plant - - 15% - 15% 15%
and
Machineries
Electrical - 15% - - - -
Fittings
SPC Tools 20% - - - 15% 15%
Building / - - - - 5% 5%
Store
Cabin
(f) Intangible Assets are amortised uniformly over three years.
9 Impairment of Assets :
On annual basis the Company makes an assessment of any indicator that
may lead to impairment of assets. An asset is treated as impaired when
the carrying cost of asset exceeds its recoverable value. Recoverable
amount is higher of an asset''s net selling price and its value in use.
Value in use is the present value of estimated future cash flows
expected to arise from the continuing use of an asset and from its
disposal at the end of its useful life.
An impairment loss is charged to the Statement of Profit and Loss in
the year in which an asset is identified as impaired.
The impairment loss recognized in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
10 Investments :
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of long term investments.
11 Cash and Cash Equivalents :
Cash and Cash Equivalents in the Balance Sheet comprise cash at bank
and in hand and short term investments with an original maturity of
three months or less.
12 Inventories :
(a) Raw materials are valued at cost, net of Excise duty and Value
Added Tax, wherever applicable. Stores and spares, loose tools are
valued at cost except unserviceable and obsolete items that are valued
at estimated realizable value thereof. Costs are determined on Weighted
Average Method.
(b) Stores and spares and material at construction site are valued and
stated at lower of cost or net realisable value. The Weighted Average
Method of inventory valuation is used to determine the cost.
(c) Work In Progress on construction contracts reflects value of
material inputs and expenses incurred on contracts including estimated
profits in evaluated jobs.
(d) Work In Progress from manufacturing operation is valued at cost and
costs are determined on Weighted Average Method.
(e) Finished Goods are valued at cost or net realizable value,
whichever is lower. Costs are determined on Weighted Average Method.
13 Foreign Currency Translation :
(a) Transactions in foreign currencies are recorded at the exchange
rate prevailing on the date of transactions.
(b) Current Assets and Current Liabilities are translated at the year
end rate or forward contract rate.
(c) Any gain or loss on account of exchange difference either on
settlement or translation is recognized in the Statement Profit and
Loss.
(d) Fixed Assets acquired in foreign currencies are translated at the
rate prevailing on the date of Bill of Lading.
(e) The transactions of branches at Kenya, Nigeria Algeria, Bhutan &
Italy are accounted as integral operation.
(f) The exchange gain / loss on long term loans to non integral
operations being Subsidiaries are restated to Foreign Exchange
Translation Reserve Account and will be transferred to the Statement of
Profit & Loss in the year when the disposal or otherwise transfer of
the operations are done.
14 Borrowing Cost :
Borrowing costs directly attributable to the acquisition or
construction of qualifying assets are capitalized. Other borrowing
costs are recognized as expenses in the period in which they are
incurred. In determining the amount of borrowing costs eligible for
capitalization during a period, any income earned on the temporary
investment of those borrowings is deducted from the borrowing costs
incurred.
15 Employee Stock Option Scheme :
Employee stock options are evaluated and accounted on intrinsic value
method as per the accounting treatment prescribed under Guidance Note
on "Accounting for Employee Share-based Payments" issued by the ICAI
read with SEBI (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999 issued by Securities and Exchange Board of
India. Accordingly the excess of market value of the stock options as
on the date of grant over the exercise price of the options is
recognized as deferred employee compensation and is charged to
Statement of Profit and Loss on graded vesting basis over the vesting
period of the options. The un-amortized portion of the deferred
employee compensation is reduced from Employee Stock Option Outstanding
which is shown under Reserves and Surplus.
16 Taxation :
Tax expenses comprise Current Tax and Deferred Tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred Tax Assets
and Deferred Tax Liabilities are offset, if a legally enforceable
right exists to set-off current tax assets against current tax
liabilities and the Deferred Tax Assets and the Deferred Tax
Liabilities related to the taxes on income levied by same governing
taxation laws. Deferred Tax Assets are recognised only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such Deferred Tax Assets can be
realised. In situations where the Company has unabsorbed depreciation
or carry forward tax losses, all Deferred Tax Assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
Deferred Tax Assets. It recognises unrecognised Deferred Tax Assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such Deferred Tax Assets can be realised.
The carrying amount of Deferred Tax Assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a Deferred
Tax Asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which Deferred Tax Asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
17 Sales Tax / Cenvat Credit / VAT / WCT :
Sales Tax / VAT / Works Contract Tax on construction contracts are
accounted on payment basis. The Cost of Material (inputs) is accounted
at purchase cost net of Excise Duty and Value Added Tax, wherever
applicable. The Excise Duty elements of materials (inputs) is debited
to "Modvat Credit Receivable A/c" and Value Added Tax element of
materials (inputs) is debited to "VAT Credit Receivable A/c", under the
head "Loans & Advances". The Excise Duty and Value Added Tax payable on
dispatch of goods are credited to "Modvat Credit Receivable A/c" and
''''VAT Credit Receivable A/c'''' by debiting the same to Excise Duty and
Value Added Tax (Sales Tax), respectively in Statement of Profit &
Loss.
18 Provision, Contingent Liabilities and Contingent Assets :
Provisions involving substantial degree of estimation in measurement
are recognised when an enterprise has a present obligation as a result
of past event. it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present
value and are determined based on best estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to reflect the current best estimates.
Contingent Liabilities are not recognized but are disclosed in the
notes to accounts. Disputed demands in respect of Central Excise,
Customs, Income tax and Sales Tax are disclosed as Contingent
Liabilities. Payment in respect of such demands, if any, is shown as
advance, till the final outcome of the matter.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
19 Earning Per Share :
Basic & Diluted earning per share is calculated by dividing the net
profit or loss for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the
period.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity shareholders and
weighted average number of equity shares outstanding during the period
is adjusted for the effects of all dilutive potential equity shares.
20 Prior Period Items :
Prior period items are included in the respective head of accounts and
material items are disclosed by way of notes to accounts.
Dec 31, 2013
1 Basis of preparation of Financial Statements:
(a) The financial statements have been prepared to comply in all
material respects with the notified accounting standards by the
Companies Accounting Standards Rules, 2006 and the relevant provisions
of the Companies Act, 1956 read with the General Circular 15/2013 dated
September 13, 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013. The financial statements have
been prepared under the historical cost convention, on an accrual basis
of accounting.
(b) The classification of assets and liabilities of the Company is done
into current and non-current based on the criterion specified in the
Revised Schedule VI notified under the Companies Act, 1956.
(c) The accounting policies discussed more fully below, are consistent
with those used in the previous year.
2 Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known.
3 Revenue Recognition:
(a) On Construction Contracts:
Long-term contracts including Joint Ventures are progressively
evaluated at the end of each accounting period. On contracts under
execution which have reasonably progressed, profit is recognised by
evaluation of the percentage of work completed at the end of the
accounting period, whereas, foreseeable losses are fully provided for
in the respective accounting period. The percentage of work completed
is determined by the expenditure incurred on the job till each review
date to total expected expenditure of the job.
Additional claims (including for escalation), which in the opinion of
the Management are recoverable on the contract, are recognised at the
time of evaluating the job.
(b) On supply of materials related to the transmission towers, revenue
is recognized upon the delivery of goods to the client in accordance
with the terms of contract. Sales include Excise Duty & other
receivable from the customers but exclude VAT, wherever applicable.
(c) Insurance claims are accounted for on cash basis.
(d) Interest income is recognised on time proportion method basis
taking into account the amounts outstanding and the rate applicable.
(e) Dividend Income is accounted when the right to receive the same is
established.
4 Turnover:
Turnover represents work certified upto and after taking into
consideration the actual cost incurred and profit evaluated by adopting
the percentage of the work completion method of accounting.
Turnover also includes the revenue from the supply of material in the
transmission tower contracts in accordance with the terms of contract.
5 Joint Venture :
(a) Joint Venture Contracts under Consortium are accounted as
independent contracts to the extent of work completion.
(b) In Joint Venture Contracts under Profit Sharing Arrangement,
services rendered to Joint Ventures are accounted as income on accrual
basis, profit or loss is accounted as and when determined by the Joint
Venture and net Investment in Joint Venture is reflected as investments
or loans & advances or current liabilities.
6 Research and Development Expenses:
All expenditure of revenue nature is charged to the Statement of Profit
and Loss of the period. All expenditure of capital nature is
capitalised and depreciation provided thereon, at the rates as applied
to other assets of similar nature.
7 Employee Retirement Benefits:
Retirement benefits in the form of provident fund and superannuation is
a defined contribution scheme and contributions are charged to the
Statement of Profit and Loss for the year / period when the
contributions are due.
Gratuity a defined benefit obligation is provided on the basis of an
actuarial valuation made at the end of each year/ period on projected
Unit Credit Method.
Leave encashment is recognised on the basis of an actuarial valuation
made at the end of each year on projected Unit Credit Method.
Actuarial gains / losses are immediately taken to Statement of Profit
and Loss and are not deferred.
8 Fixed Assets and Depreciation:
Fixed Assets are valued and stated at cost of acquisition less
accumulated depreciation thereon. Re valued assets are stated at the
re valued amount. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition of its
intended use.
Depreciation for the accounting period is provided on:
(a) Straight Line Method, for assets purchased after 2-4-1987, at the
rates and in the manner specified in Schedule XIV to the Companies Act,
1956.
(b) Written Down Value Method, for assets acquired on or prior to
2-4-1987, at the rates as specified in Schedule XIV to the Companies
Act, 1956.
(c) Depreciation on re valued component of the assets is withdrawn from
the Revaluation Reserve.
(d) Depreciation on assets used for construction has been treated as
period cost.
(e) Depreciation on assets situated in countries outside India are
accounted at the rates of depreciation prescribed as per the relevant
local laws of such countries which are as follows except in case of
Oman Branch where the depreciation is as per Schedule XIV
(f) Intangible assets are amortised uniformly over three years.
9 Impairment of Assets:
On annual basis company makes an assessment of any indicator that may
lead to impairment of assets. An asset is treated as impaired when the
carrying cost of asset exceeds its recoverable value. Recoverable
amount is higher of an asset''s net selling price and its value in use.
Value in use is the present value of estimated future cash flows
expected to arise from the continuing use of an asset and from its
disposal at the end of its useful life.
An impairment loss is charged to the Statement of Profit and Loss in
the year in which an asset is identified as impaired.
The impairment loss recognized in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
10 Investments:
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of long-term investments.
11 Cash and Cash Equivalents:
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
12 Inventories:
(a) Raw materials are valued at cost, net of Excise Duty and Value
Added Tax, wherever applicable. Stores and spares, loose tools are
valued at cost except unserviceable and obsolete items that are valued
at estimated realizable value thereof. Costs are determined on Weighted
Average Method.
(b) Stores and spares and material at construction site are valued and
stated at lower of cost or net realisable value. The Weighted Average
Method of inventory valuation is used to determine the cost.
(c) Work in progress on construction contracts reflects value of
material inputs and expenses incurred on contracts including estimated
profits in evaluated jobs.
(d) Work in progress from manufacturing operation is valued at cost and
Costs are determined on Weighted Average Method.
(e) Finished Goods are valued at cost or net realizable value,
whichever is lower. Costs are determined on Weighted Average Method.
13 Foreign Currency Translation:
(a) Transactions in foreign currencies are recorded at the exchange
rate prevailing on the date of transactions.
(b) Current Assets and Current Liabilities are translated at the year
end rate or forward contract rate.
(c) Any Gain or Loss on account of exchange difference either on
settlement or translation is recognized in the Statement of Profit and
Loss.
(d) Fixed Assets acquired in foreign currencies are translated at the
rate prevailing on the date of Bill of Lading.
(e) The transactions of Oman Branch are accounted as a non-integral
operation. The related exchange difference on conversion is accounted
under Foreign Currency Translation Reserve Account.
(f) The transactions of branches at Kenya, Nigeria, Algeria, Bhutan &
Italy are accounted as integral operation.
(g) The exchange gain / loss on long-term loans to non integral
operations being subsidiaries are restated to Foreign Exchange
Translation Reserve Account and will be transferred to the Statement of
Profit and Loss in the year when the disposal or otherwise transfer of
the operations are done.
14 Borrowing Cost:
Borrowing costs directly attributable to the acquisition or
construction of qualifying assets are capitalized. Other borrowing
costs are recognized as expenses in the period in which they are
incurred. In determining the amount of borrowing costs eligible for
capitalization during a period, any income earned on the temporary
investment of those borrowings is deducted from the borrowing costs
incurred.
15 Employee Stock Option Scheme:
Employee stock options are evaluated and accounted on intrinsic value
method as per the accounting treatment prescribed under Guidance Note
on "Accounting for Employee Share-based payments" issued by the ICAI
read with SEBI (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999 issued by Securities and Exchange Board of
India. Accordingly the excess of market value of the stock options as
on the date of grant over the exercise price of the options is
recognized as deferred employee compensation and is charged to
Statement of Profit and Loss on graded vesting basis over the vesting
period of the options. The un-amortized portion of the deferred
employee compensation is reduced from Employee stock option outstanding
which is shown under Reserves and Surplus.
16 Taxation:
Tax expenses comprise Current Tax and Deferred Tax. Current Income Tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act.
Deferred Income Taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred Tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred Tax Assets
and Deferred Tax Liabilities are offset, if a legally enforceable right
exists to set-off Current Tax Assets against Current Tax Liabilities
and the Deferred Tax Assets and the Deferred Tax Liabilities related to
the taxes on income levied by same governing taxation laws. Deferred
Tax Assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such Deferred Tax Assets can be realised. In situations
where the Company has unabsorbed depreciation or carry forward tax
losses, all Deferred Tax Assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
Deferred Tax Assets. It recognises unrecognised Deferred Tax Assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such Deferred Tax Assets can be realised.
The carrying amount of Deferred Tax Assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a Deferred
Tax Asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which Deferred Tax Asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
17 Sales Tax / Cenvat Credit / VAT / WCT:
Sales Tax / VAT / Works Contract Tax on construction contracts are
accounted on payment basis. The cost of Material (inputs) is accounted
at purchase cost net of Excise Duty and Value Added Tax, wherever
applicable. The Excise Duty elements of materials (inputs) is debited
to "Modvat Credit Receivable A/c" and Value Added Tax element of
materials (inputs) is debited to "VAT Credit Receivable A/c", under the
head "Loans & Advances" The Excise Duty and Value Added Tax payable on
dispatch of goods are credited to "Modvat Credit Receivable A/c" and
"VAT Credit Receivable A/c" by debiting the same to Excise Duty and
Value Added Tax (Sales Tax), respectively in Statement of Profit and
Loss.
18 Provision, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognised when an enterprise has a present obligation as a result
of past event; it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present
value and are determined based on best estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to reflect the current best estimates.
Contingent Liabilities are not recognized but are disclosed in the
notes to accounts. Disputed demands in respect of Central Excise,
Customs, Income Tax and Sales Tax are disclosed as Contingent
Liabilities. Payment in respect of such demands, if any, is shown as
advance, till the final outcome of the matter.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
19 Earning Per Share:
Basic & diluted earning per share is calculated by dividing the net
profit or loss for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the
period.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity shareholders and
weighted average number of equity shares outstanding during the period
is adjusted for the effects of all dilutive potential equity shares.
20 Prior Period Items:
Prior period items are included in the respective head of accounts and
material items are disclosed by way of notes to accounts.
(d) Shares reserved under options to be given
17,400 (Previous Year 17,400) Equity shares have been reserved for
issue as ESOR Refer Note No. 34 for details of the ESOP Shares and
Scheme.
(e) Terms / rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.
2 each. Each holder of equity share is entitled to one vote per share.
The distribution will be in proportion to the number of equity shares
held by the shareholders.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive any of the remaining assets of the
company after distribution of all preferential amounts. However, no
such preferential amounts exist currently. The distribution will be in
proportion to the number of equity shares held by the shareholders.
(a) The Company''s Corporate Debt Restructuring (CDR) package was
approved by the CDR Empowered Group (EG) in its meeting held on 24 June
2013 and communicated to the Company vide its letter of approval dated
29 June 2013. The Company executed the Master Restructuring Agreement
(MRA) with the CDR lenders on 24 September 2013. Substantial securities
have been created in favor of the CDR lenders.
Key features of the CDR proposal are as follows:
- Reschedulement of Short Term Loans & Term Loans (RTL) and NCD payable
over a period of ten years.
- Repayment of Rupee Term Loans (RTL) after moratorium of 27 months
from cut off date being 1 January 2013 in structured quarterly
installments commencing from April 2015.
- Conversion of various irregular / outstanding / devolved financial
facilities into Working Capital Term Loan (WCTL).
- Repayment of WCTL after moratorium of 27 Months from cutoff date in
structured quarterly installments commencing from April 2015, subject to
mandatory prepayment obligation on realisation of proceeds from certain
asset sale and capital infusion.
- Restructuring of existing and fresh fund based and non fund based
financial facilities, subject to renewal and reassessment every year.
- Interest accrued but not paid on certain financial facilities till
March 2014 shall be converted into Funded Interest Term Loan (FITL).
- Waiver of existing events of defaults, penal interest and charges
etc. in accordance with the MRA.
- Right of Recompense to CDR Lenders for the relief and sacrifice
extended, subject to provisions of CDR Guidelines and MRA.
- Contribution of Rs. 100 Crore in the Company by promoters, in lieu of
bank sacrifice, in the form of Promoters Contribution.
(b) Securities for Term Loans and NCD : Rupee Term Loan (RTL) -1 and
FITL thereon -
1) 1st pari-passu charge on the entire Fixed Assets (movable and
immovable), both present and future of the Company, including the pari-
passu security with Non Convertible Debenture but excluding the
exclusive security for Non Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire current assets,
loans and advances, long-term trade receivables and other assets of the
Company.
3) For Canara Bank 1st pari-passu charge on land parcel of Metropolitan
Infrahousing Private Limited (MIPL) along with their NCD holders.
Rupee Term Loan (RTL) - 2 and FITL thereon -
1) 1st pari-passu charge on Gammon House.
2) 2nd pari-passu charge on the entire Fixed Assets (movable and
immovable), both present and future of the Company, including the
pari-passu security with Non Convertible Debenture but excluding the
exclusive security for Non Convertible Debenture and the Gammon House.
3) 2nd pari-passu charge on entire current assets, loans and advances,
long-term trade receivables and other assets of the Company.
Rupee Term Loan (RTL) - 3 and FITL thereon -
1) 3rd pari-passu charge over the entire fixed assets (movable and
immovable) and current assets of the Company excluding the Gammon
House.
2) 3rd pari-passu charge on the Gammon House.
Working Capital Term Loan (WCTL) -
1) 1st pari-passu charge on the entire Fixed Assets (movable and
immovable), both present and future of the Company, including the pari-
passu security with Non Convertible Debenture but excluding the
exclusive security for Non Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire current assets,
loans and advances, long-term trade receivables and other assets of the
Company.
Priority Loan -
1) 1st pari-passu charge on the entire Fixed Assets (movable and
immovable), both present and future of the Company, including the pari-
passu security with Non Convertible Debenture but excluding the
exclusive security for Non Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire current assets,
loans and advances, long-term trade receivables and other assets of the
Company.
Non Convertible Debentures (NCD) and FITL thereon -
1) 1st pari-passu charge by mortgage of Gujarat Property and
hypothecation over the pari-passu security with the Non Convertible
Debentures.
2) 3rd pari-passu charge over the entire fixed assets (movable and
immovable) and current assets of the Company excluding the Gammon
House.
3) 3rd pari-passu charge on the Gammon House.
(c) Funded Interest Term Loan (FITL) -
The interest amount on RTL -1, RTL - 2, RTL - 3 and NCDs for the
initial period of 15 months i.e. from cut off date till March 31, 2014
will be converted to FITL.
(f) Collateral security pari-passu with all CDR lenders
a) Pledge of entire unencumbered equity shares (present and future) of
GIL held by Promoters subject to Section 19(2) & 19(3) of Banking
Regulation Act including pledge of encumbered equity shares as and when
such shares are released by the respective existing lenders.
b) Personal guarantee of Mr. Abhijit Rajan, Chairman & Managing
Director.
c) Undertaking to create pledge over the resultant shares of
Metropolitan Infra housing Private Limited (Ml PL) after signing the J V
agreement with developer.
d) Undertaking to create pledge over shares of Gactel Turnkey Projects
Limited (currently pledged to lenders of Gactel), as and when they are
released in the future.
e) Pledge over the following shares -
23% of Deepmala Infrastructure Private Limited
100% of SEZ Adityapur Limited
24% of Ansaldocaldaie Boilers India Private Limited
100% of Transrail Lighting Limited
(a) In respect of the road projects undertaken by the Company, in
furtherance to the recommendation of the Dispute Resolution Board
(DRB), during the previous years the Company has recognized revenue to
the extent of Rs. 150.09 Crore of which Rs. 14.12 Crore has been
recovered. The balance of Rs. 135.97 Crore being the award from the
arbitral tribunal received for its projects is included in Non-Current
Trade Receivables. The Company contends that such awards have reached
finality for the determination of the amounts of such claims and are
reasonably confident of recovery of such claims although the client has
moved the court to set aside the awards. Considering the fact that the
Company has received favorable awards from the DRB and the arbitration
tribunal, the Management is reasonably certain that the claims will get
favorable verdict from the courts.
The Company had also recognised revenue of Rs. 58.00 Crore in respect of
one of the project based on advanced negotiation and discussion with
the client and is confident of realising the same, pending the final
revision in contract value.
Mar 31, 2013
1. Basis of preparation of Financial Statements:
(a) The fi nancial statements have been prepared to comply in all
material respects with the notifi ed accounting standards by the
Companies Accounting Standards Rules, 2006 and the relevant provisions
of the Companies Act, 1956. The fi nancial statements have been
prepared under the historical cost convention, on an accrual basis of
accounting.
(b) The classifi cation of assets and liabilities of the Company is
done into current and non-current based on the criterion specifi ed in
the Revised Schedule VI notifi ed under the Companies Act, 1956.
(c) The accounting policies discussed more fully below, are consistent
with those used in the previous year.
2. Use of Estimates:
The preparation of fi nancial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of fi nancial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known.
3. Revenue Recognition:
(a) On Construction Contracts:
Long-term contracts including Joint Ventures are progressively
evaluated at the end of each accounting period. On contracts under
execution which have reasonably progressed, profi t is recognised by
evaluation of the percentage of work completed at the end of the
accounting period, whereas, foreseeable losses are fully provided for
in the respective accounting period. The percentage of work completed
is determined by the expenditure incurred on the job till each review
date to total expected expenditure of the job.
Additional claims (including for escalation), which in the opinion of
the Management are recoverable on the contract, are recognised at the
time of evaluating the job.
(b) On supply of materials related to the transmission towers, revenue
is recognized upon the delivery of goods to the client in accordance
with the terms of contract. Sales include excise duty & other
receivable from the customers but exclude VAT, wherever applicable.
(c) Insurance claims are accounted for on cash basis.
(d) Interest income is recognised on time proportion method basis
taking into account the amounts outstanding and the rate applicable.
(e) Dividend Income is accounted when the right to receive the same is
established.
4. Turnover :
Turnover represents work certifi ed upto and after taking into
consideration the actual cost incurred and profi t evaluated by
adopting the percentage of the work completion method of accounting.
Turnover also includes the revenue from the supply of material in the
transmission tower contracts in accordance with the terms of contract.
5. Joint Venture :
(a) Joint Venture Contracts under Consortium are accounted as
independent contracts to the extent of work completion.
(b) In Joint Venture Contracts under Profi t Sharing Arrangement,
services rendered to Joint Ventures are accounted as income on accrual
basis, profi t or loss is accounted as and when determined by the Joint
Venture and net Investment in Joint Venture is refl ected as
investments or loans & advances or current liabilities.
6. Research and Development Expenses:
All expenditure of revenue nature is charged to the Statement of Profi
t and Loss of the period. All expenditure of capital nature is
capitalised and depreciation provided thereon, at the rates as applied
to other assets of similar nature.
7. Employee Retirement Benefi ts:
Retirement benefi ts in the form of provident fund and superannuation
is a defi ned contribution scheme and contributions are charged to the
Statement of Profi t and Loss for the year/period when the
contributions are due.
Gratuity a defi ned benefi t obligation is provided on the basis of an
actuarial valuation made at the end of each year/period on projected
Unit Credit Method.
Leave encashment is recognised on the basis of an actuarial valuation
made at the end of each year on projected Unit Credit Method.
Actuarial gains/losses are immediately taken to Statement of Profi t
and Loss and are not deferred.
8. Fixed Assets and Depreciation:
Fixed Assets are valued and stated at cost of acquisition less
accumulated depreciation thereon. Revalued assets are stated at the
revalued amount. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition of its
intended use.
Depreciation for the accounting period is provided on:
(a) Straight Line Method, for assets purchased after 2-4-1987, at the
rates and in the manner specifi ed in Schedule XIV to the Companies
Act, 1956.
(b) Written Down Value Method, for assets acquired on or prior to
2-4-1987, at the rates as specifi ed in Schedule XIV to the Companies
Act, 1956.
(c) Depreciation on revalued component of the assets is withdrawn from
the Revaluation Reserve.
(d) Depreciation on assets used for construction has been treated as
period cost.
(e) Depreciation on assets situated in countries outside India are
accounted at the rates of depreciation prescribed as per the relevant
local laws of such countries which are as follows except in case of
Oman Branch where the depreciation is as per Schedule XIV.
(f) Intangible assets are amortised uniformly over three years.
9. Impairment of Assets:
On annual basis Company makes an assessment of any indicator that may
lead to impairment of assets. An asset is treated as impaired when the
carrying cost of asset exceeds its recoverable value. Recoverable
amount is higher of an asset''s net selling price and its value in use.
Value in use is the present value of estimated future cash fl ows
expected to arise from the continuing use of an asset and from its
disposal at the end of its useful life.
An impairment loss is charged to the Statement of Profi t and Loss in
the year in which an asset is identifi ed as impaired.
The impairment loss recognized in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
10. Investments:
Investments that are readily realisable and intended to be held for not
more than a year are classifi ed as current investments. All other
investments are classifi ed as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of long term investments.
11. Cash and cash equivalents:
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
12. Inventories:
(a) Raw materials are valued at cost, net of Excise duty and Value
Added Tax, wherever applicable. Stores and spares, loose tools are
valued at cost except unserviceable and obsolete items that are valued
at estimated realizable value thereof. Costs are determined on Weighted
Average method.
(b) Stores and spares and material at construction site are valued and
stated at lower of cost or net realisable value. The Weighted Average
method of inventory valuation is used to determine the cost.
(c) Work-in-Progress on construction contracts refl ects value of
material inputs and expenses incurred on contracts including estimated
profi ts in evaluated jobs.
(d) Work in progress from manufacturing operation is valued at cost and
Costs are determined on Weighted Average method.
(e) Finished Goods are valued at cost or net realizable value,
whichever is lower. Costs are determined on Weighted Average method.
13. Foreign Currency Translation:
(a) Transactions in foreign currencies are recorded at the exchange
rate prevailing on the date of transactions.
(b) Current Assets and Current Liabilities are translated at the year
end rate or forward contract rate.
(c) Any Gain or Loss on account of exchange difference either on
settlement or translation is recognized in the Statement Profi t and
Loss.
(d) Fixed Assets acquired in foreign currencies are translated at the
rate prevailing on the date of Bill of Lading.
(e) The transactions of Oman branch are accounted as a non-integral
operation. The related exchange difference on conversion is accounted
under Foreign Currency Translation Reserve Account.
(f) The transactions of branches at Kenya, Nigeria Algeria, Bhutan &
Italy are accounted as integral operation.
(g) The exchange gain / loss on long term loans to non-integral
operations being subsidiaries are restated to Foreign Exchange
Translation Reserve Account and will be transferred to the Statement of
Profi t & Loss in the year when the disposal or otherwise transfer of
the operations are done.
14. Borrowing Cost:
Borrowing costs directly attributable to the acquisition or
construction of qualifying assets are capitalized. Other borrowing
costs are recognized as expenses in the period in which they are
incurred. In determining the amount of borrowing costs eligible for
capitalization during a period, any income earned on the temporary
investment of those borrowings is deducted from the borrowing costs
incurred.
15. Employee Stock Option Scheme:
Employee stock options are evaluated and accounted on intrinsic value
method as per the accounting treatment prescribed under Guidance Note
on "Accounting for Employee Share-based payments" issued by the ICAI
read with SEBI (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999 issued by Securities and Exchange Board of
India. Accordingly the excess of market value of the stock options as
on the date of grant over the exercise price of the options is
recognized as deferred employee compensation and is charged to
Statement of Profi t and Loss on graded vesting basis over the vesting
period of the options. The un-amortized portion of the deferred
employee compensation is reduced from Employee Stock Option Outstanding
which is shown under Reserves and Surplus.
16. Taxation:
Tax expenses comprise Current Tax and Deferred Tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act.
Deferred income taxes refl ects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets
and deferred tax liabilities are offset, if a legally enforceable right
exists to set-off current tax assets against current tax liabilities
and the deferred tax assets and the deferred tax liabilities related to
the taxes on income levied by same governing taxation laws. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that suffi cient future taxable income will be available
against which such deferred tax assets can be realised. In situations
where the Company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profi ts.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that suffi cient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that suffi cient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that suffi
cient future taxable income will be available.
17. Sales Tax /Cenvat Credit / VAT / WCT:
Sales Tax/VAT/Works Contract Tax on construction contracts are
accounted on payment basis. The cost of Material (inputs) is accounted
at purchase cost net of excise duty and Value Added Tax, wherever
applicable. The excise duty elements of materials (inputs) is debited
to "Modvat Credit Receivable A/c." and Value Added Tax element of
materials (inputs) is debited to ''VAT Credit Receivable A/c.'', under
the head "Loans & Advances" The excise duty and Value Added Tax payable
on dispatch of goods are credited to Modvat Credit Receivable A/c. and
VAT Credit Receivable A/c by debiting the same to excise duty and value
added tax (sales tax), respectively in Statement of Profi t & Loss.
18. Provision, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognised when an enterprise has a present obligation as a result
of past event; it is probable that an outfl ow of resources will be
required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present
value and are determined based on best estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to refl ect the current best estimates.
Contingent Liabilities are not recognized but are disclosed in the
notes to accounts. Disputed demands in respect of Central Excise,
Customs, Income tax and Sales Tax are disclosed as Contingent
Liabilities. Payment in respect of such demands, if any, is shown as
advance, till the fi nal outcome of the matter.
Contingent Assets are neither recognized nor disclosed in the fi
nancial statements.
19. Earning per share:
Basic & Diluted earning per share is calculated by dividing the net
profi t or loss for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the
period.
For the purpose of calculating diluted earning per share, the net profi
t or loss for the period attributable to equity shareholders and
weighted average number of equity shares outstanding during the period
is adjusted for the effects of all dilutive potential equity shares.
20. Prior Period Items:
Prior period items are included in the respective head of accounts and
material items are disclosed by way of notes to accounts.
Mar 31, 2012
1. Basis of preparation of financial Statements:
(a) The financial statements have been prepared to comply in all
material respects with the notified accounting standards by the
Companies Accounting Standards Rules, 2006 and the relevant provisions
of the Companies Act, 1956. The financial statements have been prepared
under the historical cost convention, on an accrual basis of
accounting.
(b) The classification of assets and liabilities of the Company is done
into current and non-current based on the criterion specified in the
Revised Schedule VI notified under the Companies Act, 1956.
(c) The accounting policies discussed more fully below, are consistent
with those used in the previous year except for the following:
(i) Valuation of inventory which has been changed from FIFO to Weighted
Average. This change has resulted in profit for the year being lower by
Rs. 9.23 Crore.
(ii) Dividend on investment in subsidiary Company which has undergone
change due to changes in schedule VI. The Company now recognises the
dividend as income only when the right to receive is established by the
reporting date. This change however does not have any impact on the
financial statement.
2. use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known.
3. Revenue Recognition:
(a) On Construction Contracts
Long-term contracts including Joint Ventures are progressively
evaluated at the end of each accounting period. On contracts under
execution which have reasonably progressed, profit is recognised by
evaluation of the percentage of work completed at the end of the
accounting period, whereas, foreseeable losses are fully provided for
in the respective accounting period. The percentage of work completed
is determined by the expenditure incurred on the job till each review
date to total expected expenditure of the job.
Additional claims (including for escalation), which in the opinion of
the Management are recoverable on the contract, are recognised at the
time of evaluating the job.
(b) On supply of materials related to the transmission towers, revenue
is recognized upon the delivery of goods to the client in accordance
with the terms of contract. Sales include excise duty & other
receivable from the customers but exclude VAT, wherever applicable.
(c) Insurance claims are accounted for on cash basis.
(d) Interest income is recognised on time proportion method basis
taking into account the amounts outstanding and the rate applicable.
(e) Dividend Income is accounted when the right to receive the same is
established.
4. Turnover :
Turnover represents work certified upto and after taking into
consideration the actual cost incurred and profit evaluated by adopting
the percentage of the work completion method of accounting.
Turnover also includes the revenue from the supply of material in the
transmission tower contracts in accordance with the terms of contract.
5. Joint Venture :
(a) Joint Venture Contracts under Consortium are accounted as
independent contracts to the extent of work completion.
(b) In Joint Venture Contracts under Profit Sharing Arrangement,
services rendered to Joint Ventures are accounted as income on accrual
basis, profit or loss is accounted as and when determined by the Joint
Venture and net Investment in Joint Venture is reflected as investments
or loans & advances or current liabilities.
6. Research and development Expenses:
All expenditure of revenue nature is charged to the Statement of Profit
and Loss of the period. All expenditure of capital nature is
capitalised and depreciation provided thereon, at the rates as applied
to other assets of similar nature.
7. Employee Retirement Benefits:
Retirement benefits in the form of provident fund and superannuation is
a defined contribution scheme and contributions are charged to the
Statement of Profit and Loss for the year/period when the contributions
are due.
Gratuity a defined benefit obligation is provided on the basis of an
actuarial valuation made at the end of each year/period on projected
Unit Credit Method.
Leave encashment is recognised on the basis of an actuarial valuation
made at the end of each year on projected Unit Credit Method.
Actuarial gains/losses are immediately taken to Statement of Profit and
Loss and are not deferred.
8. Fixed Assets and Depreciation:
Fixed Assets are valued and stated at cost of acquisition less
accumulated depreciation thereon. Revalued assets are stated at the
revalued amount. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition of its
intended use.
Depreciation for the accounting period is provided on:
(a) Straight Line Method, for assets purchased after 2-4-1987, at the
rates and in the manner specified in Schedule XIV to the Companies Act,
1956.
(b) Written Down Value Method, for assets acquired on or prior to
2-4-1987, at the rates as specified in Schedule XIV to the Companies
Act, 1956.
(c) Depreciation on revalued component of the assets is withdrawn from
the Revaluation Reserve.
(d) Depreciation on assets used for construction has been treated as
period cost.
(f) Intangible assets are amortised uniformly over three years.
9. Impairment of Assets:
On annual basis Company makes an assessment of any indicator that may
lead to impairment of assets. An asset is treated as impaired when the
carrying cost of asset exceeds its recoverable value. Recoverable
amount is higher of an asset's net selling price and its value in use.
Value in use is the present value of estimated future cash flows
expected to arise from the continuing use of an asset and from its
disposal at the end of its useful life.
An impairment loss is charged to the Statement of Profit and Loss in
the year in which an asset is identified as impaired.
The impairment loss recognized in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
10. Investments:
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of long term investments.
11. Cash and cash equivalents:
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
12. Inventories:
(a) Raw materials are valued at cost, net of Excise duty and Value
Added Tax, wherever applicable. Stores and spares, loose tools are
valued at cost except unserviceable and obsolete items that are valued
at estimated realizable value thereof. Costs are determined on Weighted
Average Method.
(b) Stores, spares and material at construction site are valued and
stated at lower of cost or net realisable value. The Weighted Average
Method of inventory valuation is used to determine the cost.
(c) Work-in-Progress on construction contracts reflects value of
material inputs and expenses incurred on contracts including estimated
profits in evaluated jobs.
(d) Work-in-Progress from manufacturing operation is valued at cost and
Costs are determined on Weighted Average Method.
(e) Finished Goods are valued at cost or net realizable value,
whichever is lower. Costs are determined on Weighted Average Method.
13. Foreign Currency Translation:
(a) Transactions in foreign currencies are recorded at the exchange
rate prevailing on the date of transactions.
(b) Current Assets and Current Liabilities are translated at the year
end rate or forward contract rate.
(c) Any Gain or Loss on account of exchange difference either on
settlement or translation is recognized in the Statement of Profit and
Loss.
(d) Fixed Assets acquired in foreign currencies are translated at the
rate prevailing on the date of Bill of Lading.
(e) The transactions of Oman branch are accounted as a non-integral
operation. The related exchange difference on conversion is accounted
under Foreign Currency Translation Reserve Account.
(f) The transactions of branches at Kenya, Nigeria, Algeria, Bhutan &
Italy are accounted as integral operation.
(g) The exchange gain / loss on long term loans to non integral
operations being subsidiaries are restated to Foreign Exchange
Translation Reserve Account and will be transferred to the Statement of
Profit and Loss in the year when the disposal or otherwise transfer of
the operations are done.
14. Borrowing Cost:
Borrowing costs directly attributable to the acquisition or
construction of qualifying assets are capitalized. Other borrowing
costs are recognized as expenses in the period in which they are
incurred. In determining the amount of borrowing costs eligible for
capitalization during a period, any income earned on the temporary
investment of those borrowings is deducted from the borrowing costs
incurred.
15. Employee Stock Option Scheme:
Employee stock options are evaluated and accounted on intrinsic value
method as per the accounting treatment prescribed under Guidance Note
on "Accounting for Employee Share-based payments" issued by the ICAI
read with SEBI (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999 issued by Securities and Exchange Board of
India. Accordingly the excess of market value of the stock options as
on the date of grant over the exercise price of the options is
recognized as deferred employee compensation and is charged to
Statement of Profit and Loss on graded vesting basis over the vesting
period of the options. The un-amortized portion of the deferred
employee compensation is reduced from Employee Stock Option Outstanding
which is shown under Reserves and Surplus.
16. Taxation:
Tax expenses comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets
and deferred tax liabilities are offset, if a legally enforceable right
exists to set-off current tax assets against current tax liabilities
and the deferred tax assets and the deferred tax liabilities related to
the taxes on income levied by same governing taxation laws. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. In situations
where the Company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
17. Sales Tax / Cenvat Credit / VAT / WCT:
Sales Tax / VAT / Works Contract Tax on construction contracts are
accounted on payment basis. The cost of Material (inputs) is accounted
at purchase cost net of excise duty and Value Added Tax, wherever
applicable. The excise duty elements of materials (inputs) is debited
to "Modvat Credit Receivable A/c." and Value Added Tax element of
materials (inputs) is debited to "VAT Credit Receivable A/c.", under
the head "Loans & Advances" The excise duty and Value Added Tax
payable on dispatch of goods are credited to Modvat Credit Receivable
A/c. and VAT Credit Receivable A/c by debiting the same to excise duty
and value added tax (sales tax), respectively in Statement of Profit
and Loss.
18. Provision, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognised when an enterprise has a present obligation as a result
of past event; it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present
value and are determined based on best estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to reflect the current best estimates.
Contingent Liabilities are not recognized but are disclosed in the
notes to accounts. Disputed demands in respect of Central Excise,
Customs, Income tax and Sales Tax are disclosed as Contingent
Liabilities. Payment in respect of such demands, if any, is shown as
advance, till the final outcome of the matter.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
19. Earning per share:
Basic & Diluted earning per share is calculated by dividing the net
profit or loss for the period attributable to equity shareholders by
the Weighted Average number of equity shares outstanding during the
period.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity shareholders and
Weighted Average number of equity shares outstanding during the period
is adjusted for the effects of all dilutive potential equity shares.
20. Prior Period Items:
Prior period items are included in the respective head of accounts and
material items are disclosed by way of notes to accounts.
Mar 31, 2011
1. Basis of preparation of Financial Statements:
The financial statements have been prepared to comply in all material
respects with the notifed accounting standards by the Companies
Accounting Standards Rules, 2006 and the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared under
the historical cost convention, on an accrual basis of accounting. The
accounting policies discussed more fully below, are consistent with
those used in the previous year.
2. Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known.
3. Revenue Recognition:
(a) On Construction Contracts:
Long-term contracts including Joint Ventures are progressively
evaluated at the end of each accounting period. On contracts under
execution which have reasonably progressed, Profit is recognized by
evaluation of the percentage of work completed at the end of the
accounting period, whereas, foreseeable losses are fully provided for
in the respective accounting period. The percentage of work completed
is determined by the expenditure incurred on the job till each review
date to total expected expenditure of the job.
Additional claims (including for escalation), which in the opinion of
the Management are recoverable on the contract, are recognized at the
time of evaluating the job.
(b) On supply of materials related to the transmission towers, revenue
is recognized upon the delivery of goods to the client in accordance
with the terms of contract. Sales include excise duty & other
receivable from the customers but exclude VAT, wherever applicable.
(c) Insurance claims are accounted for on cash basis.
(d) Interest income is recognized on time proportion method basis
taking into account the amounts outstanding and the rate applicable.
(e) Dividend Income is accounted when the right to receive the same is
established. The dividend declared by the subsidiary companies after
the date of balance sheet are also included if they are in respect of
accounting period which closed on or before the date of Company's
Balance Sheet.
4. Turnover:
Turnover represents work certifed upto and after taking into
consideration the actual cost incurred and Profit evaluated by adopting
the percentage of the work completion method of accounting.
Turnover also includes the revenue from the supply of material in the
transmission tower contracts in accordance with the terms of contract.
5. Joint Venture:
(a) Joint Venture Contracts under Consortium are accounted as
independent contracts to the extent of work completion.
(b) In Joint Venture Contracts under Profit Sharing Arrangement,
services rendered to Joint Ventures are accounted as income on accrual
basis, Profit or loss is accounted as and when determined by the Joint
Venture and net Investment in Joint Venture is refected as investments
or loans & advances or current liabilities.
6. Research and Development Expenses:
All expenditure of revenue nature is charged to the Profit and Loss
Account of the period. All expenditure of capital nature is capitalized
and depreciation provided thereon, at the rates as applied to other
assets of similar nature.
7. Employee Retirement Benefts:
Retirement benefts in the form of provident fund and superannuation is
a defined contribution scheme and contributions are charged to the
Profit and Loss Account for the year/period when the contributions
are due.
Gratuity a defined beneft obligation is provided on the basis of an
actuarial valuation made at the end of each year/period on projected
Unit Credit Method.
Leave encashment is recognized on the basis of an actuarial valuation
made at the end of each year on projected Unit Credit Method.
Actuarial gains/losses are immediately taken to Profit and loss account
and are not deferred.
8. Fixed Assets and Depreciation:
Fixed Assets are valued and stated at cost of acquisition less
accumulated depreciation thereon. Revalued assets are stated at the
revalued amount. Cost comprises the purchase price and any attributable
cost of bringing the asset to its working condition of its intended
use.
Depreciation for the accounting period is provided on:
(a) Straight Line Method, for assets purchased after 2-4-1987, at the
rates and in the manner specifed in Schedule XIV to the Companies Act,
1956.
(b) Written Down Value Method, for assets acquired on or prior to
2-4-1987, at the rates as specifed in Schedule XIV to the Companies
Act, 1956.
(c) Depreciation on revalued component of the assets is withdrawn from
the Revaluation Reserve.
(d) The depreciation on assets used for construction has been treated
as period cost.
(e) Depreciation on assets situated in countries outside India are
accounted at the rates of depreciation prescribed as per the relevant
local laws of such countries which are as follows except in case of
Oman Branch where the depreciation is as per Schedule XIV.
(f) Intangible assets are amortised uniformly over three years.
9. Impairment of Assets:
On annual basis Company makes an assessment of any indicator that may
lead to impairment of assets. An asset is treated as impaired when the
carrying cost of asset exceeds its recoverable value. Recoverable
amount is higher of an asset's net selling price and its value in use.
Value in use is the present value of estimated future cash flows
expected to arise from the continuing use of an asset and from its
disposal at the end of its useful life.
An impairment loss is charged to the Profit and Loss Account in the year
in which an asset is identifed as impaired.
The impairment loss recognized in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
10. Investments:
Investments that are readily realisable and intended to be held for not
more than a year are classifed as current investments. All other
investments are classifed as long-term investments. Current investments
are carried at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost. However,
provision for diminution in value is made to recognise a decline other
than temporary in the value of long term investments.
11. Cash and cash equivalents:
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
12. Inventories:
(a) Raw materials are valued at cost, net of Excise duty and Value
Added Tax, wherever applicable. Stores and spares, loose tools are
valued at cost except unserviceable and obsolete items that are valued
at estimated realizable value thereof. Costs are determined on FIFO
method.
(b) Stores and Construction Materials are valued and stated at lower of
cost or net realisable value. The FIFO method of inventory valuation is
used to determine the cost.
(c) Work-in-Progress on construction contracts refects value of
material inputs and expenses incurred on contracts including estimated
Profits in evaluated jobs.
(d) Work-in-progress from manufacturing operation is valued at cost and
costs are determined on FIFO method.
(e) Finished Goods are valued at cost or net realizable value,
whichever is lower. Costs are determined on FIFO method.
13. Foreign Currency Translation:
(a) Transactions in foreign currencies are recorded at the exchange
rate prevailing on the date of transactions.
(b) Current Assets and Current Liabilities are translated at the year
end rate or forward contract rate.
(c) Any Gain or Loss on account of exchange difference either on
settlement or translation is recognized in the Profit and Loss Account.
(d) Fixed Assets acquired in foreign currencies are translated at the
rate prevailing on the date of Bill of Lading.
(e) The transactions of Oman branch are accounted as a non-integral
operation. The related exchange difference on conversion is accounted
under Foreign Currency Translation Reserve Account.
(f) The transactions of branches at Kenya, Nigeria, Algeria, Bhutan and
Italy are accounted as integral operation.
(g) The exchange gain/loss on long term loans to non integral
operations being subsidiaries are restated to Foreign Exchange
Translation Reserve Account and will be transferred to the Profit & loss
account in the year when the disposal or otherwise transfer of the
operations are done.
14. Borrowing Cost:
Borrowing costs directly attributable to the acquisition or
construction of qualifying assets are capitalized. Other borrowing
costs are recognized as expenses in the period in which they are
incurred. In determining the amount of borrowing costs eligible for
capitalization during a period, any income earned on the temporary
investment of those borrowings is deducted from the borrowing costs
incurred.
15. Employee Stock Option Scheme:
Employee stock options are evaluated and accounted on intrinsic value
method as per the accounting treatment prescribed under Guidance Note
on "Accounting for Employee Share-based payments" issued by the ICAI
read with SEBI (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999 issued by Securities and Exchange Board of
India. Accordingly the excess of market value of the stock options as
on the date of grant over the exercise price of the options is
recognized as deferred employee compensation and is charged to Profit
and loss account on graded vesting basis over the vesting period of the
options. The un-amortized portion of the deferred employee compensation
is reduced from Employee Stock Option Outstanding which is shown under
Reserves and Surplus.
16. Taxation:
Tax expenses comprise Current Tax and Deferred Tax.
Current Tax is calculated after considering benefts admissible under
Income tax Act, 1961. Deferred Tax is recognized on timing differences
being the differences between the taxable incomes and accounting income
that originate in one period and are capable of reversal in one or more
subsequent periods. Deferred Tax Assets, subject to the consideration
of prudence are recognized and carried forward only to the extent that
there is a reasonable certainty that sufficient future taxable income
will be available against which such Deferred Tax Assets can be
realized. The tax effect is calculated on the accumulated timing
difference at the year-end based on the tax rates and laws enacted or
substantially enacted on balance sheet date.
In situations where the Company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognized only if
there is virtual certainty supported by convincing evidence that they
can be realized against future taxable Profits.
At each balance sheet date the Company re-assesses un-recognized
deferred tax assets. It recognized unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
1 7. Sales Tax/Cenvat Credit/VAT/WCT:
Sales Tax/VAT/Works Contract Tax on construction contracts are
accounted on payment basis. The cost of Material (inputs) is accounted
at purchase cost net of excise duty and Value Added Tax, wherever
applicable. The excise duty elements of materials (inputs) is debited
to "Modvat Credit Receivable A/c." and Value Added Tax element of
materials (inputs) is debited to "VAT Credit Receivable A/c.", under
the head "Loans & Advances" The excise duty and Value Added Tax payable
on dispatch of goods are credited to Modvat Credit Receivable A/c. and
VAT Credit Receivable A/c. by debiting the same to excise duty and
Value Added Tax (sales tax), respectively in Profit and Loss A/c.
18. Provision, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognised when an enterprise has a present obligation as a result
of past event; it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present
value and are determined based on best estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to refect the current best estimates.
Contingent Liabilities are not recognized but are disclosed in the
notes to accounts. Disputed demands in respect of Central Excise,
Customs, Income tax and Sales Tax are disclosed as Contingent
Liabilities. Payment in respect of such demands, if any, is shown as
advance, till the final outcome of the matter. Contingent Assets are
neither recognized nor disclosed in the financial statements.
19. Earning per share:
Basic and Diluted earning per share is calculated by dividing the net
Profit or loss for the period attributable to equity shareholders by the
weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earning per share, the net Profit
or loss for the period attributable to equity shareholders and weighted
average number of equity shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.
20. Prior Period Items:
Prior period items are included in the respective head of accounts and
material items are disclosed by way of notes to accounts.
Mar 31, 2010
1. Basis of preparation of Financial Statements:
The financial statements have been prepared to comply in all material
respects with the notified accounting standards by the Companies
Accounting Standards Rules, 2006 and the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared under
the historical cost convention, on an accrual basis of accounting. The
accounting policies discussed more fully below, are consistent with
those used in the previous year.
2. Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known.
3. Revenue Recognition:
(a) On Construction Contracts:
Long-term contracts including Joint Ventures are progressively
evaluated at the end of each accounting period. On contracts under
execution which have reasonably progressed, profit is recognised by
evaluation of the percentage of work completed at the end of the
accounting period, whereas, foreseeable losses are fully provided for
in the respective accounting period. The percentage of work completed
is determined by the expenditure incurred on the job till each review
date to total expected expenditure of the job.
Additional claims (including for escalation), which in the opinion of
the Management are recoverable on the contract, are recognised at the
time of evaluating the job.
(b) On supply of materials related to the transmission towers, revenue
is recognized upon the delivery of goods to the client in accordance
with the terms of contract. Sales include excise duty & other
receivable from the customers but exclude VAT, wherever applicable.
(c) Insurance claims are accounted for on cash basis.
(d) Interest income is recognised on time proportion method basis
taking into account the amounts outstanding and the rate applicable.
(e) Dividend Income is accounted when the right to receive the same is
established. The dividend declared by the subsidiary companies after
the date of balance sheet are also included if they are in respect of
accounting period which closed on or before the date of companyÃs
Balance Sheet.
4. Turnover:
Turnover represents work certified upto and after taking into
consideration the actual cost incurred and profit evaluated by adopting
the percentage of the work completion method of accounting.
Turnover also includes the revenue from the supply of material in the
transmission tower contracts in accordance with the terms of contract.
5. Joint Venture:
(a) Joint Venture Contracts under Consortium are accounted as
independent contracts to the extent of work completion.
(b) In Joint Venture Contracts under Profit Sharing Arrangement,
services rendered to Joint Ventures are accounted as income on accrual
basis, profit or loss is accounted as and when determined by the Joint
Venture and net Investment in Joint Venture is refected as investments
or loans & advances or current liabilities.
6. Research and Development Expenses:
All expenditure of revenue nature is charged to the Profit and Loss
Account of the period. All expenditure of capital nature is capitalised
and depreciation provided thereon, at the rates as applied to other
assets of similar nature.
7. Employee Retirement Benefits:
Retirement benefits in the form of provident fund and superannuation is
a defined contribution scheme and contributions are charged to the
Profit and Loss Account for the year/period when the contributions are
due.
Gratuity a defined benefit obligation is provided on the basis of an
actuarial valuation made at the end of each year/period on projected
Unit Credit Method.
Leave encashment is recognised on the basis of an actuarial valuation
made at the end of each year on projected Unit Credit Method.
Actuarial gains/losses are immediately taken to profit and loss account
and are not deferred.
8. Fixed Assets and Depreciation:
Fixed Assets are valued and stated at cost of acquisition less
accumulated depreciation thereon. Revalued assets are stated at the
revalued amount. Cost comprises the purchase price and any attributable
cost of bringing the asset to its working condition of its intended
use.
Depreciation for the accounting period is provided on:
(a) Straight Line Method, for assets purchased after 2nd April, 1987,
at the rates and in the manner specified in Schedule XIV to the
Companies Act, 1956.
(b) Written Down Value Method, for assets acquired on or prior to 2nd
April, 1987, at the rates as specified in Schedule XIV to the Companies
Act, 1956.
(c) Depreciation on revalued component of the assets is withdrawn from
the Revaluation Reserve.
(d) The depreciation on assets used for construction has been treated
as period cost.
9. Impairment of Assets:
On annual basis company makes an assessment of any indicator that may
lead to impairment of assets. An asset is treated as impaired when the
carrying cost of asset exceeds its recoverable value. Recoverable
amount is higher of an assetÃs net selling price and its value in use.
Value in use is the present value of estimated future cash flows
expected to arise from the continuing use of an asset and from its
disposal at the end of its useful life.
An impairment loss is charged to the Profit and Loss Account in the
year in which an asset is identified as impaired.
The impairment loss recognized in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
10. Investments:
Investments are classified as current and long term investments.
Current Investments are valued at lower of cost or market value. Long
Term Investments are stated at cost. The decline in the value of long
term Investments, other than temporary, is provided for.
11. Inventories:
(a) Stores and Construction Materials are valued and stated at lower of
cost or net realisable value. The FIFO method of inventory valuation is
used to determine the cost.
(b) Work-in-Progress on construction contracts refects value of
material inputs and expenses incurred on contracts including estimated
profits in evaluated jobs.
(c) Raw materials are valued at cost, net of Excise duty and Value
Added Tax, wherever applicable. Stores and spares, loose tools are
valued at cost except unserviceable and obsolete items that are valued
at estimated realizable value thereof. Costs are determined on FIFO
method.
(d) Work-in-progress from manufacturing operation is valued at cost and
Costs are determined on FIFO method.
(e) Finished Goods are valued at cost or net realizable value,
whichever is lower. Costs are determined on FIFO method.
12. Foreign Currency Translation:
(a) Transactions in foreign currencies are recorded at the exchange
rate prevailing on the date of transactions.
(b) Current Assets and Current Liabilities are translated at the year
end rate or forward contract rate.
(c) Any Gain or Loss on account of exchange difference either on
settlement or translation is recognized in the Profit and Loss Account.
(d) Fixed Assets acquired in foreign currencies are translated at the
rate prevailing on the date of Bill of Lading.
(e) The transactions of Oman branch are accounted as a non-integral
operation. The related exchange difference on conversion is accounted
under Foreign Currency Translation Reserve Account.
(f) The transactions of branches at Kenya, Nigeria and Algeria are
accounted as integral operation.
(g) The exchange gain/loss on long term loans to non integral
operations being subsidiaries are restated to Foreign Exchange
Translation Reserve Account and will be transferred to the profit &
loss account in the year when the disposal or otherwise transfer of the
operations are done.
13. Borrowing Cost:
Borrowing costs directly attributable to the acquisition or
construction of qualifying assets are capitalized. Other borrowing
costs are recognized as expenses in the period in which they are
incurred. In determining the amount of borrowing costs eligible for
capitalization during a period, any income earned on the temporary
investment of those borrowings is deducted from the borrowing costs
incurred.
14. Employee Stock Option Scheme:
Employee stock options are evaluated and accounted on intrinsic value
method as per the accounting treatment prescribed under Guidance Note
on "Accounting for Employee Share-based payments" issued by the ICAI
read with SEBI (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999 issued by Securities and Exchange Board of
India. Accordingly the excess of market value of the stock options as
on the date of grant over the exercise price of the options is
recognized as deferred employee compensation and is charged to profit
and loss account on graded vesting basis over the vesting period of the
options. The un-amortized portion of the deferred employee compensation
is reduced from Employee Stock Option Outstanding which is shown under
Reserves and Surplus.
15. Taxation:
Tax expenses comprise Current Tax, Deferred Tax and Fringe Benefit Tax.
Current Tax is calculated after considering benefits admissible under
Income tax Act, 1961. Deferred Tax is recognized on timing differences
being the differences between the taxable incomes and accounting income
that originate in one period and are capable of reversal in one or more
subsequent periods. Deferred Tax Assets, subject to the consideration
of prudence are recognized and carried forward only to the extent that
there is a reasonable certainty that sufficient future taxable income
will be available against which such Deferred Tax Assets can be
realized. The tax effect is calculated on the accumulated timing
difference at the year-end based on the tax rates and laws enacted or
substantially enacted on balance sheet date.
Tax on FBT is means the specified rate on the value of fringe benefit
in accordance with the provision of section 115 WC of the Income Tax
Act, 1961. Accordingly, FBT is done as per the guidance note issued by
the Institute of Chartered Accountants of India.
At each balance sheet date the Company re-assesses un-recognised
deferred tax assets. It recognised unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
16. Sales Tax/Cenvat Credit/VAT/WCT:
Sales Tax/VAT/Works Contract Tax on construction contracts are
accounted on payment basis. The cost of Material (inputs) is accounted
at purchase cost net of excise duty and Value Added Tax, wherever
applicable. The excise duty elements of materials (inputs) is debited
to ÃModvat Credit Receivable A/c.Ã and Value Added Tax element of
materials (inputs) is debited to ÃVAT Credit Receivable A/c.Ã, under
the head ÃLoans & Advancesà The excise duty and Value Added Tax payable
on dispatch of goods are credited to Modvat Credit Receivable A/c. and
VAT Credit Receivable A/c by debiting the same to excise duty and value
added tax (sales tax), respectively in Profit & Loss A/c.
17. Provision, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognised when an enterprise has a present obligation as a result
of past event; it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present
value and are determined based on best estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to refect the current best estimates.
Contingent Liabilities are not recognized but are disclosed in the
notes to accounts. Disputed demands in respect of Central Excise,
Customs, Income tax and Sales Tax are disclosed as Contingent
Liabilities. Payment in respect of such demands, if any, is shown as
advance, till the final outcome of the matter. Contingent Assets are
neither recognized nor disclosed in the financial statements.
18. Earning per share:
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders 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 of share split.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity shareholders and
weighted average number of equity shares outstanding during the period
is adjusted for the effects of all dilutive potential equity shares.
19. Prior Period Items:
Prior period items are included in the respective head of accounts and
material items are disclosed by way of notes to accounts.