Mar 31, 2023
SIGNIFICANT ACCOUNTING POLICIES1.1 NATURE OF PRINCIPAL ACTIVITIES
NBCC (India) Limited (referred to as "NBCC" or "the Company" or "Parent Company") is a Government of India Navratna Enterprise under the Ministry of Housing and Urban Affairs. The Company operates into three major segments namely Project Management Consultancy, Real Estate and Engineering Procurement & Construction.
1.2 GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IND AS
The Company is incorporated and domiciled in India with registered office at New Delhi. The Company is headquartered in New Delhi, India. The shares of the Company are listed on the National Stock Exchange and the Bombay Stock Exchange.
The Standalone Financial Statements of the Company have been prepared in accordance with the Companies (Indian Accounting Standards) Rules 2015 issued by Ministry of Corporate Affairs (''MCA''). The Company has uniformly applied the Accounting Policies during the period presented.
Unless otherwise stated, all amounts are stated in Lakh of Rupees.
The Standalone Financial Statements for the year ended 31st March, 2023 were authorized and approved for issue by the Board of Directors on 29th May, 2023.
1.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Standalone Financial Statements have been prepared using the Accounting Policies and measurement basis summarized below.
The Standalone Financial Statements have been prepared using the significant Accounting Policies and measurement basis that are in effect at 31 March 2023, as summarised below:
1.4.1 INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
Investments in Subsidiaries, Associates and Joint Ventures are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost.
On each reporting date, consequent upon existence of any external or internal indication to impairment, the impairment loss shall be recognised as difference between the carrying amount and recoverable amount
1.4.2 FOREIGN CURRENCY TRANSLATION Functional and Presentation Currency
The Standalone Financial Statements are presented in Indian Rupee (''INR''), which is Company''s functional Currency.
Foreign Currency Transactions and Balances
Foreign Currency transactions are recorded in the reporting Currency, by applying to the Foreign Currency amount, the exchange rate between the Reporting Currency and the Foreign Currency at the date of the transaction.
Foreign Currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Nonmonetary items which are measured in terms of historical cost denominated in a Foreign Currency are reported using the exchange rate at the date of the transaction.
Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of the Company at rates different from those at which they were initially recorded during the year, or reported in previous Financial Statements, are recognized as Income/ Expenses in the year in which they arise.
For the foreign operations, all assets and liabilities are translated into INR using the exchange rate prevailing at the reporting date and their Statement of Profit and Loss are translated at date of transaction/average rate prevailing over the reporting period. Exchange differences are charged or credited to other comprehensive income and recognised in the foreign currency translation reserve in equity.
The Company derives revenues primarily from Constructions contracts and Real Estate Projects. Construction contracts comprise of geotechnical investigations, topographical surveys, resource planning, preparation of DPR, obtaining statutory approvals, construction of the building, ratification of defects during defect liability period etc. ("together called as construction related services"). In case of Redevelopment construction contracts, sale of the redevelopment properties is also entrusted onto the Company in addition to the construction related services. In Real Estate projects, the contract with customer comprises of delivery of residential/ commercial space, parking slots, after sale maintenance services etc.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognizes revenue when it transfers control over a product or service to a customer.
a) Project Management Consultancy
In case of PMC contracts, the Company undertakes to perform tasks such as geotechnical investigations, topographical surveys, resource-planning, preparing detailed engineering designs and supervising execution of works etc. For contracts where there is one performance obligation, revenue is recognized over time based on the input method of measuring progress as in these contracts, the customer receives and uses the benefits simultaneously.
Some redevelopment construction contracts include additional deliverables, such as marketing and publicity services or the services relating to appointment of real estate consultant, e-auction etc. of commercial and residential areas. These services are separately sold in the market with no dependence on the construction related services and therefore are accounted for as a separate performance obligation. Where the contracts include multiple performance obligations, the transaction price is allocated to each performance obligation based on the standalone selling prices. For marketing and publicity services, the performance obligation is to facilitate and manage the sale process on behalf of client. The performance obligation is satisfied at the time of booking of sale of unit on behalf of client. The revenue is recognized at a point in time when the performance obligation is completed.
For maintenance services, revenue is recognized over time as the customer receives and uses the benefits as the Company performs its obligation.
In real estate development contracts, there are multiple promises such as (a) Sale of property, (b) Sale of additional parking slots and (c) Maintenance services etc. These individual items are sold separately in market and add value to the customer on an individual basis. Therefore, these services are considered as separate performance obligations.
The revenue for these performance obligations is recognized based on the stand-alone selling prices.
Revenue for ''sale of property'' and ''sale of additional parking slots'' is recognized when control over the property has been transferred to the customer. The properties have generally no alternative use for the Company due to contractual restrictions. An enforceable right to payment does not arise until the transfer of control of property to customer. Revenue is recognized at a point in time when the possession is handed over to the customer including deemed possession.
For maintenance services, revenue is recognized over time as the customer receives and uses the benefits as the Company performs its obligation.
c) Engineering, Procurement and Construction (EPC)
Under EPC Contracts, the Company is required to construct, manufacture or develop an asset on behalf of a customer, which is considered as a single performance obligation as the bundle of goods or services represent the combined output for which the customer has contracted with the Company i.e. construction of the project/asset.
For EPC contracts, transaction price is the price which is contractually agreed with the customer for provision of services. The revenue is recognized over time based on the input method of measuring progress because in such contracts, the customer receives and uses the benefits as the Company performs its obligation.
1. Work done for which only letters of intent have been received, however, formal contracts/agreements are in the process of execution.
2. Work executed, and measured by the Company pending certification by the client.
3. Work executed but not measured /partly executed is accounted for at engineering estimate.
4. Extra/Substituted items and the Claims lodged against clients to the extent considered realizable.
1.6 OTHER INCOMEInterest, Dividend and Rental income
Interest income is reported on an accrual basis using the Effective Interest Rate method. Interest income on mobilisation advances given to contractors recoverable in short term is recognised using simple interest method which approximates the effective interest rate.
Interest income on bank deposits held on behalf of client is netted off from interest payable to client on such deposits.
Dividend income is recognised at the time the right to receipt is established. Rental income is recognised on a straight-line basis over the period of lease terms.
Other items of income are recognised in the statement of profit and loss when control of respective goods or service has been transferred to customer.
1.7 INTANGIBLEASSETS Recognition
Intangible assets are initially measured at cost of acquisition thereof. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent Measurement (Amortization)
Amortization on Intangible Assets is charged on the straight line method on the basis of rates arrived at with reference to the useful life of the assets evaluated and approved by the Management.
Asset category |
Estimated useful life (in years) |
Other Intangible Assets Computer Software |
3 Years |
An item of Intangible Asset or any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss Account when the asset is derecognized
1.8 PROPERTY, PLANT AND EQUIPMENT Recognition
Properties Plant and Equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its Property, Plant and Equipment recognised as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the Property, Plant and Equipment.
Subsequent measurement (Depreciation)
Depreciation on Property, Plant and Equipment is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013.The following useful lives are applied:
Asset category |
Estimated useful life (in years) |
Buildings |
|
Building (other than factory buildings) |
60 years |
Other (including temporary structure, etc.) |
03 years |
Plant and Machinery used in civil construction |
12 years |
Furniture and fittings |
10 years |
Motor Vehicles |
08 years |
Office equipment |
05 years |
Computers and data processing units |
|
Servers and networks |
06 years |
End user devices viz. desktops, laptops, etc. |
03 years |
Premium paid on land where lease agreements have been executed for specified period are written off over the period of lease proportionately.
Property, Plant and Equipment individually costing upto INR 10,000 are fully depreciated in the year of acquisition.
The residual values, useful lives and methods of depreciation of Property, Plant and Equipment are reviewed at each Financial Year end and adjusted prospectively, if appropriate.
An item of Property, Plant and Equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss account when the asset is derecognised.
1.9 INVESTMENT PROPERTY Recognition
Investment Properties are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost, if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent Measurement (Depreciation)
Depreciation on Investment Property is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates are arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013.The following useful lives are applied:
Asset category |
Estimated useful life (in years) |
Buildings |
|
Building (other than factory buildings) Other (including temporary structure, etc.) |
60 Years 03 Years |
The residual values, useful lives and methods of depreciation of investment properties are reviewed at each Financial Year end and adjusted prospectively, if appropriate.
An item of Investment Property and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
1.10 LEASESCompany as a Lessee
At inception of a contract, the Company assess whether the contract is, or contains, a lease.
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
1. "Right of Use (ROU) Asset":
At the commencement date, the Company recognizes a right-of-use asset and a lease liability, except:
a. For lease with a term of twelve months or less (Short term leases) and,
b. Leases for which the underlying asset is of low value
For short term lease and assets of low value the Company recognizes the lease payments as an operating expenses on a straight-line basis over the term of lease.
2. "Lease Liability"
At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date.
The lease payments are discounted using the effective interest rate.
1. "Right of Use (ROU) Asset":
After the commencement date, the Company measure the right-of-use asset at cost less any accumulated depreciation and is subject to impairment losses.
2. "Lease Liability"
After the commencement date, the Company measure the lease liability by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made. In addition, the carrying amount of lease liability is re-measured if there is a modification, a change in the lease term, a change in lease payments.
After the commencement date, the interest element of lease payments is charged to Statement of Profit and Loss, as Finance Costs over the period of the lease.
A right of use assets initially recognised is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognistion of the right of use assets (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss account when the right of use asset is derecognized.
The Company recognises assets held under a finance lease as a receivable at an amount equal to the net investment in the lease. The Company further recognises finance income over the lease term, based on straight-line basis reflecting a constant periodic rate of return on the net investment in the lease.
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Assets leased out under operating leases are recognized & presented according to the nature of the underlying asset.
Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
1.11 IMPAIRMENT OF NON FINANCIAL ASSETS
Carrying amount of assets is reviewed at each reporting date where there is any indication of impairment based on internal/ external indicators. An impairment loss is recognised in the Statement of Profit and Loss where carrying amount exceeds recoverable amount of assets. Impairment loss is reversed, if, there is change in recoverable amount and such loss either no longer exists or has decreased or indication on which impairment was recognised no longer exists.
FINANCIAL INSTRUMENTS Financial AssetsInitial recognition and measurement
Financial Assets and Financial Liabilities are recognised when the Company becomes a party to the contractual provisions of the Financial Instrument and are measured initially at fair value adjusted for transaction costs.
i. Debt instruments at Amortised Costâ A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.
After initial measurement, such Financial Assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. All other debt instruments measured are Fair Value through Other Comprehensive Income (FVOCI) or Fair Value through Profit And Loss (FVTPL) based on Company''s business model.
ii. Equity Investmentsâ All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL)on an instrument to instrument basis.
iii. Mutual Fundsâ All mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL).
De-recognition of Financial Assets
A Financial Asset is primarily de-recognised when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Financial LiabilitiesInitial recognition and measurement
All Financial Liabilities are recognised initially at fair value and transaction cost that is attributable to the acquisition of the Financial Liabilities is also adjusted. Financial Liabilities are classified as amortised cost.
Subsequent to initial recognition, these liabilities are measured at Amortised Cost using the Effective Interest Rate method.
De-recognition of Financial Liabilities
A Financial Liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. Consequently write back of unsettled credit balances and invoked bank guarantee is done on closure of the concerned project or earlier based on the previous experience of Management and actual facts of each case and recognised in Other Operating Revenues.
Further when an existing Financial Liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting of Financial Instruments
Financial Assets and Financial Liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.12 IMPAIRMENT OF FINANCIAL ASSETS
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for Financial Assets.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company considers the following â
⢠All contractual terms of the Financial Assets (including prepayment and extension) over the expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
As a practical expedient the Company has adopted ''simplified approach'' using the provision matrix method for recognition of expected loss on trade receivables. The provision matrix is based on three years rolling average default rates observed over the expected life of the trade receivables and is adjusted for forward-looking estimates. These average default rates are applied on total credit risk exposure on trade receivables and outstanding for more than one year at the reporting date to determine lifetime Expected Credit Losses. Further, in cases where there is significant increase in credit risk since initial recognition, impairment loss is assessed & provided.
For recognition of impairment loss on Other Financial Assets and Risk Exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
Inventories are valued as under:
Land Bankâ It consists of asset purchased by the Company that it intends to develop later on into residential / commercial project but on which no construction has commenced. Land is initially recognized at fair value which is generally the cost or net realizable value whichever is less. However, it is discounted to present value when payment terms are deferred for a period of more than one year.
Work in Progressâ Work-in-Progress includes construction work in progress and unsold portion of completed Real Estate Projects. Increase / decrease in Work-in-Progress is accounted for as Income or Expenditure for the year, as the case may be. Valuation of Work-in-Progress including unsold portion of reality project is being done on basis of actual cost and overheads incurred which are directly attributable to project, till completion or net realizable value whichever is less.
Direct Materials, Stores and Spare Parts are valued at lower of cost or net realizable value. Cost is determined on Weighted Average Cost Method.
Consumables including Cantering, Shuttering and Scaffolding, Loose Tools, Laboratory Equipment, empty containers & others are valued on the basis of realizable value, based on the engineering estimate. Provision for obsolescence and slow moving inventory is made based on management''s best estimates of net realizable value of such inventories.
Tax expense recognised in Profit and Loss comprises the sum of Current Tax and Deferred Tax and Current Tax not recognised in Other Comprehensive Income or directly in Equity.
Calculation of Current Tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred Income Taxes are calculated using Balance Sheet Approach. The Current Tax and Deferred Tax so calculated are adjusted for the uncertainty of tax treatment by the tax authorities at each reporting date.
Deferred Tax Liabilities are generally recognised in full for all taxable temporary differences.
Deferred Tax Assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable income.
This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.
1.15 CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents comprise Cash in hand, Balances in Bank Account, Remittance in Transit, Cheques in hand and Demand Deposits, together with other short-term, highly liquid investments (original maturity less than 3 months) that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
1.16 EQUITY, RESERVES AND DIVIDEND PAYMENTS
Share capital represents the nominal value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from retained earnings, net of any related income tax benefits.
Other components of equity include Other Comprehensive Income (OCI) arising from actuarial gain or loss on remeasurement of defined benefit liability and return on plan assets.
Retained earnings include all current and prior period retained profits. All transactions with owners of the parent are recorded separately within equity. Annual dividend distribution to shareholders is recognised as a liability in the period in which the dividend is approved by the shareholders. Any interim dividend paid is recognised on approval by Board of Directors. Dividend payable and corresponding tax on dividend distribution is recognised directly in equity.
1.17 NON CURRENT ASSETS HELD FOR SALE
Non-current assets and disposal groups are classified as held for sale if their carrying amount is intended to be recovered principally through a sale (rather than through continuing use) when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such asset (or disposal group) and the sale is highly probable and is expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at lower of their carrying amount and fair value less costs to sell. The determination of fair value less costs to sell includes use of management estimates and assumptions.
1.18 POST-EMPLOYMENT BENEFITS AND SHORT-TERM EMPLOYEE BENEFITS Defined Contribution Plan
Company''s Contribution paid/payable during the year to Provident Fund, EPS 1995 and Company''s Pension Scheme is recognised in the Statement of Profit and Loss for the year in which the related services are rendered. The same is paid to a fund administered through separate trusts and by EPFO.
Company''s liability towards Gratuity, Post-Retirement Medical Benefits and TA on Superannuation are determined by independent actuary, at the year-end using the Projected Unit Credit Method.
Actuarial gains or losses are recognised in the Other Comprehensive Income. Liability for Gratuity as per actuarial valuation is paid to a fund administered through a separate Trust.
Company''s liability towards Leave (Earned and Sick)and Long Service Awards is determined by independent actuary, at the year-end using the Projected Unit Credit Method. Actuarial gains or losses are recognised in the Profit and Loss.
Short term benefits comprise of employee costs such as Salaries, Bonus, PLI, PRP and Short-term compensated absences are accrued in the year in which the associated services are rendered by employees of the Company.
Ex-gratia to employees who have opted for retirement under the Voluntary Retirement Scheme of the Company is charged to Statement of Profit and Loss in the year of acceptance of the option by the management.
1.19 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions recognised by the Company include provisions for Warranties, Research & Development, Contingencies, Onerous Contracts and Corporate Social Responsibility (CSR). A provision is recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
Provisions are discounted to their present values, where the time value of money is material.
Contingent Liabilities are disclosed on basis of judgment of management after a careful evaluation of facts and legal aspects of matter involved.
Contingent Assets are disclosed when probable and recognised when realization of income is virtually certain.
Arbitration / Court''s awards along with related interest receivable/payable are, to the extent not taken into accounts at the time of initiation, are recognized after it becomes decree. Permanent Machinery of Arbitration, Govt of India, is accounted for on finalization of award by the appellate authority. Interests to/from in these cases are accounted when the payment is probable which the point is when matter is considered settled by management.
Liquidated Damages / Compensation for delay in respect of clients/ contractors, if any, are accounted for when payment is probable which is the point when matter is considered settled by management.
1.22 PRIOR PERIOD EXPENDITURE INCOME
Expenditures / Incomes relating to prior periods and considered not material has been accounted for in the respective head of accounts in the current year.
1.23 SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATIONUNCERTAINTY
Financial Statements are prepared in accordance with GAAP in India which require management to make estimates and assumptions that affect the reported balances of assets, liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of income & expenses during the periods. Although these estimates and assumptions used in accompanying Financial Statements are based upon management''s evaluation of relevant facts and circumstances as of date of Financial Statements which in management''s opinion are prudent and reasonable, actual results may differ from estimates and assumptions used in preparing accompanying Financial Statements. Any revision to accounting estimates is recognized prospectively from the period in which results are known/ materialize in accordance with applicable Indian Accounting Standards.
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below.
Significant Management Judgements
The following are Significant Management Judgements in applying the Accounting Policies of the Company that have the most significant effect on the Financial Statements:
Recognition of Deferred Tax Assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized.
Evaluation of indicators for Impairment of Assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Property, Plant and Equipment - Management assess the remaining useful lives and residual value of property, plant and equipment and believes that the assigned useful lives and residual value are reasonable.
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below.
Revenue Recognition - Where revenue contracts include deferred payment terms, the management determines the fair value of consideration receivable using the expected collection period and interest rate applicable to similar instruments with a similar credit rating prevailing at the date of transaction.
Recoverability of Advances/ Receivables - The Project heads, Zonal heads and Regional/Strategic Business groups from time to time review the recoverability of advances and receivables. The review is done at least once in a Financial Year and such assessment requires significant management judgement based on financial position of the counter-parties, market information and other relevant factors.
Defined Benefit Obligation (DBO) - Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may impact the DBO amount and the annual defined benefit expenses.
Contingencies - Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
Provisions for Warranties - Management''s estimate of the warranties is based on engineering estimates and variation in these assumptions may impact the provision amount and the annual warranty expenses.
Liquidated Damages - Liquidated Damages receivables are estimated and recorded as per contractual terms; estimate may vary from actual as levied on contractor.
1.24 STANDARDS ISSUED BUT NOT EFFECTIVE:
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
Ind AS 1 - Presentation of Financial Statements - This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the standalone financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its standalone financial statements.
Ind AS 12 - Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its standalone financial statement.
Mar 31, 2022
SIGNIFICANT ACCOUNTING POLICIES1.1 NATURE OF PRINCIPAL ACTIVITIES
NBCC (India) Limited (referred to as "NBCC" or "the Company" or "Parent Company") is a Government of India Navratna Enterprise under the Ministry of Housing and Urban Affairs. The Company operates into three major segments namely Project Management Consultancy, Real Estate and Engineering Procurement & Construction.
1.2 GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IND AS
The Company is incorporated and domiciled in India with registered office at New Delhi. The Company is headquartered in New Delhi, India. The shares of the Company are listed on the National Stock Exchange and the Bombay Stock Exchange.
The Standalone Financial Statements of the Company have been prepared in accordance with the Companies (Indian Accounting Standards) Rules 2015 issued by Ministry of Corporate Affairs (''MCA''). The Company has uniformly applied the Accounting Policies during the period presented.
Unless otherwise stated, all amounts are stated in Lakh of Rupees.
The Standalone Financial Statements for the year ended 31st March, 2022 were authorized and approved for issue by the Board of Directors on 30th May, 2022.
1.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Standalone Financial Statements have been prepared using the Accounting Policies and measurement basis summarized below.
The Standalone Financial Statements have been prepared using the significant Accounting Policies and measurement bases that are in effect at 31st March 2022, as summarised below:
1.4.1 INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
Investments in Subsidiaries, Associates and Joint Ventures are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost.
On each reporting date, consequent upon existence of any external or internal indication to impairment, the impairment loss shall be recognised as difference between the carrying amount and recoverable amount
1.4.2 FOREIGN CURRENCY TRANSLATION Functional and Presentation Currency
The Standalone Financial Statements are presented in Indian Rupee (''INR''), which is company''s functional Currency.
Foreign Currency Transactions and Balances
Foreign Currency transactions are recorded in the reporting Currency, by applying to the Foreign Currency amount, the exchange rate between the Reporting Currency and the Foreign Currency at the date of the transaction.
Foreign Currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items which are measured in terms of historical cost denominated in a Foreign Currency are reported using the exchange rate at the date of the transaction.
Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of the Company at rates different from those at which they were initially recorded during the year, or reported in previous Financial Statements, are recognized as Income/ Expenses in the year in which they arise.
For the foreign operations, all assets and liabilities are translated into INR using the exchange rate prevailing at the reporting date and their Statement of Profit and Loss are translated at date of transaction/average rate prevailing over the reporting period. Exchange differences are charged or credited to other comprehensive income and recognised in the foreign currency translation reserve in equity.
The Company derives revenues primarily from Constructions contracts and Real Estate Projects. Construction contracts comprise of geotechnical investigations, topographical surveys, resource planning, preparation of DPR, obtaining statutory approvals, construction of the building, ratification of defects during defect liability period etc. ("together called as construction related services"). In case of Redevelopment construction contracts, sale of the redevelopment properties is also entrusted onto the company in addition to the construction related services. In Real Estate projects, the contract with customer comprises of delivery of residential/ commercial space, parking slots, after sale maintenance services etc.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognizes revenue when it transfers control over a product or service to a customer.
a) Project Management Consultancy
In case of PMC contracts, the Company undertakes to perform tasks such as geotechnical investigations, topographical surveys, resource-planning, preparing detailed engineering designs and supervising execution of works etc. For contracts where there is one performance obligation, revenue is recognized over time based on the input method of measuring progress as in these contracts, the customer receives and uses the benefits simultaneously.
Some redevelopment construction contracts include additional deliverables, such as marketing and publicity services or the services relating to appointment of real estate consultant, e-auction etc. of commercial and residential areas. These services are separately sold in the market with no dependence on the construction related services and therefore are accounted for as a separate performance obligation. Where the contracts include multiple performance obligations, the transaction price is allocated to each performance obligation based on the stand-alone selling prices. For marketing and publicity services, the performance obligation is to facilitate and manage the sale process on behalf of client. The performance obligation is satisfied at the time of booking of sale of unit on behalf of client. The revenue is recognized at a point in time when the performance obligation is completed.
For maintenance services, revenue is recognized over time as the customer receives and uses the benefits as the Company performs its obligation.
In real estate development contracts, there are multiple promises such as (a) Sale of property, (b) Sale of additional parking slots and (c) Maintenance services etc. These individual items are sold separately in market and add value to the customer on an individual basis. Therefore, these services are considered as separate performance obligations.
The revenue for these performance obligations is recognized based on the stand-alone selling prices.
Revenue for ''sale of property'' and ''sale of additional parking slots'' is recognized when control over the property has been transferred to the customer. The properties have generally no alternative use for the Company due to contractual restrictions. An enforceable right to payment does not arise until the transfer of control of property to customer. Revenue is recognized at a point in time when the possession is handed over to the customer including deemed possession.
For maintenance services, revenue is recognized over time as the customer receives and uses the benefits as the Company performs its obligation.
c) Engineering, Procurement and Construction (EPC)
Under EPC Contracts, the Company is required to construct, manufacture or develop an asset on behalf of a customer, which is considered as a single performance obligation as the bundle of goods or services represent the combined output for which the customer has contracted with the Company i.e. construction of the project/asset.
For EPC contracts, transaction price is the price which is contractually agreed with the customer for provision of services. The revenue is recognized over time based on the input method of measuring progress because in such contracts, the customer receives and uses the benefits as the Company performs its obligation.
1. Work done for which only letters of intent have been received, however, formal contracts/agreements are in the process of execution.
2. Work executed, and measured by the Company pending certification by the client.
3. Work executed but not measured /partly executed is accounted for at engineering estimate.
4. Extra/Substituted items and the Claims lodged against clients to the extent considered realizable.
1.6 OTHER INCOMEInterest, Dividend and Rental income
Interest income is reported on an accrual basis using the Effective Interest Rate method. Interest income on mobilisation advances given to contractors recoverable in short term is recognised using simple interest method which approximates the effective interest rate.
Interest income on bank deposits held on behalf of client is netted off from interest payable to client on such deposits.
Dividend income is recognised at the time the right to receipt is established. Rental income is recognised on a straight-line basis over the period of lease terms.
Other items of income are recognised in the statement of profit and loss when control of respective goods or service has been transferred to customer.
1.7 INTANGIBLE ASSETS Recognition
Intangible assets are initially measured at cost of acquisition thereof. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent Measurement (Amortization)
Amortization on Intangible Assets is charged on the straight line method on the basis of rates arrived at with reference to the useful life of the assets evaluated and approved by the Management.
Asset category |
Estimated useful life (in years) |
Other Intangible Assets |
|
Computer Software |
3 Years |
An item of Intangible Asset or any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss Account when the asset is derecognized.
1.8 PROPERTY, PLANT AND EQUIPMENT Recognition
Properties Plant and Equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its Property, Plant and Equipment recognised as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the Property, Plant and Equipment.
Subsequent measurement (Depreciation)
Depreciation on Property, Plant and Equipment is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013. The following useful lives are applied:
Asset category |
Estimated useful life (in years) |
Buildings |
|
Building (other than factory buildings) |
60 years |
Other (including temporary structure, etc.) |
03 years |
Plant and Machinery used in civil construction |
12 years |
Furniture and fittings |
10 years |
Motor Vehicles |
08 years |
Office equipment |
05 years |
Computers and data processing units |
|
Servers and networks |
06 years |
End user devices viz. desktops, laptops, etc. |
03 years |
Premium paid on land where lease agreements have been executed for specified period are written off over the period of lease proportionately.
Property, Plant and Equipment individually costing upto INR 10,000 are fully depreciated in the year of acquisition. The residual values, useful lives and methods of depreciation of Property, Plant and Equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
An item of Property, Plant and Equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss account when the asset is derecognised.
1.9 INVESTMENT PROPERTY Recognition
Investment Properties are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost, if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent Measurement (Depreciation)
Depreciation on Investment Property is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by
the Management or rates are arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013. The following useful lives are applied:
Asset category |
Estimated useful life (in years) |
Buildings |
|
Building (other than factory buildings) |
60 years |
Other (including temporary structure, etc.) |
03 years |
The residual values, useful lives and methods of depreciation of investment properties are reviewed at each financial year end and adjusted prospectively, if appropriate.
An item of Investment Property and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
1.10 LEASESCompany as a Lessee
At inception of a contract, the company assess whether the contract is, or contains, a lease.
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
1. "Right of Use (ROU) Asset":
At the commencement date, the company recognizes a right-of-use asset and a lease liability, except:
a. For lease with a term of twelve months or less (Short term leases) and,
b. Leases for which the underlying asset is of low value
For short term lease and assets of low value the company recognizes the lease payments as an operating expenses on a straight-line basis over the term of lease.
2. "Lease Liability":
At the commencement date, the company measures the lease liability at the present value of the lease payments that are not paid at that date.
The lease payments are discounted using the effective interest rate.
Subsequent measurement
1. "Right of Use (ROU) Asset":
After the commencement date, the company measure the right-of-use asset at cost less any accumulated depreciation and is subject to impairment losses.
2. "Lease Liability"
After the commencement date, the company measure the lease liability by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made. In addition, the carrying amount of lease liability is re-measured if there is a modification, a change in the lease term, a change in lease payments.
After the commencement date, the interest element of lease payments is charged to Statement of Profit and Loss, as Finance Costs over the period of the lease.
De-Recognition
A right of use assets initially recognised is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognistion of the right of use assets (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss account when the right of use asset is derecognized.
Company as a Lessor
The company recognises assets held under a finance lease as a receivable at an amount equal to the net investment in the lease. The company further recognises finance income over the lease term, based on straight-line basis reflecting a constant periodic rate of return on the net investment in the lease.
Operating lease
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Assets leased out under operating leases are recognized & presented according to the nature of the underlying asset.
Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
1.11 IMPAIRMENT OF NON FINANCIAL ASSETS
Carrying amount of assets is reviewed at each reporting date where there is any indication of impairment based on internal/ external indicators. An impairment loss is recognised in the Statement of Profit and Loss where carrying amount exceeds recoverable amount of assets. Impairment loss is reversed, if, there is change in recoverable amount and such loss either no longer exists or has decreased or indication on which impairment was recognised no longer exists.
FINANCIAL INSTRUMENTS Financial AssetsInitial recognition and measurement
Financial Assets and Financial Liabilities are recognised when the Company becomes a party to the contractual provisions of the Financial Instrument and are measured initially at fair value adjusted for transaction costs. Subsequent Measurement
i. Debt instruments at Amortised Costâ A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.
After initial measurement, such Financial Assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. All other debt instruments measured are Fair Value through Other Comprehensive Income
(FVOCI) or Fair Value through Profit And Loss (FVTPL) based on Company''s business model.
ii. Equity Investmentsâ All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL)on an instrument to instrument basis.
iii. Mutual Funds â All mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL).
De-recognition of Financial Assets
A Financial Asset is primarily de-recognised when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Financial LiabilitiesInitial recognition and measurement
All Financial Liabilities are recognised initially at fair value and transaction cost that is attributable to the acquisition of the Financial Liabilities is also adjusted. Financial Liabilities are classified as amortised cost.
Subsequent to initial recognition, these liabilities are measured at Amortised Cost using the Effective Interest Rate method.
De-recognition of Financial Liabilities
A Financial Liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. Consequently write back of unsettled credit balances and invoked bank guarantee is done on closure of the concerned project or earlier based on the previous experience of Management and actual facts of each case and recognised in Other Operating Revenues.
Further when an existing Financial Liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting of Financial Instruments
Financial Assets and Financial Liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.12 IMPAIRMENT OF FINANCIAL ASSETS
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for Financial Assets.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company considers the following â
⢠All contractual terms of the Financial Assets (including prepayment and extension) over the expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
As a practical expedient the Company has adopted ''simplified approach'' using the provision matrix method for recognition of expected loss on trade receivables. The provision matrix is based on three years rolling average default rates observed over the expected life of the trade receivables and is adjusted for forward-looking estimates. These average default rates are applied on total credit risk exposure on trade receivables and outstanding for more than one year at the reporting date to determine lifetime Expected Credit Losses. Further, in cases where there is significant increase in credit risk since initial recognition, impairment loss is assessed & provided.
For recognition of impairment loss on Other Financial Assets and Risk Exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
1.13 INVENTORIESInventories are valued as under:
Land Bank â It consists of asset purchased by the Company that it intends to develop later on into residential / commercial project but on which no construction has commenced. Land is initially recognized at fair value which is generally the cost or net realizable value whichever is less. However, it is discounted to present value when payment terms are deferred for a period of more than one year.
Work in Progressâ Work-in-Progress includes construction work in progress and unsold portion of completed Real Estate Projects. Increase / decrease in Work-in-Progress is accounted for as Income or Expenditure for the year, as the case may be. Valuation of Work-in-Progress including unsold portion of reality project is being done on basis of actual cost and overheads incurred which are directly attributable to project, till completion or net realizable value whichever is less.
Direct Materials, Stores and Spare Parts are valued at lower of cost or net realizable value. Cost is determined on Weighted Average Cost Method.
Consumables including Cantering, Shuttering and Scaffolding, Loose Tools, Laboratory Equipment, empty containers & others are valued on the basis of realizable value, based on the engineering estimate. Provision for obsolescence and slow moving inventory is made based on management''s best estimates of net realizable value of such inventories.
Tax expense recognised in Profit and Loss comprises the sum of Current Tax and Deferred Tax and Current Tax not recognised in Other Comprehensive Income or directly in Equity.
Calculation of Current Tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred Income Taxes are calculated using Balance Sheet Approach. The Current Tax and Deferred Tax so calculated are adjusted for the uncertainty of tax treatment by the tax authorities at each reporting date.
Deferred Tax Liabilities are generally recognised in full for all taxable temporary differences.
Deferred Tax Assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable income.
This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.
1.15 CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents comprise Cash in hand, Balances in Bank Account, Remittance in Transit, Cheques in hand and Demand Deposits, together with other short-term, highly liquid investments (original maturity less than 3 months) that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
1.16 EQUITY, RESERVES AND DIVIDEND PAYMENTS
Share capital represents the nominal value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from retained earnings, net of any related income tax benefits.
Other components of equity include Other Comprehensive Income (OCI) arising from actuarial gain or loss on re-measurement of defined benefit liability and return on plan assets.
Retained earnings include all current and prior period retained profits. All transactions with owners of the parent are recorded separately within equity. Annual dividend distribution to shareholders is recognised as a liability in the period in which the dividend is approved by the shareholders. Any interim dividend paid is recognised on approval by Board of Directors. Dividend payable and corresponding tax on dividend distribution is recognised directly in equity.
1.17 NON CURRENT ASSETS HELD FOR SALE
Non-current assets and disposal groups are classified as held for sale if their carrying amount is intended to be recovered principally through a sale (rather than through continuing use) when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such asset (or disposal group) and the sale is highly probable and is expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at lower of their carrying amount and fair value less costs to sell. The determination of fair value less costs to sell includes use of management estimates and assumptions.
1.18 POST-EMPLOYMENT BENEFITS AND SHORT-TERM EMPLOYEE BENEFITS Defined Contribution Plan
Company''s Contribution paid/payable during the year to Provident Fund, EPS 1995 and Company''s Pension Scheme is recognised in the Statement of Profit and Loss for the year in which the related services are rendered. The same is paid to a fund administered through separate trusts and by EPFO.
Company''s liability towards Gratuity, Post-Retirement Medical Benefits and TA on Superannuation are determined by independent actuary, at the year-end using the Projected Unit Credit Method.
Actuarial gains or losses are recognised in the Other Comprehensive Income. Liability for Gratuity as per actuarial valuation is paid to a fund administered through a separate Trust.
Company''s liability towards Leave (Earned and Sick) and Long Service Awards is determined by independent actuary, at the year-end using the Projected Unit Credit Method. Actuarial gains or losses are recognised in the Profit and Loss.
Short term benefits comprise of employee costs such as Salaries, Bonus, PLI, PRP and Short-term compensated absences are accrued in the year in which the associated services are rendered by employees of the Company. Employee Separation Costs
Ex-gratia to employees who have opted for retirement under the Voluntary Retirement Scheme of the Company is charged to Statement of Profit and Loss in the year of acceptance of the option by the management.
1.19 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions recognised by the Company include provisions for Warranties, Research & Development, Contingencies, Onerous Contracts and Corporate Social Responsibility (CSR). A provision is recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
Provisions are discounted to their present values, where the time value of money is material.
Contingent Liabilities are disclosed on basis of judgment of management after a careful evaluation of facts and legal aspects of matter involved.
Contingent Assets are disclosed when probable and recognised when realization of income is virtually certain.
Arbitration / Court''s awards along with related interest receivable/payable are, to the extent not taken into accounts at the time of initiation, are recognized after it becomes decree. Permanent Machinery of Arbitration, Govt of India, is accounted for on finalization of award by the appellate authority. Interests to/from in these cases are accounted when the payment is probable which the point is when matter is considered settled by management.
Liquidated Damages / Compensation for delay in respect of clients/ contractors, if any, are accounted for when payment is probable which is the point when matter is considered settled by management.
1.22 PRIOR PERIOD EXPENDITURE INCOME
Expenditures / Incomes relating to prior periods and considered not material has been accounted for in the respective head of accounts in the current year.
1.23 SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION UNCERTAINTY
Financial Statements are prepared in accordance with GAAP in India which require management to make estimates and assumptions that affect the reported balances of assets, liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of income & expenses during the periods. Although these estimates and assumptions used in accompanying Financial Statements are based upon management''s evaluation of relevant facts and circumstances as of date of Financial Statements which in management''s opinion are prudent and reasonable, actual results may differ from estimates and assumptions used in preparing accompanying Financial Statements. Any revision to accounting estimates is recognized prospectively from the period in which results are known/ materialize in accordance with applicable Indian Accounting Standards.
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below.
Significant Management Judgements
The following are Significant Management Judgements in applying the Accounting Policies of the Company that have the most significant effect on the Financial Statements:
Recognition of Deferred Tax Assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized.
Evaluation of indicators for Impairment of Assetsâ The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Property, Plant and Equipment - Management assess the remaining useful lives and residual value of property, plant and equipment and believes that the assigned useful lives and residual value are reasonable.
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below.
Revenue Recognitionâ Where revenue contracts include deferred payment terms, the management determines the fair value of consideration receivable using the expected collection period and interest rate applicable to similar instruments with a similar credit rating prevailing at the date of transaction.
Recoverability of Advances/ Receivablesâ The Project heads, Zonal heads and Regional/Strategic Business groups from time to time review the recoverability of advances and receivables. The review is done at least once in a financial year and such assessment requires significant management judgement based on financial position of the counterparties, market information and other relevant factors.
Defined Benefit Obligation (DBO) - Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may impact the DBO amount and the annual defined benefit expenses.
Contingencies - Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
Provisions for Warranties- Management''s estimate of the warranties is based on engineering estimates and variation in these assumptions may impact the provision amount and the annual warranty expenses.
Liquidated Damages - Liquidated Damages receivables are estimated and recorded as per contractual terms; estimate may vary from actual as levied on contractor.
1.24 STANDARDS ISSUED BUT NOT EFFECTIVE:
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, as below.
Ind AS 16 - Property Plant and equipment - The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognized in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant and equipment. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022. The company has evaluated the amendment and there is no impact on its financial statements.
Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets - The amendment specifies that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022, although early adoption is permitted. The company has evaluated the amendment and the impact is not expected to be material.
Mar 31, 2018
SIGNIFICANT ACCOUNTING POLICIES
1.1 NATURE OF PRINCIPAL ACTIVITIES
NBCC (India) Limited (referred to as "NBCC" or "the Company" or "Parent Company") is a Government of India Navratna Enterprise under the Ministry of Urban Development. The Company operates into three major segments namely Project Management Consultancy, Real Estate and Engineering Procurement & Construction.
1.2 GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IND AS
The Company is incorporated and domiciled in India with registered office at New Delhi. The Company is headquartered in New Delhi, India. The shares of the Company are listed on the National Stock Exchange and the Bombay Stock Exchange.
The Standalone Financial Statements of the Company have been prepared in accordance with the Companies (Indian Accounting Standards) Rules 2015 issued by Ministry of Corporate Affairs (''MCA''). The Company has uniformly applied the Accounting Policies during the period presented.
Unless otherwise stated, all amounts are stated in Lakhs of Rupees).
The Standalone Financial Statements for the year ended 31 March 2018 were authorized and approved for issue by the Board of Directors on 25th May, 2018.
1.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Standalone Financial Statements have been prepared using the Accounting Policies and measurement basis summarized below.
1.4 OVERALL CONSIDERATIONS
The Standalone Financial Statements have been prepared using the significant Accounting Policies and measurement bases that are in effect at 31 March 2018, as summarized below.
1.4.1 INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
Investments in Subsidiaries, Associates and Joint Ventures are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost.
1.4.2 FOREIGN CURRENCY TRANSLATION Functional and Presentation Currency
The Standalone Financial Statements are presented in Indian Rupee (''INR''), which is company''s functional Currency. Foreign Currency Transactions and Balances
Foreign Currency transactions are recorded in the reporting Currency, by applying to the Foreign Currency amount the exchange rate between the Reporting Currency and the Foreign Currency at the date of the transaction.
Foreign Currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Nonmonetary items which are measured in terms of historical cost denominated in a Foreign Currency are reported using the exchange rate at the date of the transaction.
Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of the Company at rates different from those at which they were initially recorded during the year, or reported in previous Financial Statements, are recognized as Income/ Expenses in the year in which they arise.
Foreign Operations
For the foreign operations, all assets and liabilities are translated into INR using the exchange rate prevailing at the reporting date and their Statement of Profit and Loss are translated at date of transaction/average rate prevailing over the reporting period. Exchange differences are charged or credited to other comprehensive income and recognized in the foreign currency translation reserve in equity.
1.5 REVENUE RECOGNTION
Revenue arises from rendering of services and is measured at the fair value of consideration received or receivable, excluding applicable taxes, and reduced by any rebates and trade discounts allowed.
Project Management Consultancy
In case of PMC contracts which are in nature of cost plus contracts, revenue is recognized on the basis of percentage completion method and the consideration is to be recognized at fair value. The stage of completion is determined by the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs.
Real Estate Development
The Company follows Guidance Note on "Accounting for Real Estate Transactions" issued by The Institute of Chartered Accountants of India on 10 May 2016. Revenue from Real Estate Projects is recognized on "Percentage of Completion method" (POC) of accounting. Revenue under POC method is recognized on basis of percentage of actual costs incurred including construction and development cost of projects under execution and proportionate cost of land provided following conditions have been fulfilled.
- At least 25% of estimated construction and development costs (excluding land cost) has been incurred;
- At least 25% of saleable project area is secured by the Agreements to Sell/ Application Forms (containing salient terms of the agreement to sell); and
- At least 10% of total revenue as per Agreement to Sell are realized in respect of these agreements.
Project revenues are measured at fair value of the consideration received or receivable.
Engineering, Procurement and Construction
In case of EPC Contracts, the revenue is recognized on the basis of percentage completion method. The stage of completion is determined by the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs.
Revenue includes:
1. Work done for which only letters of intent have been received, however, formal contracts / agreements are in the process of execution.
2. Work executed and measured by the Company pending certification by the client.
3. Work executed but not measured/ partly executed is accounted for at engineering estimated cost.
4. Extra and substituted items to the extent considered realizable.
5. Claims lodged against clients to the extent considered realizable.
6. Amount retained by the clients which is released after the commissioning of the project.
7. Income from Sales commission arising from facilitating sales of units in redevelopment projects by organizing marketing, publicity and e-auction is recognized at the time service is determined to be complete in accordance with terms of the agreements with respective agencies.
Interest, Dividend and Rental income
Interest income is reported on an accrual basis using the Effective Interest Rate method. Interest income on mobilization advances given to contractors recoverable in short term is recognized using simple interest method which approximates the effective interest rate. Interest income on bank deposits held on behalf of client is netted off from interest payable to client on such deposits.
Dividend income is recognized at the time the right to receipt is established.
Rental income is recognized on a straight-line basis over the period of lease terms.
1.6 INTANGIBLE ASSETS Recognition
Intangible assets are initially measured at cost of acquisition thereof. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent Measurement (Amortization)
Amortization on Intangible Assets is charged on the straight line method on the basis of rates arrived at with reference to the useful life of the assets evaluated and approved by the Management.
De-recognition
An item of Intangible Asset or any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss Account when the asset is derecognized.
1.7 PROPERTY, PLANT AND EQUIPMENT
Recognition
Properties Plant and Equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its Property, Plant and Equipment recognized as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the Property, Plant and Equipment.
Subsequent measurement (Depreciation)
Depreciation on Property, Plant and Equipment is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013.The following useful lives are applied:
Premium paid on land where lease agreements have been executed for specified period are written off over the period of lease proportionately.
Property, Plant and Equipment individually costing up to INR 10,000 are fully depreciated in the year of acquisition.
The residual values, useful lives and methods of depreciation of Property, Plant and Equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-Recognition
An item of Property, Plant and Equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss account when the asset is derecognized.
1.8 INVESTMENT PROPERTY
Recognition
Investment Properties are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost, if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent Measurement (Depreciation)
Depreciation on Investment Property is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates are arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013.The following useful lives are applied:
The residual values, useful lives and methods of depreciation of investment properties are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-Recognition
An item of Investment Property and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.
1.9 LEASES Company as a Lessee Finance Leases
A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a Finance Lease. Finance Leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments.
The interest element of lease payments is charged to Statement of Profit and Loss, as Finance Costs over the period of the lease. The leased asset is depreciated over the useful life of the asset or lease term whichever is lower.
Operating Leases
Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the less or are classified as operating leases. Lease rental are charged to Statement of Profit and Loss on straight-line basis except where scheduled increase in rent compensate the less or for expected inflationary costs.
Company as a Less or
Operating lease
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Assets leased out under operating leases are capitalized. Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
1.10 IMPAIRMENT OF NON FINANCIAL ASSETS
Carrying amount of assets is reviewed at each reporting date where there is any indication of impairment based on internal/ external indicators. An impairment loss is recognized in the Statement of Profit and Loss where carrying amount exceeds recoverable amount of assets. Impairment loss is reversed, if, there is change in recoverable amount and such loss either no longer exists or has decreased or indication on which impairment was recognized no longer exists.
FINANCIAL INSTRUMENTS Financial Assets
Initial recognition and measurement
Financial Assets and Financial Liabilities are recognized when the Company becomes a party to the contractual provisions of the Financial Instrument and are measured initially at fair value adjusted for transaction costs.
Subsequent Measurement
i. Debt instruments at Amortized Cost- A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.
After initial measurement, such Financial Assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. All other debt instruments are measured are Fair Value through Other Comprehensive Income (FVOCI) or Fair Value through Profit And Loss (FVTPL) based on Company''s business model.
ii. Equity Investments - All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL)on an instrument to instrument basis.
iii. Mutual Funds - All mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL). De-recognition of Financial Assets
A Financial Asset is primarily de-recognized when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Financial Liabilities
Initial recognition and measurement
All Financial Liabilities are recognized initially at fair value and transaction cost that is attributable to the acquisition of the Financial Liabilities is also adjusted. Financial Liabilities are classified as amortized cost.
Subsequent measurement
Subsequent to initial recognition, these liabilities are measured at Amortized Cost using the Effective Interest Rate method. De-recognition of Financial Liabilities
A Financial Liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. Consequently write back of unsettled credit balances and invoked bank guarantee is done on closure of the concerned project or earlier based on the previous experience of Management and actual facts of each case and recognized in Other Operating Revenues.
Further when an existing Financial Liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.
Offsetting of Financial Instruments
Financial Assets and Financial Liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
1.11 IMPAIRMENT OF FINANCIAL ASSETS
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for Financial Assets.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company consider the follow ng -
- All contractual terms of the Financial Assets (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade Receivables
As a practical expedient the Company has adopted ''simplified approach'' using the provision matrix method for recognition of expected loss on trade receivables. The provision matrix is based on three years rolling average default rates observed over the expected life of the trade receivables and is adjusted for forward-looking estimates. These average default rates are applied on total credit risk exposure on trade receivables and outstanding for more than one year at the reporting date to determine lifetime Expected Credit Losses
Other Financial Assets
For recognition of impairment loss on Other Financial Assets and Risk Exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
1.12 INVENTORIES Inventories are valued as under:
Land Bank - It consists of asset purchased by the Company that it intends to develop later on into residential / commercial project but on which no construction has commenced. Land is initially recognized at fair value which is generally the cost. However, it is discounted to present value when payment terms are deferred for a period of more than one year.
Work in Progress - Work-in-Progress includes unsold portion of Real Estate Projects. Increase / decrease in Work-in-Progress is accounted for as Income or Expenditure for the year, as the case may be. Valuation of Work-in-Progress including unsold portion of reality project is being done on basis of actual cost and overheads incurred which are directly attributable to project, till completion.
Direct Materials, Stores and Spare Parts are valued at lower of cost or net realizable value. Cost is determined on Weighted Average Cost Method.
Consumables including Cantering, Shuttering and Scaffolding, Loose Tools, Laboratory Equipment, empty containers & others are valued on the basis of realizable value, based on the engineering estimate.
Provision for obsolescence and slow moving inventory is made based on management''s best estimates of net realizable value of such inventories.
1.13 INCOME TAXES
Tax expense recognized in Profit and Loss comprises the sum of Current Tax and Deferred Tax and Current Tax not recognized in Other Comprehensive Income or directly in Equity.
Calculation of Current Tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred Income Taxes are calculated using Balance Sheet Approach.
Deferred Tax Liabilities are generally recognized in full for all taxable temporary differences.
Deferred Tax Assets are recognized to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.
1.14 CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents comprise Cash in hand, Balances in Bank Account, Remittance in Transit, Cheques in hand and Demand Deposits, together with other short-term, highly liquid investments (original maturity less than 3 months) that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
1.15 EQUITY, RESERVES AND DIVIDEND PAYMENTS
Share capital represents the nominal value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from retained earnings, net of any related income tax benefits.
Other components of equity includes Other Comprehensive Income (OCI) arising from actuarial gain or loss on remeasurement of defined benefit liability and return on plan assets
Retained earnings include all current and prior period retained profits. All transactions with owners of the parent are recorded separately within equity. Annual dividend distribution to shareholders is recognized as a liability in the period in which the dividend is approved by the shareholders. Any interim dividend paid is recognized on approval by Board of
Directors. Dividend payable and corresponding tax on dividend distribution is recognized directly in equity.
1.16 POST-EMPLOYMENT BENEFITS AND SHORT-TERM EMPLOYEE BENEFITS Defined Contribution Plan
Company''s Contribution paid/payable during the year to Provident Fund, EPS 1995 and Company''s Pension Scheme is recognized in the Statement of Profit and Loss for the year in which the related services are rendered. The same is paid to a fund administered through separate trusts and by EPFO.
Defined Benefit Plan
Company''s liability towards Gratuity, Post-Retirement Medical Benefits and TA on Superannuation are determined by independent actuary, at the year-end using the Projected Unit Credit Method. Actuarial gains or losses are recognized in the Other Comprehensive Income. Liability for Gratuity as per actuarial valuation is paid to a fund administered through a separate Trust.
Other Long-Term Benefits
Company''s liability towards Leave (Earned and Sick)and Long Service Awards is determined by independent actuary, at the year-end using the Projected Unit Credit Method. Actuarial gains or losses are recognized in the Profit and Loss.
Short Term Employee Benefits
Short term benefits comprise of employee costs such as Salaries, Bonus, PLI, PRP and Short-term compensated absences are accrued in the year in which the associated services are rendered by employees of the Company.
Employee Separation Costs
Ex-gratia to employees who have opted for retirement under the Voluntary Retirement Scheme of the Company is charged to Statement of Profit and Loss in the year of acceptance of the option by the management.
1.17 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions recognized by the Company include provisions for Warranties, Research & Development, Contingencies, Onerous Contracts and Corporate Social Responsibility (CSR). A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
Provisions are discounted to their present values, where the time value of money is material.
Contingent Liabilities are disclosed on basis of judgment of management after a careful evaluation of facts and legal aspects of matter involved.
Contingent Assets are disclosed when probable and recognized when realization of income is virtually certain.
1.18 ARBITRATION AWARDS
Arbitration / Court''s awards along with related interest receivable/payable are, to the extent not taken into accounts at the time of initiation, are recognized after it becomes decree. Permanent Machinery of Arbitration, Govt of India, is accounted for on finalization of award by the appellate authority. Interest to/from in these cases are accounted when the payment is probable which the point is when matter is considered settled by management.
1.19 LIQUIDATED DAMAGES
Liquidated Damages / Compensation for delay in respect of clients/ contractors, if any, are accounted for when payment is probable which is the point when matter is considered settled by management.
1.20 PRIOR PERIOD EXPENDITURE/ INCOME
Expenditures / Incomes relating to prior periods and considered not material has been accounted for in the respective head of accounts in the current year.
1.21 SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION UNCERTAINTY
Financial Statements are prepared in accordance with GAAP in India which require management to make estimates and assumptions that affect the reported balances of assets, liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of income & expenses during the periods. Although these estimates and assumptions used in accompanying Financial Statements are based upon management''s evaluation of relevant facts and circumstances as of date of Financial Statements which in management''s opinion are prudent and reasonable, actual results may differ from estimates and assumptions used in preparing accompanying Financial Statements. Any revision to accounting estimates is recognized prospectively from the period in which results are known/ materialize in accordance with applicable Indian Accounting Standards.
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below.
Significant Management Judgments
The following are Significant Management Judgments in applying the Accounting Policies of the Company that have the most significant effect on the Financial Statements.
Recognition of Deferred Tax Assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized.
Evaluation of indicators for Impairment of Assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Property, Plant and Equipment - Management assess the remaining useful lives and residual value of property, plant and equipment and believes that the assigned useful lives and residual value are reasonable (see note 4.5).
Estimation Uncertainty
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below.
Revenue Recognition - where revenue contracts include deferred payment terms, the management determines the fair value of consideration receivable using the expected collection period and interest rate applicable to similar instruments with a similar credit rating prevailing at the date of transaction.
Recoverability of Advances/ Receivables - The Project heads, Zonal heads and Regional/Strategic Business groups from time to time review the recoverability of advances and receivables. The review is done at least once in a financial year and such assessment requires significant management judgment based on financial position of the counter-parties, market information and other relevant factors.
Defined Benefit Obligation (DBO) - Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may impact the DBO amount and the annual defined benefit expenses.
Contingencies -Management judgments is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
Provisions for Warranties- Management''s estimate of the warranties is based on engineering estimates and variation in these assumptions may impact the provision amount and the annual warranty expenses.
Liquidated Damages -Liquidated Damages receivables are estimated and recorded as per contractual terms; estimate may vary from actual as levy on contractor.
1.22 STANDARDS ISSUED BUT NOT EFFECTIVE
Ind AS 12 - Income Taxes
On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing amendment to Ind AS 12 requires the entities to consider restriction in tax laws in sources of taxable profit against which entity may make deductions on reversal of deductible temporary difference (may or may not have arisen from same source) and also consider probable future taxable profit. The Group is evaluating the requirements of the amendment & its impact on the financial statements.
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018
containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will
come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.
Ind AS 115- Revenue from Contract with Customers: On March 28, 2018 : Ministry of Corporate Affairs ("MCA") has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers.
The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors.
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach) The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018. The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted.
The company is currently evaluating the requirements of the amendment and the effect of the disclosure on the financial statements is being evaluated.
(ii) Leasing Arrangements
Certain Investment Properties are leased to tenants under long-term operating leases with rentals payable monthly (Refer Note 38). The Company Capitalized Rs, 170.70 Lakhs from Inventory (Real Estate Completed Projects) as investment property during the financial year 2016-17. Future minimum lease payments receivable under long-term operating leases of Investment Properties in the aggregate is Rs,28.16 Lakhs {Previous Year Rs,31.36 Lakhs} and for each of the following period:
(Rs, in lakhs)
(iv) Description of Valuation Techniques used and key inputs to Valuation on Investment Properties:
Valuation Approach - The valuation of the Investment Property was conducted based on Direct Sales Comparison Method. This approach estimates value of the properties by comparing recent sales/ listings of similar interests in commercial shops located in the surrounding area. By analysing sales/ listings adjustments can be made for size, length and other relevant factors when comparing such sales/ listings against the properties. This approach is commonly used to value standard properties when reliable sales/ listings evidence is available.
"Commercial property in same commercial complex was used for comparison and adjustments made for following factors
i) Listing Discount,
ii) Location
iii) Size, and
iv) Economic Obsolescence"
(v) All resulting fair value estimates for Investment Properties are included in level 2 Fair Value
Mar 31, 2017
1. SUMMARY OFS1GNIFICANT ACCOUNTING POLICIES
The Standalone Financial Statements have been prepared using the Accounting Policies and measurement basis summarized below.
1.1 INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
Investments in Subsidiaries, Associates and Joint Ventures are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost.
1.2 FOREIGN CURRENCY TRANSLATION
FunctionaI and Presentation Currency
The Standalone Financial Statements are presented in Indian Rupee (âlNRâ), which is companyâs functional Currency.
Foreign Currency Transactions and Balances
Foreign Currency transactions are recorded in the reporting Currency, by applying to the Foreign Currency amount the exchange rate between the Reporting Currency and the Foreign Currency at the date of the transaction.
Foreign Currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items which are measured in terms of historical cost denominated in a Foreign Currency are reported using the exchange rate at the date of the transaction.
Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of the Company at rates different from those at which they were initially recorded during the year, of reported in previous Financial Statements, are recognised as Income/ Expenses in the year in which they arise.
1.3 REVENUE RECOGNTION
Revenue arises from rendering of services and is measured at the fair value of consideration received or receivable, excluding applicable taxes, and reduced by any rebates and trade discounts allowed.
Project Management Consultancy
In case of PMC contracts which are in nature of cost plus contracts, revenue is recognised on the basis of percentage completion method and the consideration is to be recognised at fair value. The stage of completion is determined by the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs.
Real Estate Development
The Company follows Guidance Note on âAccounting for Real Estate Transactionsâ issued by The Institute of Chartered Accountants of India on 10 May 2016. Revenue from Real Estate Projects is recognised on âPercentage of Completion methodâ {POC) of accounting. Revenue under POC method is recognised on basis of percentage of actual costs incurred including construction and development cost of projects under execution and proportionate cost of land provided following conditions have been fuIfilled.
- At least 25% of estimated construction and development costs (excluding land cost) has been incurred;
- At least 25% of saleable project area is secured by the Agreements to Sell/Application Forms (containing salient terms of the agreement to sell); and
- At least 10% of total revenues as per Agreement to Sell are realized )n respect of these agreements.
Project revenues are measured at fair value of the consideration received or receivable.
Engineering, Procurement and Construction
In case of EPC Contracts, the revenue is recognised on the basis of percentage completion method. The stage of completion is determined by the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs.
Revenue includes:
1. Work done for which only Letters of intent have been received, however, formal contracts/agreements are in the process Of execution,
2. Work executed and measured by the Company pending certification by the client.
3. Work executed but not measured/ partly executed is accounted for at engineering estimated cost.
4. Extra and substituted items to the extent considered realizable.
5. Claims lodged against clients to the extent considered realizable.
6. Amount retained by the clients which is released after the commissioning of the project.
Interest, Dividend and Rental income
Interest income is reported on an accrual basis using the Effective Interest Rate method. Interest income on mobilisation advances given to contractors recoverable in short term is recognised using simple interest method which approximates the effective interest rate .Interest income on bank deposits heId on behaIf of client is netted off from interest payabIe to client on such deposits.
Dividend income is recognised at the time the right to receipt is established.
Rental income is recognised on a straight-line basis over the period of lease terms.
1.4 INTANGIBLE ASSETS
Recognition
Intangible assets are initially measured at cost of acquisition thereof- The cost comprise purchase price, borrowing cost if capitalization criteria are met and directly attributable Cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent Measurement (Amortization)
Amortization of Intangible Assets is charged on the straight line method on the basis of rates arrived at with reference to the useful life of the assets evaluated and approved by the Management.
De-recognition
An item of Intangible Asset or any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss Account when the asset is derecognised.
1.5 PROPERTY, PLANT AND EQUIPMENT
Recognition
Properties, Plant and Equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates 3re deducted in arriving at the purchase price.
On transition to ind AS, the Company has elected to continue with the carrying value of all of its Property, Plant and Equipment recognised as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the Property, Plant and Equipment.
Subsequent measurement (Depreciation)
Depreciation on Property, Plant and Equipment ii charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013-The following useful lives are applied!
Premium paid on land where lease agreements have been executed for specified period are written off over the period of lease proportionately.
Property, Plant and Equipment individually costing upto INR 10,000 are fuIly depreciated in the year of acquisition.
The residual values, useful lives and methods of depreciation of Property, Plant and Equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-Recognition
An item of Property; Plant and Equipment and any significant, part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss account when the asset is derecognised.
1.6 INVESTMENT PROPERTY
Recognition
Investment Properties are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost, if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent Measurement (Depreciation)
Depreciation on Investment Property is charged on straight line method either on the basis of rates arrived at with reference to the useful life of the assets evaluated by the Committee consisting of Technical experts and approved by the Management or rates are arrived at based on useful life prescribed under Part C of Schedule II of the Companies Act, 2013. The following useful lives are applied:
The residual values, useful lives and methods of depreciation of investment properties are reviewed at each financial year end and adjusted prospectively, if appropriate
De-Recognition
An item of Investment Property and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss a rising on de - recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is de-recognised.
1.7 LEASES
Company as a Lessee
Finance Leases
A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a Finance Lease. Finance Leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments.
The interest element of lease payments is charged to Statement of Profit and Loss, as Finance Costs over the period of the lease. The leased asset is depreciated over the useful life of the asset or lease term whichever is lower.
Operating Leases
Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the lessor are cla$5ified as operating leases. Lease rental are charged to Statement of Profit and Loss on straight-line basis except where scheduled increase in rent compensate the lessor far expected inflationary costs.
Company as a Lessor
Operating lease
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Assets leased out tinder operating leases are capitalized. Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs,
1.8 IMPAIRMENT OF NON FINANCIAL ASSETS
Carrying amount of assets is reviewed at each reporting date where there is any indication of impairment based on internal/ external indicators. An Impairment loss is recognised in the Statement of Profit and Loss where carrying amount exceed recoverable amount of assets. Impairment loss is reversed,, if, there is change in recoverable amount and such loss either no longer exists or has decreased or indication on which impairment was recognised no longer exists.
1.9 FINANCIAL INSTRUMENTS
Financial Assets
Initial recognition and measurement
Financial Assets and Financial Liabilities are recognised when the Company becomes a party to the contractual provisions of the Financial [Instrument and are measured initially at fair value adjusted for transaction costs.
Subsequent Measurement
i. Debt instruments at Amortised Cost- A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met;
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.
After initial measurement, such Financial Assets are subsequently measured at amortised cost using the effective interest rate (EIR) method- All other debt instruments are measured are Fair Value through Other Comprehensive Income (FVOCl) or Farr Value through Profit and Loss f FVTPL) based on Companyâs business model.
ii. Equity Investments - All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at fair value through profit and loss (F VTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL)on an instrument to instrument basis.
iii. Mutual Funds - All mutual funds in scope of Ind - AS 109 are measured at fair vaIue through profit and loss (F VTPL).
De-re cognition of Financial Assets
A Financial Asset is primarily de-recognised when the rights to receive cash flaws from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Financial Liabilities
Initial recognition and measurement
AH Financial Liabilities are recognised initially at fair value and transaction cost that is attributable to the acquisition of the Financial Liabilities is also adjusted. Financial Liabilities are classified as a mortised cost.
Subsequent measurement
Subsequent to initial recognition, these liabilities are measured at A mortised Cost using the Effective Interest Rate method. De-recognition of Financial Liabilities
A Financial Liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. Consequently, write back of unsettled credit balances and invoked bank guarantee is done on closure of the concerned project or earlier based on the previous experience of Management and actual facts of each case and recognised in Other Operating Revenues.
Further when an existing Financial Liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability and Substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting of Financial instruments
Financial Assets and Financial Liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.10 IMPAIRMENT OF FINANCIAL ASSETS
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for Financial Assets.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company considers the following -
- All Contractual terms Of the Financial Assets (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade Receivables
As a practical expedient the Company has adopted âsimplified approachâ using the provision matrix method for recognition of expected loss on trade receivables. The provision matrix is based on three years rolling average default rates observed over the expected life of the trade receivables and is adjusted for forward-looking estimates. These average default rates are applied on total credit risk exposure on trade receivables and outstanding for more than one year at the reporting date to determine lifetime Expected Credit Losses
Other Financial Assets
For recognition of impairment loss on Other Financial Assets and Risk Exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
1.11 INVENTORIES
Inventories are valued as under:
Land Bank - It consists of asset purchased by the Company that it intends to develop later on into residential / commercial project but on which no construction has commenced. Land is initially recognized at fair value which is generally the cost. However, it is discounted to present value when payment terms are deferred for a period of more than one year.
Work in Progress - Work-in-Progress includes unsold portion of Real Estate Projects. Increase / decrease in Work-in-Progress is accounted for as Income or Expenditure for the year, as the Case may be. Valuation of Work-in-Progress including unsold portion of reality project is being done on basis of actual Cost and overheads incurred which are directly attributable to project, till completion.
Direct Materials, Stores and Spare Parts are valued at lower of cost or net realizable value. Cost is determined on Weighted Average Cost Method.
Consumables including Cantering, Shuttering and Scaffolding, Loose Tools, Laboratory Equipment, empty containers & others are valued on the basis of realizable value, based on the engineering estimate.
Provision for obsolescence and slow moving inventory is made based on managementâs best estimates of net realisable value of such inventories.
1.12 INCOME TAXES
Tax expense recognised in Profit and Loss comprises the sum of Current Tax and Deferred Tax and Current Tax not recognised in Other Comprehensive Income or directly in Equity.
Calculation of Current Tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred Income Taxes are calculated using Balance Sheet Approach.
Deferred Tax Liabilities are generally recognised in full for all taxable temporary differences.
Deferred Tax Assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.
1.13 CASH AND CAS H EQUIVALENTS
Cash and Cash Equivalents comprise Cash in hand, Balances in Bank Account, Remittance in Transit, Cheques in hand and Demand Deposits, together with other short-term, highly liquid investments (original maturity less than 3 months! that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
1.14 EQUITY, RESERVES AND DIVIDEND PAYMENTS
Share capital represents the nominal value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from retained earnings, net of any related income tax benefits.
Other components of equity includes Other Comprehensive Income (OCI) arising from actuarial gain or loss on re-measurement of defined benefit liability and return on plan assets.
Retained earnings include all current and prior period retained profits. All transactions with owners of the parent are recorded separately within equity. Annual dividend distribution to shareholders is recognised as a liability in the period in which the dividend is approved by the shareholders. Any interim dividend paid is recognised on approval by Board of Directors. Dividend payable and corresponding tax on dividend distribution is recognised directly in equity.
1.15 POST-EMPLOYMENT BENEFITS AND SHORT-TERM EMPLOYEE BENEFITS
Defined Contribution Plan
Companyâs Contribution paid/payable during the year to Provident Fund, EPS 1995 and Companyâs Pension Scheme is recognised in the Statement of Profit and Loss for the year in which the related services are rendered. The same is paid to a fund administered through separate trusts and by EPFO.
Defined Benefit Plan
Companyâs liability towards Gratuity, Post-Retirement Medical Benefits and TA on Superannuation are determined by independent actuary, at the year-end using the Projected Unit Credit Method. Actuarial gains or losses are recognised in the Other Comprehensive Income. Liability for Gratuity as per actuarial valuation is paid to a fund administered through a separate Trust.
Other Long-Term Benefits
Companyâs liability towards Leave (Earned and Sick) and Long Service Awards is determined by independent actuary, at the year-end using the Projected Unit Credit Method. Actuarial gains or losses are recognised in the Profit and Loss.
Short Term Employee Benefits
Short term benefits comprise of employee costs such as Salaries, Bonus, PLI, PRP and Short-term compensated absences are accrued in the year in which the associated services are rendered by employees of the Company.
Employee Separation Costs
Ex-gratia to employees who have opted for retirement under the Voluntary Retirement Scheme of the Company is charged to Statement of Profit and Loss in the year of acceptance of the option by the management.
1.16 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions recognised by the Company include provisions for Warranties., Research & Development, Contingencies, Onerous Contracts and Corporate Social Responsibility {CSR). A provision is recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
Provisions are discounted to their present values, where the time value of money is material.
Contingent Liabilities are disclosed on basis of judgment of management after a careful evaluation of facts and legal aspects of matter involved.
Contingent Assets are disclosed when probable and recognised when realization of income is virtually certain
1.17 ARBITRATION AWARDS
Arbitration / Courtâs awards along with related interest receivable/payable are, to the extent not taken into accounts at the time of initiation, are recognized after it becomes decree. Permanent Machinery of Arbitration, Govt of India, is accounted for on finalisation of award by the appellate authority. Interest to/from in these cases are accounted when the payment is probable which the point is when matter is considered Settled by management.
1.18 LIQUIDATED DAMAGES
Liquidated Damages / Compensation for delay in respect of clients/ contractors, if any, are accounted for when payment is probable which is the point when matter is considered settled by management.
1.19 PRIORPERIOD EXPENDITURE/INCOME
Expenditures / Incomes relating to prior periods and considered not material has been accounted for in the respective head of accounts in the current year.
1.20 SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION UNCERTAINTY
Financial Statements are prepared in accordance with GAAP in India which require management to make estimates and assumptions that affect the reported balances of assets, liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of income & expenses during the periods. Although these estimates and assumptions used in accompanying Financial Statements are based upon managementâs evaluation of relevant facts and circumstances as of date of Financial Statements which in managementâs opinion are prudent and reasonable, actual results may differ from estimates and assumptions used in preparing accompanying Financial Statements. Any revision to accounting estimates is recognized prospectively from the period in which results are known/ materialise in accordance with applicable Indian Accounting Standards.
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, Liabilities, income and expenses is provided below.
Significant Management Judgements
The following are Significant Management Judgements in applying the Accounting Policies of the Company that have the most significant effect on the Financial Statements.
Recognition of Deferred Tax Assets -The extent to which deferred tax assets can be recognized is based on an assessment of ; he probability of the Companyâs future taxable income against which the deferred tax assets can be utilized.
Evaluation of indicators for Impairment of Assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Property, Plant and Equipment Management assess the remaining useful lives and residual value of property, plant and equipment and believes that the assigned usefuI lives and residuaI value are reasonable (see note 3,5).
Estimation Uncertainty - Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below.
Revenue Recognition - Where revenue contracts include deferred payment terms, the management determines the fair value of consideration receivable using the expected collection period and interest rate applicable to similar instruments with a similar credit rating prevailing at the date of transaction.
Recoverability of Advances/ Receivables - The Project heads, Zonal heads and Regional/Strategic Business groups from time to time review the recoverability of advances and receivables. The review is done at least once in a financial year and such assessment requires significant management judgement based on financial position of the counter-parties, market information and other relevant factors.
Defined Benefit Obligation (DBO) - Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may impact the DBO amount and the annual defined benefit expenses.
Contingencies - Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
Provisions for Warranties - Managements estimate of the warranties is based on engineering estimates and variation in these assumptions may impact the provision amount and the annual warranty expenses.
Liquidated Damages - Liquidated Damages receivables are estimated and recorded as per contractual terms; estimate may vary from actual as levy on contractor.
1.21 STANDARDS ISSUED BUT NOT EFFECTIVE
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2D17, notifying amendments to Ind AS 7, âStatement of cash flowsâ and Ind AS 102, âShare-based payment.â The amendment are applicableto the Company from 1 April 2017.
Amendment to Ind AS 7
The amendment to Ind AS 7 requires the entities to provide certain additional disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from financing cash flows and non-cash transactions. The amendment suggests entities to include a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirements. The Company is currently evaluating the requirements of the amendment and the effect of the disclosure on the financial statements is being evaluated.
Mar 31, 2016
(a) Corporate Information
National Buildings Construction Corporation Limited (NBCC) was incorporated in 1960 under the Companies Act, 1956. NBCC is a Public Sector Enterprise under the administrative control of Ministry of Urban Development, Government of India. NBCC is primarily engaged in the business of (i) Project Management Consultancy (PMC) (ii) Real Estate Development and (iii) Engineering, Procurement and Construction (EPC). The equity shares of NBCC are listed on National Stock Exchange of India Limited and BSE Limited.
(b) BASIS OF PREPARATION OF FINANCIAL STATETEMENTS
The financial statements have been prepared to comply in all material respects with the notified Accounting Standards by Companies Accounting Standards Rules, 2006 as amended from time to time (notified under Section 211(3C) of the Companies Act, 1956 which continues to be applicable in terms of Companies (Accounts) Rules, 2014 in respect of Section 133 of the Companies Act, 2013) and other relevant provisions of the Companies Act, 2013. Financial Statements have been prepared under historical cost convention on accrual basis in accordance with Generally Accepted Accounting Principles (GAAP) in India. The accounting policies have been consistently followed by Company.
(c) USE OF ESTIMATES
Financial Statements are prepared in accordance with GAAP in India which require management to make estimates and assumptions that affect the reported balances of assets, liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of income & expenses during the periods. Although these estimates and assumptions used in accompanying financial statements are based upon management''s evaluation of relevant facts and circumstances as of date of financial statements which in management''s opinion are prudent and reasonable, actual results may differ from estimates and assumptions used in preparing accompanying financial statements. Any revision to accounting estimates is recognized prospectively from the period in which results are known/ materialize in accordance with applicable Accounting Standards.
1. INCOME RECOGNITION
a) In case of PMC contracts which are in nature of Cost Plus Contracts, revenue is recognized on the basis of percentage completion method. The stage of completion is determined by the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs.
b) In respect of Real Estate Development, the company is following Revised Guidance Note, GN (A) 23 (revised 2012) on âAccounting for Real Estate Transactionsâ issued by The Institute of Chartered Accountants of India. Revenue from Real Estate projects is recognized on âPercentage of completion Methodâ (POC) of accounting. Revenue under POC method is recognized on basis is of percentage of actual costs incurred including construction and development cost of projects under execution and proportionate cost of land provided following conditions have been fulfilled:
1. at least 25% of estimated construction and development costs (excluding land cost) has been incurred;
2. at least 25% of saleable project area is secured by the Agreements to Sell/ Application Forms (containing salient terms of the agreement to sell);. and
3. at least 10% of total revenue as per Agreement to Sell are realized in respect of these agreements.
c) In case of EPC Contracts, the revenue is recognized on the basis of percentage completion method. The stage of completion is determined by the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs.
d) Revenue includes:
1. Work done for which only letters of intent have been received, however, formal contracts/agreements are in the process of execution.
2. Work executed and measured by the Company pending certification by the client.
3. Work executed but not measured/partly executed are accounted for at engineering estimated cost.
4. Extra and substituted items to the extent considered realizable.
5. Claims lodged against clients to the extent considered realizable.
6. Amount retained by the clients which is released after the commissioning of the project.
e) Income from interest is accounted for on time proportion basis taking into account amount outstanding and applicable rate of interest. Interest from customers under agreement to sell is accounted for on receipt basis.
f) Dividend income is recognized when right to receive is established.
g) Rent, Service Receipts are accounted for on accrual basis.
2. FIXED ASSETS Tangible Assets:
Fixed Assets are stated at historical cost less accumulated depreciation and impairment loss, if any. Cost comprises purchase price, duties, levies and any directly attributable cost of bringing the assets to their working condition for its intended use. It excludes refundable taxes. Borrowing costs, if any relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Intangible Assets:
Intangible Assets are stated at their cost of acquisition less accumulated amortization.
3. DEPRECIATION & AMORTISATION
a) Depreciation on Fixed Assets is calculated on Straight line method in accordance with the provisions of Schedule II of the Companies Act, 2013 keeping 5% of cost as residual value. The useful life of fixed assets as defined in the Part C of Schedule II of the Companies Act, 2013 has been taken for all tangible assets.
b) Fixed Assets costing up to ''10,000/- each are fully depreciated in the year of its acquisition.
4. FOREIGN CURRENCY TRANSACTIONS
The financial statement of an integral operation is translated using following principles and procedures:
a) A foreign currency transaction is recorded, on initial recognition in reporting currency (i.e. ''), by applying to foreign currency exchange rate at the date of transaction.
b) Monetary items denominated in a foreign currency are reported using exchange rate at reporting date.
c) Non-monetary items carried in term of historical cost denominated in foreign currency, are reported using exchange rate at the date of transaction.
d) Exchange differences arising on the settlement of monetary items or on reporting an enterprise''s monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, are recognized as income or as expenses in the period in which they arise.
e) Exchange differences arising on reporting of long term monetary assets at rates different from those at which they were initially reported during the period or previous periods in so far they relate to the acquisition of depreciable capital asset is added to or deducted from the cost of assets.
f) Non monetary foreign currency items are carried at cost.
5. VALUATION OF INVENTORIES
a) Direct Materials, Stores and Spare Parts, Finished Goods and Stock in Transit are valued at lower of cost or net realizable value. Cost is determined on weighted average cost method.
b) Land Bank is measured at actual cost of land including incidental expenses and directly attributable expenses till the execution of the project is actually started.
c) Work-in-progress includes unsold portion of Real Estate Projects. Net Increase/decrease in Work-in-Progress is accounted for in the Profit & Loss Account for the year. Valuation of work-in-progress including unsold portion of reality project is being done on basis of actual cost and overheads incurred which are directly attributable to project, till completion.
d) Consumables including Loose Tools, Scrap including empty containers & others Cantering, Shuttering and Scaffolding and Hostel Staff Camp Equipment, are valued on the basis of realizable value, based on the engineering estimate.
6. INVESTMENTS
a) Current Investments are valued at Lower of Cost or Net Realizable Value.
b) Long Term Investment are stated at cost. Provision for diminution in the value of long term investments is made only if, such decline is other than temporary in the opinion of the management.
7. EMPLOYEE BENEFITS
a) SHORT TERM BENEFITS
These are recognized as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related services are rendered. These benefits include performance related pay and compensated absences.
b) LONG TERM BENEFITS
Defined Contribution Plan
Company''s contribution paid/payable during the year to Provident Fund, EPS 1995 of EPFO and Company''s Pension Scheme is recognized in the statement of profit and loss for the year in which the related services are rendered. The same is paid to a fund administered through separate trusts.
Defined Benefit Plan
Company''s liability towards gratuity, leave benefits (including compensated absences), Post Retirement Medical Benefit and TA on Superannuation are determined by independent actuary, at the yearend using the projected unit credit method. Actuarial gains or losses are recognized immediately in the statement of profit and loss. Liability for gratuity as per actuarial valuation is paid to a fund administered through a separate trust.
c) EMPLOYEE SEPARATION COSTS
Ex Gratia to employees who have opted for retirement under the voluntary retirement scheme of the Company is charged to the Statement of Profit and Loss in the year of acceptance of option by the management
8. PRIOR PERIOD EXPENDITURE/ INCOME
Expenditure / Income upto Rs,1,00,000 in each case relating to prior period has been charged / accounted for to the respective head of accounts.
9. TAXES ON INCOME
Tax expense comprises both current and deferred tax. Current tax is determined on the basis of taxable income in accordance with the provisions of the Income Tax Act, 1961. Deferred tax liability /asset resulting from ''timing difference'' between accounting income and taxable income, that is capable of reversal in subsequent accounting period is accounted for considering the tax rate & tax laws that have been enacted or substantively enacted as on the reporting date. Deferred tax asset is recognized and carried forward only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are reviewed at each reporting date for their reliability.
10. IMPAIRMENT OF ASSETS
Carrying amount of cash generating units is reviewed at each reporting date where there is any indication of impairment based on internal/ external indicators. An impairment loss is recognized in the statement of profit and loss where carrying amount exceeds recoverable amount of cash generating units. Impairment loss is reversed, if, there is change in recoverable amount and such loss either no longer exists or has decreased or indication on which impairment was recognized no longer exists.
11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A provision is recognized when the company has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle obligation and in respect of which a reliable estimate can be made. Provisions are determined based on management estimate required to settle the obligation on reporting date.
Contingent liabilities are disclosed on basis of judgment of management after a careful evaluation of facts and legal aspects of matter involved.
Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized.
12. PROVISION FOR DOUBTFUL DEBTS/ LOANS AND ADVANCES
The amount of Trade Receivables / Loans and Advances in closed projects, pertaining to Government of India, its departments and Public Sector Enterprises are considered Good for realization irrespective of the age of receivable/loans and advances. These debts are under constant persuasion for realization till final settlement made with client or in case of dispute, verdict is passed by the arbitrator/court. Necessary provision against doubtful debts/loans and advances is made based on the previous experience of Management. Receivables/Advances are written-off as and when considered unrealizable.
13. UNADJUSTED CREDIT BALANCES WRITTEN BACK
Write back of unsettled credit balances is done on closure of the concerned project or earlier based on the previous experience of Management and actual facts of each case.
14. ARBITRATION AWARDS
Arbitration / Court''s awards, to the extent not taken into accounts at the time of initiation, are accounted for after it becomes decree. Arbitration awards by Permanent Machinery of Arbitration, Govt. of India, are accounted for on finalization of award by the appellate authority.
Interest to / from in these cases are accounted for on actual payment /receipt basis.
15. LIQUIDATED DAMAGES
Liquidated Damages / Compensation for delay in respect of clients/ contractors, if any, are accounted for when matter is considered settled by management.
The Company has only one class of equity shares and the shareholders of the company are entitled to receive dividends as and when declared by the company and enjoy proportionate voting rights in case any resolution is put to vote. Further, the shareholders have all such rights, as may be available to a shareholder of a listed public company, under the Companies Act, the terms of the listing agreements executed with the Stock Exchanges, and Memorandum of Association and Articles of Association of the Company.
Mar 31, 2015
(a) Corporate Information
National Buildings Construction Corporation Limited (NBCC/the company)
was incorporated in I960 under the Companies Act, 1956. NBCC is a
Public Sector Enterprise under the administrative control of Ministry
of Urban Development, Government of India. NBCC is primarily engaged
in the business of (i) Project Management Consultancy (PMC) (ii) Real
Estate Development and (iii) Engineering, Procurement and Construction
(EPC). The equity shares of NBCC are listed on National Stock Exchange
of India Limited and BSE Limited.
(b) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared to comply in all material
respects with the notified Accounting Standards by Companies Accounting
Standards Rules, 2006 as amended from time to time (notified under
Section 211(3C) of the Companies Act, 1956 which continues to be
applicable in terms of Companies (Accounts) Rules, 2014 in respect of
Section 133 of the Companies Act, 2013) and other relevant provisions
of the Companies Act, 2013. Financial Statements have been prepared
under historical cost convention on accrual basis in accordance with
Generally Accepted Accounting Principles (GAAP) in India. The
accounting policies have been consistently followed by Company.
(c) USE OF ESTIMATES
Financial Statements are prepared in accordance with GAAP in India
which require management to make estimates and assumptions that affect
the reported balances of assets, liabilities and disclosure of
contingent liabilities at the date of the financial statements and
reported amounts of income & expenses during the periods. Although
these estimates and assumptions used in accompanying financial
statements are based upon management''s evaluation of relevant facts and
circumstances as of date of financial statements which in management''s
opinion are prudent and reasonable, actual results may differ from
estimates and assumptions used in preparing accompanying financial
statements. Any revision to accounting estimates is recognized
prospectively from the period in which results are known/ materialize
in accordance with applicable Accounting Standards.
2. INCOME RECOGNITION
(a) In case of PMC contracts which are in nature of Cost Plus
Contracts, revenue is recognised on the basis of percentage completion
method. The stage of completion is determined by the proportion that
contract costs incurred for work performed upto the reporting date bear
to the estimated total contract costs.
(b) In respect of Real Estate Development, the company is following
Revised Guidance Note, GN (A) 23 (revised 2012) on "Accounting for Real
Estate Transactions" issued by The Institute of Chartered Accountants
of India. Revenue from Real Estate projects is recognized on
"Percentage of completion Method" (POC) of accounting. Revenue under
POC method is recognized on basis of percentage of actual costs
incurred including construction and development cost of projects under
execution and proportionate cost of land provided following conditions
have been fulfilled:
i. atleast 25% of estimated construction and development costs
(excluding land cost) has been incurred;
ii. atleast 25% of saleable project area is secured by the Agreements
to Sell/ Application Forms (containing salient terms of the agreement
to sell); and
iii. atleast 10% of total revenue as per Agreement to Sell are realized
in respect of these agreements.
(c) In case of EPC Contracts, the revenue is recognised on the basis of
percentage completion method. The stage of completion is determined by
the proportion that contract costs incurred for work performed upto the
reporting date bear to the estimated total contract costs.
(d) Revenue includes:
(i) Work done for which only letters of intent have been received,
however, formal contracts / agreements are in the process of execution.
(ii) Work executed and measured by the Company pending certification by
the client.
(iii) Work executed but not measured / partly executed are accounted
for at engineering estimated cost.
(iv) Extra and substituted items to the extent considered realizable.
(v) Claims lodged against clients to the extent considered realizable.
(vi) Amount retained by the clients which is released after the
commissioning of the project.
(e) Income from interest is accounted for on time proportion basis
taking into account amount outstanding and applicable rate of interest.
Interest from customers under agreement to sell is accounted for on
receipt basis.
(f) Dividend income is recognised when right to receive is established.
(g) Rent, Service Receipts are accounted for on accrual basis.
3. WORK-IN-PROGRESS
Work-in-progress includes unsold portion of Real Estate Projects.
Increase / decrease in Work-in-Progress is accounted for as income or
expenditure for the year, as the case may be. Valuation of
work-in-progress including unsold portion of reality project is being
done on basis of actual cost and overheads incurred which are directly
attributable to project, till completion.
4. FIXED ASSETS Tangible Assets:
Fixed Assets are stated at historical cost less accumulated
depreciation and impairment loss, if any Cost comprises purchase price,
duties, levies and any directly attributable cost of bringing the
assets to their working condition for its intended use. It excludes
refundable taxes. Borrowing costs, if any relating to acquisition of
fixed assets which take substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use.
Intangible Assets:
Intangible Assets are stated at their cost of acquisition less
accumulated amortisation.
5. DEPRECIATION & AMORTISATION
a) Depreciation on Fixed Assets is calculated on Straight line method
in accordance with the provisions of Schedule II of the Companies Act,
2013 keeping 5% of cost as residual value. The useful life of fixed
assets as defined in the Part C of Schedule II of the Companies Act,
2013 has been taken for all tangible assets.
b) Fixed Assets costing upto Rs. 10,000/- each are fully depreciated in
the year of its acquisition.
6. FOREIGN CURRENCY TRANSACTIONS
The financial statement of an integral operation is translated using
following principles and procedures:
a. A foreign currency transaction is recorded, on initial recognition
in reporting currency (i.e. Rs.), by applying to foreign currency
exchange rate at the date of transaction.
b. Monetary items denominated in a foreign currency are reported using
exchange rate at reporting date.
c. Non-monetary items carried in term of historical cost denominated in
foreign currency, are reported using exchange rate at the date of
transaction.
d. Exchange differences arising on the settlement of monetary items or
on reporting an enterprise''s monetary items at rates different from
those at which they were initially recorded during the period, or
reported in previous financial statements, are recognized as income or
as expenses in the period in which they arise.
e. Exchange differences arising on reporting of long term monetary
assets at rates different from those at which they were initially
reported during the period or previous periods in so far they relate to
the acquisition of depreciable capital asset is added to or deducted
from the cost of assets.
f. Non monetary foreign currency items are carried at cost.
7. VALUATION OF INVENTORIES
a) Direct Materials, Stores and Spare Parts are valued at lower of cost
or net realizable value. Cost is determined on weighted average cost
method.
b) Consumables including Cantering, Shuttering and Scaffolding, Loose
TooIs, Laboratory Equipment, empty containers & others are valued on
the basis of realizable value, based on the engineering estimate.
8. INVESTMENTS
* Current Investments are valued at Lower of Cost or Net Realizable
Value.
* Long Term Investment are stated at cost. Provision for diminution in
the value of long term investments is made only if, such decline is
other than temporary in the opinion of the management.
9. EMPLOYEE BENEFITS
a) SHORT TERM BENEFITS
These are recognised as an expense at the undiscounted amount in the
statement of profit and loss for the year in which the related services
are rendered. These benefits include performance related pay and
compensated absences.
b) LONG TERM BENEFITS
Defined Contribution Plan
Company''s contribution paid/payable during the year to Provident Fund,
EPS 1995 of EPFO and Company''s Pension Scheme is recognised in the
statement of profit and loss for the year in which the related services
are rendered. The same is paid to a fund administered through separate
trusts.
Defined Benefit Plan
Company''s liability towards gratuity, leave benefits (including
compensated absences) and TA on Superannuation are determined by
independent actuary, at the year end using the projected unit credit
method. Actuarial gains or losses are recognised immediately in the
statement of profit and loss. Liability for gratuity as per actuarial
valuation is paid to a fund administered through a separate trust.
c. EMPLOYEE SEPERATION COSTS
Ex Gratia to employees who have opted for retirement under the
voluntary retirement scheme of the Company is charged to the Statement
of Profit and Loss in the year of acceptance of option by the
management.
10. PRIOR PERIOD EXPENDITURE / INCOME
Expenditure / Income upto Rs. 1,00,000 in each case relating to prior
period has been charged / accounted for to the respective head of
accounts.
11. TAXES ON INCOME
Tax expense comprises both current and deferred tax. Current tax is
determined on the basis of taxable income in accordance with the
provisions of the Income Tax Act, 1961. Deferred tax liability /asset
resulting from ''timing difference'' between accounting income and
taxable income, that is capable of reversal in subsequent accounting
period is accounted for considering the tax rate & tax laws that have
been enacted or substantively enacted as on the reporting date.
Deferred tax asset is recognized and carried forward only to the extent
there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realized. Deferred tax assets are reviewed at each reporting date for
their realisability.
12. IMPAIRMENT OF ASSETS
Carrying amount of cash generating units is reviewed at each reporting
date where there is any indication of impairment based on internal/
external indicators. An impairment loss is recognised in the statement
of profit and loss where carrying amount exceeds recoverable amount of
cash generating units. Impairment loss is reversed, if, there is change
in recoverable amount and such loss either no longer exists or has
decreased or indication on which impairment was recognised no longer
exists.
13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A provision is recognised when the company has a present obligation as
a result of a past event and it is probable that an outflow of
resources will be required to settle obligation and in respect of which
a reliable estimate can be made. Provisions are determined based on
management estimate required to settle the obligation on reporting
date.
Contingent liabilities are disclosed on basis of judgment of management
after a careful evaluation of facts and legal aspects of matter
involved.
Contingent assets are neither recognized nor disclosed. However, when
realization of income is virtually certain, related asset is
recognized.
14. PROVISION FOR DOUBTFUL DEBTS / LOANS AND ADVANCES
The amount of Trade Receivables / Loans and Advances in closed
projects, pertaining to Government of India, its departments and Public
Sector Enterprises are considered Good for realisation irrespective of
the age of receivable / loans and advances. These debts are under
constant persuasion for realisation till final settlement made with
client or in case of dispute, verdict is passed by the arbitrator /
court. Necessary provision against doubtful debts / loans and advances
is made based on the previous experience of Management. Receivables /
Advances are written-off as and when considered unrealisable.
15. UNADJUSTED CREDIT BALANCES WRITTEN BACK
Write back of unsettled credit balances is done on closure of the
concerned project or earlier based on the previous experience of
Management and actual facts of each case.
16. ARBITRATION AWARDS
Arbitration / Court''s awards, to the extent not taken into accounts at
the time of initiation, are accounted for after it becomes decree.
Interest to / from in these cases are accounted for on actual payment
/receipt basis.
17. LIQUIDATED DAMAGES
Liquidated Damages / Compensation for delay in respect of clients/
contractors, if any, are accounted for when matter is considered
settled by management.
Mar 31, 2013
1. (a) BASIS OF PREPARATION Of FINANCIAL STATEMENTS
These financial statement are prepared in accordance with Indian
Generally accepted accounting principles (GAAP) under the historical
cost convention and the accrual basis GAAP comprises mandatory according
as standard as prescribed by the companies according standards) Rules
2005 as amended issued by the Central Government the provisions of
companies ACt,1956 guidelines issued by the securities and Exchange
Board of India (SEBI) and ICAI The according policies have been
consistently followed by the company.
(b) USE OF ESTIMATES
The financial statements are prepared in according with generally
accepted accounting (GAAP) in India which requires management to make
estimates and assumptions that affect the reported balances of assets
liability and disclosure of contingent liability as at the date of the
financial statement and reported amounts of income & expenses during
the periods. The estimates and assumptions used in the accompanying
financial statements are based upon management evaluation of the relevant
facts and circumstances as of the date of the financial statements which
in managements opinion are prudent and reasonable Actual results may
differ from the east mates and assumptions used in preparing the
accompanying financial statements Any revision to accounting estimates
is recognized prospectively in current future periods.
2. INCOME RECOGNIOTION
(a) Value of work done is being shown in the accounts based on
percentage completion method such an evaluation of work done is based
on the previous experience of the Management.
(b) Value of work done and constituent for which only letters of intent
have been received however formal contracts agreements are in the
process of execution.
(i) Work done for the constituent for which only letters of intent have
been received however formal contracts/agreements are in the process of
execution.
(ii) Work executed and measured by the company pending certified by the
constituent.
(iii) Work executed but not measured party executed accounted for at
engineering estimated cost.
(iv) Extra and substituted items to the extent consider realized based
on the previous experiences of the Management.
v) Claims referred to arbitration or lodged against constituent to the
extent considered realizable based on the previous experience of the
Management
vi) Amount retained by the constituent which is released after the
coming of the project.
(c) Company is following the revised guidance note GN(A) 23
(revised2012) on accounting for real estate transfer Revenue from real
estate projects is recognized on the percentage of compliances method
(POC) of accounting Revenue under POC method is execution and
proportionate cost of land subject to such actual cost incurred.
Total sale consideration as per the duty executed agreements to sell
application forms corporate salient terms of a agreement to sell) is
recognized as rev endue based on the percentage of actual project cost of
land and at least 25% or more area of total salable area is secured by
agreements to sell application forms containing salient terms of
agreement to sell of which at least 10% amount of the total revenue is
received.
4. FIXEDASSETS
Fixed Assets are stated at historical cost less accumulated
depreciation and impair mane loss if any cost directly attributable to
acquisition of fixed assets are capitalized. Fixed essay sure capsule
5. DEPRECIATION & AMORTISATION
a) Depreciation on fixed assets is calculated on straight line Method in
according with the provisions of schedule XIV to the companies Act,1956
after keeping 5% residual value of Assets.
b) Fixed Assets costing up to Rs,5000/- each are depreciated fully in
the year of its creation.
c) Temporary hutments and installation are depreciated fully in the
year of its question.
d) Hostel staff campus equipments are considered as temporary Assets
and the depreciation thereon is ascertained by deducting the realizable
value as estimated by the management from the book value.
T. VALUATION OF INVENTORIES
a) Valuation of Direct Metrical stores & spore parts steel scrap tools &
Equipments act are done at lower at cost or net realizable value
b) Consumables including centering shuttering and scaffolding loose
laboratory Equipment empty containers & others is ascertained on the
basis of realizable value at the end of every period.
g. INVESTMENTS
Current investments are valued at lower of original cost or net
Realizable value.
9. EMPLOYEE BENEFITS
A) Short term employs benefits are recognized as an expense in the
statement of profit 7 loss for the year in which the related services
are rendered.
II) LONG TERM BENEFITS
a) Gratuity
The PROVISION FOR GRATUITY IS MADE IN THE ACCOUNTS IN According with
the provisions of the payment of Gratuity Act, on actuarial basis
b) Leave Encashment
The provision for leave encashment of employees is made on actuarial
basis.
c) Travelling Allowance on Superannuation
The provision for travelling allowance on suppuration is made on
actuarial basis.
d) Pension
The provision for pension on superannuation is made on actual basis
19. PEFERRED REVENUE ESPEHDITUHE
Expenditure incurred for acquiring Technical knowhow is treated as
Deferred Revenue Expenditure and charged to profit & loss Account in
equal yearly instilments over a period of six years or estimated life of
the know-how whichever is less.
11. CONSUMPTION OF MATERIAL AT SITE
The consumption of material at site is net of recovery/sale from/ to
PRW Others and inter unit transfer shortage of materials on account of
theft pirate etc. if any is booked separately under the appropriate
discrepancy head.
12. PRIOR PERIODEXPENDITURE- INCOME
Expenditure/income up to Rs,50000/- In each relating to prior has been
charged for to the respective head of accounts.
13. TAXES ON INCOME
Income Tax is accounted for in accordance with Accounting Standard
-22''Accounting for taxes on income issued by ICAI which includes current
Taxes and Deferred Taxes
Deferred taxis recognized on timing differences being the different
taxable income and Accounting income that originate in one period and
capable of reversing in one more subsequent period
14. IMPAIRMENT OF ASSETS
The company identified impair able assets on individual asset ct the
year end in the terms of pare 5-13 of AS-28 issued by ICAI for the
purpose of arriving at impairment loss thereon if any being the
difference the book value and recoverable value of relevant assets The
impairment loss recognized in the prior accounting periods is reversed
if there has been a charged in the estimates of recoverable amount.
15. PROVISIONS CONTINGENT LIABILITIES AND CONTINGENT ASSETS
a) A Provision is made in the accounts if it becomes problem that an
out flow of resources embodying economic benefits will be required to
settle the obligation in respect of which a reliable estimate can be
made.
b) Contingent Liability are disclosed after a careful evaluation of the
facts and legal aspects of the matter involved
c) Contingent Assets are neither recognized nor disclosed as per
Accounting standard -29 issued by the institute of chartered
Accountants of India.
16. PROVISION FOR DOUBTFUL DEBTS LOANS AND ADVANCES
The amount of Sundry Debtors Loans and Advances in closed rejects
pertaining to Govt of India Departments and PSEs clients are considered
Good for realization irrespective of the age debtors/loans and advances
These debts are under constant persuasion for realization till final
settlement made with the client or verdict is passed by the
arbitrator/court in case of dispute Necessary provision against
doubtful debts/loans and advances is made based on the previous
experience of the Management Debtors/ Advances are written off when
considered unrealizable.
17 UNADJUSTED CFIEDTT BALANCES WRITTEN BACK
Write back is done on closure of the concerned project or earlier based
on the previous experience of the Management.
19 JOINT VENTURE
i) Jointly controlled offend operations are accounted as independent
contract entity.
ii) In respect of contracts/Reality projects executed by a jointly
controlled entity the profit/loss from the joint venture is a accounted
for as and when determined.
19 ARBITRATION
Arbitration courts awards to the extent net taken into accounts at the
time of initiation are accounted for after in becomes Decree interest
to form in these cases are account for on actual receipt/payment basis.
2D LIQUIDATED DAMAGES
Liquidated Damages .'' Cam pa real ion for delay in reaped of
Cans revert.'' Ocala cores, ill any, are accorded for when the matter a
considered scathed by the meaner.
21 SEGMENT REPORTING
The company has indentified three primary reporting segments based on
nature of business activities viz Real Estate infrastructure and civil
construction.
22 INSURANCE CLAIMS
Insurance claims are accounted for on the basis of claims accepted by
the insurers in the year of acceptance.
Mar 31, 2012
1. (a) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These financial statement are prepared in accordance with Indian
Generally accepted accounting principles (GAAP) under the historical
cost convention on the accural basis except for certain financial
instruments which are measured at fair values. GAAP comprises mandatory
accounting standards as prescibed by the Companies (Accounting
Standards) Rules 2006 as amended issued by the Central Government, the
provision of Companies Act,1956 and guidelines issued by the Securities
and Exchange Board of India (SEBI).The accounting policies have been
consistently followed by the Company.
(b) USE OF ESTIMATES
The financial statements are prepared in accordance with generally
accepted accounting principles (GAAP) in India which requires
management to make estimates and assumptions that affect the reported
balances of assets, liabilities and disclosure of contingent
liabilities as at the date of the finacial statement and reported
amounts of income & expenses during the periods. The estimates and
assumptions used in the accompanying financial statements are based
upon management's evaluation of the relevant facts and circumstances
as of the date of the financial statements which in management's
opinion are prudent and reasonable. Actual results may differ from the
estimates and assumptions used in preparing the accompanying financial
statements. Any revision to accounting estimates is recognized
prospectively in current and future periods.
2. INCOME RECOGNITION
(a) Value of work done is being shown in the accounts based on
percentage completion method. Such an evaluation of work done is based
on the previous experience of the Management.
(b) Value of work done and Sundry Debtors include:
i) Work done for the constituent for which only letters of intent have
been received however formal contracts / agreements are in the process
of execution.
ii) Work executed and measured by the Corporation pending certification
by the constituent.
iii) Work executed but not measured / partly executed / accounted for
at engineering estimated cost.
iv) Extra and substituted items to the extent considered realizable
based on the previous experience of the Management.
v) Claims referred to arbitration or lodged against constituent to the
extent considered realizable based on the previous experience of the
Management.
vi) Amount retained by the constituent is released after the
commissioning of the project.
(c) Value of work done for Real Estate Projects (Reality Project),
taking into account the total expenditure incurred in the project, is
accounted for in the year of receipts of sale consideration or on the
basis of execution of sale documents with the buyers, wherever
significant sale consideration has been recieved, whichever is earlier.
Sales documents also include unregistered agreement to sell.
3. WORK-IN-PROGRESS
Work-in-progress incudes unsold portion of Real Estate pertaining to
Reality Projects. The increase / decrease in Work-in- Progress is
accounted for as income or expenditure of the year, as the case may be.
Valuation of work-in-progress including unsold portion of reality
project is being done on the basis of incurrence of expense directly
attributable to the project.
4. FIXED ASSETS
Fixed Assets are stated at historical cost less accumulated
depreciation. Cost directly attributable to acquisition of fixed assets
are capitalized.
5. DEPRECIATION & AMORTISATION
a) Depreciation on fixed assets is calculated on Straight Line Method
in accordance with the provisions of schedule-XIV to the Companies Act,
1956.
b) Fixed Assets costing upto Rs. 5000/- each are depreciated fully in the
year of its acquisition.
c) Temporary hutments and installation are depreciated fully in the
year of its creation.
d) Hostel / Staff Camps equipments are considered as Current Assets and
the depreciation thereon is ascertained by deducting the realizable
value as estimated by the Management from the book value.
e) Amortisation amounts in respect of Centering, Shuttering and
Scaffolding, Loose Tools, Laboratory Equipment, empty containers &
others is ascertained by deducting the realizable value, as estimated
by the Management from the book value.
6. FOREIGN CURRENCY TRANSACTIONS
(a) Foreign Projects
The basis adopted for conversion of foreign currency:-
i) Revenue items other than opening and closing inventories and
depreciation are translated into Indian Currency at an average rate of
the month of the transaction.
ii) Assets (other than fixed assets), liabilities relating to foreign
projects have been translated into Indian currency at the closing
buying rates. Balance of Head Office account in the books of branch is
reported at the amount of balance of branch account appearing in the
books of Head Office.
iii) The net exchange difference resulting from the translation of
items in respect of foreign branches is charged or credited to Profit &
Loss Account except to the extent adjusted in the carrying amount of
the related fixed assets.
(b) Inland Projects
Foreign currency in respect of revenue items are translated into Indian
Rupees on the date of transaction and liabilities are translated in
Indian Rupees at the closing buying rates. The difference, if any, is
recognized as revenue / expenditure, as the case may be during the
year.
7. VALUATION OF INVENTORIES
a) Valuation of Direct Material, Stores & spare parts, Steel Scrap,
Tools & Equipments etc are done at lower of historical cost or net
realizable value .
b) Centering, shuttering & Scaffolding and Hostel / Staff Camp
equipments are valued at written down value arrived at after deducting
amortization / depreciation indicted in para 5(e) above.
8. INVESTMENTS
Short Term Investments are valued at Lower of Original Cost or Net
Realizable Value.
9. RETIREMENT BENEFITS
a) Gratuity
The provision for gratuity is made in the accounts in accordance with
the provisions of the Payment of Gratuity Act on actuarial basis.
b) Leave Encashment
The provision for leave encashment of employees is made on actuarial
basis.
c) Travelling Allowance on Superannuation
The provision for travelling allowance on superannuation is made on
actuarial basis.
10. DEFERRED REVENUE EXPENDITURE
Expenditure incurred for acquiring Technical know-how is treated as
Deferred Revenue Expenditure and charged to Profit & Loss Account in
equal yearly instalments over a period of six years or estimated life
of the know-how, whichever is less.
11. The consumption of material at site is net of recovery / sale from
/ to PRW / Others and inter-unit transfers. Shortage of materials on
account of theft, pilferage etc., if any, is booked separately under
the appropriate discrepancy head.
12. PRIOR PERIOD EXPENDITURE / INCOME
Expenditure / Income upto Rs. 50,000/- in each case relating to prior
period has been charged / accounted for to the respective head of
accounts.
13. TAXES ON INCOME
Income Tax is accounted for in accordance with Accounting Standard-22
'Accounting for taxes on income' issued by ICAI, which includes
Current Taxes and Deferred Taxes.
Deferred tax is recognized on timing differences, being the difference
between taxable income and Accounting income that originate in one
period and are capable of reversing in one or more subsequent period.
Deferred Tax Assets are recognized only to the extent there is a
reasonable certainty of its realization.
14. IMPAIRMENT OF ASSETS
The company identifies impairable assets based on individual assets
concept at the year-end in the terms of para 5-13 of AS- 28 issued by
ICAI for the purpose of arriving at impairment loss thereon, if any,
being the difference between the book value and recoverable value of
relevant assets. The impairment loss recognized in the prior accounting
periods is reversed if there has been a change in the estimates of
recoverable amount.
15. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
a) A provision is made in the accounts if it becomes probable that an
out flow of resources embodying economic benefits will be required to
settle the obligation in respect of which a reliable estimate can be
made.
b) Contingent Liabilities are disclosed after a careful evaluation of
the facts and legal aspects of the matter involved.
c) Contingent Assets are neither recognized nor disclosed as per
Accounting Standard-29 issued by the Institute of Chartered Accountants
of India.
16. PROVISION FOR DOUBTFUL DEBTS / LOANS AND ADVANCES
The amount of Sundry Debtors / Loans and Advances in closed projects,
pertains to Govt. of India Departments and PSEs clients are considered
Good for realisation irrespective of the age of debtors / loans and
advances. These debts are under constant persuasion for realisation
till final settlement made with the client or verdict is passed by the
arbitration / court, in case of dispute. Necessary provision against
doubtful debts / loans and advances is made based on the previous
experience of the Management. Debtors / Advances are written-off when
considered unrealisable.
17. JOINT VENTURE
i) Jointly controlled operations are accounted as independent contract
/ entity.
ii) In respect of contracts / Reality Projects executed by a jointly
controlled entity, the profit / loss from the Joint Venture is
accounted for as and when determined.
18. ARBITRATION
Arbitration / Court's awards, to the extent not taken into accounts
at the time of lodge, are accounted for after it becomes Decree.
Interest to / from in these cases are accounted for on actual receipt /
payment.
19. LIQUIDATED DAMAGES
Liquidated Damages / Compensation for delay in respect of constituent /
contractors, if any, are accounted for when the matter is considered
settled by the management.
20. SEGMENT REPORTING
The company has identified three primary reporting segments based on
nature of business activities viz. Real Estate, Infrastructure and
Civil Construction.
21. INSURANCE CLAIMS
Insurance claims are accounted for on the basis of claims accepted by
the insurers in the year of acceptance.
Mar 31, 2008
1. FINANCIAL STATEMENTS
The financial statements are prepared under the historical cost
convention and generally accepted accounting principles in accordance
with the Companies Act, 1956 and with the compliance of Accounting
Standards issued by the Institute of Chartered Accountants of India
(ICAI) to the extent applicable. The Company maintains its accounts on
accrual basis as a going concern except where otherwise stated.
2. INCOME RECOGNITION
a) Value of work done is being shown in the accounts based on
percentage completion method. Such an evaluation of work done is based
on the previous experience of the Management.
b) Value of work done and Sundry Debtors include:
i) Work done for the constituent for which only letters of intent have
been received however formal contracts / agreements are in the process
of execution.
ii) Work executed and measured by the Corporation pending certification
by the constituent.
iii) Work executed but not measured / partly executed / accounted for
at engineering estimated cost.
iv) Extra and substituted items to the extent considered realizable
based on the previous experience of the Management.
v) Claims referred to arbitration or lodged against constituent to the
extent considered realizable based on the previous experience of the
Management.
vi Amount retained by the constituent is released after the
commissioning of the project.
c) Value of work done for Real Estate Projects (Reality Project),
taking into account the total expenditure incurred in the project, is
accounted for in the year of receipts of sale consideration or on the
basis of execution of sale documents with the buyers, wherever
significant sale consideration has been received, whichever is earlier.
Sales documents also include unregistered agreement to sell.
3. WORK-IN-PROGRESS
Work-in-progress includes unsold portion of Real Estate pertaining to
Reality Project. The increase / decrease in Work-in-Progress is
accounted for as income or expenditure of the year, as the case may be.
Valuation of work in progress including unsold portion of reality
project is being done on the basis of incurrence of expense directly
attributable to the project.
4. FIXED ASSETS
Fixed Assets are stated at cost. Cost directly attributable to
acquisition of fixed assets are capitalized.
5. DEPRECIATION & AMORTISATION
a) Depreciation on fixed assets is calculated on Straight Line Method
in accordance with the provisions of schedule XIV to the Companies Act,
1956.
b) Fixed assets costing upto Rs.5000/- each are depreciated fully in
the year of its acquisition.
c) Temporary hutments and installation are depreciated fully in the
year of its creation.
d) Furniture, Fixtures and Equipments in Transit / Staff Camps are
considered as Current Assets and the depreciation thereon is
ascertained by deducting the realizable value as estimated by the
Management from the book value.
e) Amortisation amounts in respect of Centering, Shuttering and
Scaffolding, Loose Tools, Laboratory Equipment, empty containers &
others is ascertained by deducting the realizable value, as estimated
by the Management from the book value.
6. FOREIGN CURRENCY TRANSACTIONS
a) Foreign Projects
The basis adopted for conversion of foreign currency:-
i) Revenue items other than opening and closing inventories and
depreciation are translated into Indian Currency at an average rate of
the month of the transaction.
ii) Assets (other than fixed assets), liabilities relating to foreign
projects have been translated into Indian currency at the closing
buying rates. Balance of Head Office account in the books of branch is
reported at the amount of balance of branch account appearing in the
books of Head Office.
iii) Fixed Assets as on 31st March, 1991 have been converted at closing
buying rate prevalent on 31st March, 1991. The transactions after 31st
March, 1991 relating to fixed assets and depreciation thereon have been
valued at the original purchase rate.
iv) The net exchange difference resulting from the translation of items
in respect of foreign branches is charged or credited to Profit & Loss
Account except to the extent adjusted in the carrying amount of the
related fixed assets.
b) Inland Projects
Foreign currency in respect of revenue items are translated into Indian
Rupees on the date of transaction and liabilities are translated in
Indian Rupees at the closing buying rates. The difference, if any, is
recognized as revenue / expenditure, as the case may be during the
year.
7. VALUATION OF INVENTORIES
a) Valuation of Direct Material is done at lower of historical cost or
net realizable value.
b) Stores and spare parts are valued at cost
c) Steel scrap, Tools & Equipments etc. are valued at estimated
realizable value.
d) Centering, shuttering & Scaffolding and furniture, fixture &
equipments in transit /staff camps are valued at written down value
arrived at after deducting amortization /depreciation indicated in para
5(e) above.
8. INVESTMENTS
Investments are valued at cost.
9. RETIREMENT BENEFITS
a) Gratuity
The provision for gratuity is made in the accounts in accordance with
the provisions of the Payment of Gratuity Act on actuarial basis.
b) Leave Encashment
The provision for leave encashment of employees is made on actuarial
basis.
10. DEFERRED REVENUE EXPENDITURE
Expenditure incurred for acquiring Technical know-how is treated as
Deferred Revenue Expenditure and charged to Profit & Loss Account in
equal yearly installments over a period of six years or estimated life
of the know-how, whichever is less.
11. The consumption of material at site is net of recovery / sale from
/ to PRW / Others and inter-unit transfers. Shortage of materials on
account of theft, pilferage etc., if any, is booked separately under
the appropriate discrepancy head.
12. PRIOR PERIOD EXPENDITURE/INCOME
Expenditure / Income upto Rs. 50,000/- in each case relating to prior
period has been charged / accounted for to the respective head of
accounts.
13. TAXES ON INCOME
Deferred tax is recognized on timing differences, being the difference
between taxable income and Accounting income that originate in one
period and are capable of reversing in one or more subsequent period.
Deferred Tax Assets are recognized only to the extent there is a
reasonable certainty of its realization.
14. IMPAIRMENT OF ASSETS
The company identifies impairable assets based on individual assets
concept at the year-end in the terms of para 5-13 of AS-28 issued by
ICAI for the purpose of arriving at impairment loss thereon, if any,
being the difference between the book value and recoverable value of
relevant assets. Impairment loss when crystallizes is charged against
revenue of the year.
15. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Contingent liabilities and contingent assets are disclosed after a
careful evaluation of the facts and legal aspects of the matter
involved.
16. JOINT VENTURE
i) Jointly controlled operations are accounted as independent contract/
entity.
ii) In respect of contracts / Reality Projects executed by a jointly
controlled entity, the profit/ loss from the Joint Venture is accounted
for as and when determined.
17. ARBITRATION
Arbitration / Court's awards, to the extent not taken into accounts
at the time of lodge, are accounted for after it becomes Decree.
Interest to / from in these cases are accounted for on actual receipt /
payment.
18. LIQUIDATED DAMAGES
Liquidated Damages / Compensation for delay in respect of constituent/
contractors, if any, are accounted for when the matter is considered
settled by the management.
19. SEGMENT REPORTING
The company has identified three primary reporting segments based on
nature of business activities viz. Real Estate, Infrastructure and
civil construction.
Mar 31, 2006
1. FINANCIAL STATEMENTS
The financial statements are prepared under the historical cost basis
and are in accordance with the generally accepted accounting principles
and the provision of the Companies Act, 1956. The Company maintains its
accounts on accrual basis as a going concern except where otherwise
stated.
2. VALUE OF WORK DONE (INCOME RECOGNITION):
a) Value of work done is being shown in the accounts after deductions
in the event of possible likely rejections. Such an evaluation of work
done is based on the previous experience of the Management.
b) Value of work done and Sundry Debtors include:
i) Work done for the constituent for which only letters of intent have
been received however formal contracts / agreements are in the process
of execution.
ii) Work executed and measured by the Corporation pending certification
by the constituent.
iii) Work executed but not measured/partly executed accounted for at
engineering estimated cost.
iv) Extra and substituted items to the extent considered realisable
based on the previous experience of the Management.
v) Claims referred to arbitration or lodged against constituent to the
extent considered realisable based on the previous experience of the
Management.
vi) Amount retained by the constituent is released after the
commissioning of the project.
c) Value of work done for Real Estate Projects(Reality Project), taking
into account the total expenditure incurred in the project, is
accounted for in the year of actual receipts of sale proceeds or on the
basis of execution of sale documents with the buyers whichever is
earlier. Sales documents also include unregistered agreement to sell.
3. WORK-IN-PROGRESS
Work-in-progress includes unsold portion of Real Estate pertaining to
Reality Project and other projects where work has not yet started. The
increase/decrease in Work-in-Progress is accounted for as income or
expenditure for the year, as the case may be. Valuation of work in
progress including unsold portion of reality project is being done on
the basis of incurrence of expense directly attributable to the
project.
4. FIXED ASSETS
Fixed Assets are stated at cost. Costs directly attributable to
acquisition of fixed assets are capitalised.
5. DEPRECIATION & AMORTISATION
a) Depreciation on fixed assets is calculated on straight line method
in accordance with the provisions of schedule XIV to the Companies Act,
1956.
b) Fixed assets costing upto Rs.5000/- each are depreciated fully in
the year of its acquisition.
c) Temporary hutments and installations are depreciated fully in the
year of its creation.
d) Furniture, Fixtures and Equipments in Transit/Staff Camps are
considered as Current Assets and the depreciation thereon is
ascertained by deducting the realisable value as estimated by the
Management from the book value.
e) Amortisation amounts in respect of Centering, Shuttering and
Scaffolding, Loose Tools, Laboratory Equipment, empty containers &
others is ascertained by deducting the realisable value, as estimated
by the Management from the book value.
6. FOREIGN CURRENCY TRANSACTIONS
a) Foreign Projects
(i) Revenue items, other than opening and closing inventories and
depreciation, are translated into Indian Currency at an average of
opening and closing buying rates.
(ii) Assets (other than Fixed Assets), liabilities relating to foreign
projects have been translated into Indian currency at the closing
buying rates. Balance of Head Office account in the books of branch is
reported at the amount of balance of branch account appearing in the
books of Head Office.
(iii) Fixed Assets as on 31st March,1991 have been converted at closing
buying rate prevalent on 31st March, 1991. The transactions after 31st
March,1991 relating to fixed assets and depreciation thereon have been
valued at the original purchase rate.
(iv) The net exchange difference resulting from the translation of
items in respect of foreign branches is charged or credited to Profit &
Loss Account except to the extent adjusted in the carrying amount of
the related fixed assets in accordance with para 6(a)(iii) above.
b) Inland projects
Foreign currency liabilities are translated in Indian Rupees at the
closing buying rates. The difference, if any, is transferred to fixed
assets in case liabilities are related to fixed assets and in other
case the difference, if any, is recognised as revenue / expenditure, as
the case may be, during the year.
7. VALUATION OF INVENTORIES
a) Valuation of Direct Material is done at lower of historical cost or
net realisable value.
b) Stores and spare parts are valued at cost.
c) Steel scrap, Tools & Equipments etc. are valued at estimated
realisable value.
d) Centering, shuttering & Scaffolding and furniture, fixture &
equipments in transit/staff camps are valued at written down value
arrived at after deducting amortisation/depreciation indicated in para
5 above.
8. INVESTMENTS
Long Term Investments are valued at cost.
9. RETIREMENT BENEFITS
a) Gratuity
The provision for gratuity is made in the accounts in accordance with
the provisions of the Payment of Gratuity Act on actuarial basis.
b) Leave Encashment
The provision for leave encashment of employees is made on actuarial
basis.
10. DEFERRED REVENUE EXPENDITURE
a) Expenditure incurred for acquiring Technical know-how is treated as
Deferred Revenue Expenditure and charged to Profit & Loss Account in
equal yearly installments over a period of six years or estimated life
of the know-how, whichever is less.
b) Expenditure on preparatory works such as soil investigation, survey
and consultancy have been treated as Deferred Revenue Expenditure where
physical execution of work has not yet started. Such expenditure will
be charged to profit & loss account on the commencement of the project.
11. The consumption of material at site is net of recovery/sale from/to
PRW/ Others and inter-unit transfers. Shortage of materials on account
of theft, pilferage etc., if any, is booked separately under the
appropriate discrepancy head.
12. PRIOR PERIOD EXPENDITURE/INCOME
Expenditure/Income upto Rs.50,000/- in each case relating to prior
period has been charged/accounted for to the respective head of
accounts.
13. TAXES ON INCOME
Deferred tax is recognised on timing differences, being the difference
between taxable income and Accounting income that originate in one
period and are capable of reversing in one or more subsequent period.
Deferred Tax Assets are recognised only to the extent there is a
reasonable certainty of its realisation.
Mar 31, 2005
1. FINANCIAL STATEMENTS
The financial statements are prepared under the historical cost basis
and are in accordance with the generally accepted accounting principles
and the provision of the Companies Act, 1956. The Company maintains its
accounts on accrual basis as a going concern except where otherwise
stated.
2. VALUE OF WORK DONE (INCOME RECOGNITION):
- Value of work done is being shown in the accounts after deductions in
the event of possible likely rejections. Such an evaluation of work
done is based on the previous experience of the Management.
- Value of work done and Sundry Debtors include:
i) Work done for the constituent for which only letters of intent
have been received however formal contracts / agreements are in the
process of execution. xvi) Work executed and measured by the
Corporation pending certification by the constituent.
ii) Work executed but not measured/partly executed accounted for at
engineering estimated cost. xvi) Extra and substituted items to the
extent considered realizable based on the previous experience of the
Management. xvi) Claims referred to arbitration or lodged against
constituent to the extent considered realisable based on the previous
experience of the Management.
iii) Amount retained by the constituent is released after the
commissioning of the project.
- Value of work done for Real Estate Projects(Reality Project), taking
into account the total expenditure incurred in the project, is
accounted for in the year of actual receipts of sale proceeds or on the
basis of execution of sale documents with the buyers.
3. WORK-IN-PROGRESS
Work-in-progress includes unsold portion of Real Estate pertaining to
Reality Project and other projects where work has not yet started. The
increase/decrease in Work-in-Progress is accounted for as income or
expenditure for the year, as the case may be. Valuation of work in
progress including unsold portion of reality project is being done on
the basis of incurrence of expense directly attributable to the
project.
4. FIXED ASSETS
Fixed Assets are stated at cost. Costs directly attributable to
acquisition of fixed assets are capitalized
5. DEPRECIATION & AMORTISATION
- Depreciation on fixed assets is calculated on straight line method in
accordance with the provisions of schedule XIV to the Companies Act,
1956.
- Fixed assets costing upto Rs.5000/- each are depreciated fully in the
year of its acquisition.
- Temporary hutments and installations are depreciated fully in the
year of its creation.
- Furniture, Fixtures and Equipments in Transit/Staff Camps are
considered as Current Assets and the depreciation thereon is
ascertained by deducting the realizable value as estimated by the
Management from the book value.
- Amortisation amounts in respect of Cantering, Shuttering and
Scaffolding, Loose Tools, Laboratory Equipment, empty containers &
others is ascertained by deducting the realizable value, as estimated
by the Management from the book value.
6. FOREIGN CURRENCY TRANSACTIONS
a) Foreign Projects
(i) Revenue items, other than opening and closing inventories and
depreciation, are translated into Indian Currency at an average of
opening and closing buying rates.
(ii) Assets (other than Fixed Assets), liabilities relating to foreign
projects have been translated into Indian currency at the closing
buying rates. Balance of Head Office account in the books of branch is
reported at the amount of balance of branch account appearing in the
books of Head Office.
(iii) Fixed Assets as on 31st March,1991 have been converted at closing
buying rate prevalent on 31st March, 1991. The transactions after 31st
March,1991 relating to fixed assets and depreciation thereon have been
valued at the original purchase rate.
(iv) The net exchange difference resulting from the translation of
items in respect of foreign branches is charged or credited to Profit &
Loss Account except to the extent adjusted in the carrying amount of
the related fixed assets in accordance with para 6(a)(iii) above.
b) Inland projects
Foreign currency liabilities are translated in Indian Rupees at the
closing buying rates. The difference, if any, is transferred to fixed
assets in case liabilities are related to fixed assets and in other
case the difference, if any, is recognized as revenue / expenditure, as
the case may be, during the year.
7. VALUATION OF INVENTORIES
- Valuation of Direct Material is done at lower of historical cost or
net realizable value.
- Stores and spare parts are valued at cost.
- Steel scrap, Tools & Equipments etc. are valued at estimated
realizable value.
- Centering, shuttering & Scaffolding and furniture, fixture &
equipments in transit/staff camps are valued at written down value
arrived at after deducting amortization/depreciation indicated in para
5 above.
8. INVESTMENTS
Long Term Investments are valued at cost.
9. RETIREMENT BENEFITS
e) Gratuity
The provision for gratuity is made in the accounts in accordance with
the provisions of the Payment of Gratuity Act on actuarial basis.
b) Leave Encashment
The provision for leave encashment of employees is made on actuarial
basis.
10. DEFERRED REVENUE EXPENDITURE
- Expenditure incurred for acquiring Technical know-how is treated as
Deferred Revenue Expenditure and charged to Profit & Loss Account in
equal yearly instalments over a period of six years or estimated life
of the know-how, whichever is less.
- Expenditure on preparatory works such as soil investigation, survey
and consultancy have been treated as Deferred Revenue Expenditure where
physical execution of work has not yet started. This expenditure shall
be charged proportionately on the basis of actual execution of work.
11. The consumption of material at site is net of recovery/sale from/to
PRW/ Others and inter-unit transfers. Shortage of materials on account
of theft, pilferage etc., if any, is booked separately under the
appropriate discrepancy head.
12. PRIOR PERIOD EXPENDITURE/INCOME
Expenditure/Income upto Rs.50,000/- in each case relating to prior
period has been charged/accounted for to the respective head of
accounts.
13. TAXES ON INCOME
Deferred tax is recognised on timing differences, being the difference
between taxable income and Accounting income that originate in one
period and are capable of reversing in one or more subsequent period.
Deferred Tax Assets are recognized only to the extent there is a
reasonable certainty of its realization.
Mar 31, 2004
1. FINANCIAL STATEMENTS
The financial statements are prepared under the historical cost basis
and are in accordance with the generally accepted accounting principles
and the provision of the Companies Act, 1956. The Company maintains its
accounts on accrual basis as a going concern except where otherwise
stated.
2. VALUE OF WORK DONE:
- Value of work done and Sundry Debtors are shown in the accounts after
deductions for likely rejections identified and evaluated at best
estimates by the Management.
- Value of work done and Sundry Debtors include:
i) Work done for the clients for which letters of intent have been
received but formal contracts/ agreements are yet to be executed.
ii) Work done and measured by the Corporation but not certified by
the clients.
iii) Unmeasured/partly executed work accounted for at engineering
estimates.
iv) Extra and substituted items to the extent considered realisable
by the Management.
v) Claims referred to arbitration or lodged against Clients to the
extent considered realisable by the Management.
Vii) Value of work done for Real Estate Projects is accounted for in the
ratio of the total estimated realisable value to the total estimated
expenditure on the basis of agreement to sell or execution of sale deed
or acceptance of sale by the buyer.
3. WORK-IN-PROGRESS
Work-in-progress includes unsold portion of Real Estate and Defence
Housing Project (DHP). Valuation of unsold portion of Real Estate is
done at lower of cost or net realisable value. Cost includes material
consumed, overheads, depreciation/ amortisation and interest cost
directly attributable to the project. The increase/decrease in
Work-in-Progress is accounted for as income or expenditure for the
year, as the case may be.
4. FIXED ASSETS
Fixed Assets are stated at cost. Costs directly attributable to
acquisition of fixed assets are capitalised
5. DEPRECIATION & AMORTISATION
- Leasehold land is amortised over the period of lease.
- Depreciation on fixed assets is calculated on straight line method in
accordance with the provisions of schedule XIV to the Companies Act,
1956.
- Fixed assets costing upto Rs.5000/- each are depreciated fully in the
year of capitalisation.
- Temporary hutments and installations are depreciated fully in the
year of capitalisation.
- Furniture, Fixtures and Equipments in Hostel/Staff Camps are
considered as Current Assets and the depreciation thereon is
ascertained by deducting the realisable value as estimated by the
Management from its book value.
- Amortisation amounts in respect of Centering, Shuttering and
Scaffolding, Loose Tools, Laboratory Equipment, empty containers &
others is ascertained by deducting the realisable value, as estimated
by the Management, from its book value.
6. FOREIGN CURRENCY TRANSACTIONS
a) Foreign Projects
(v) Revenue items, other than opening and closing inventories and
depreciation, are translated into Indian Currency at average of opening
and closing buying rates.
(v) Assets (other than Fixed Assets), liabilities relating to foreign
projects have been translated into Indian currency at the closing
buying rates. Balance of Head Office account in the books of branch is
reported at the amount of balance of branch account appearing in the
books of Head Office.
(v) Fixed Assets as on 31st March,1991 have been converted at closing
buying rate prevalent on 31st March, 1991. The transactions after 31st
March,1991 relating to fixed assets and depreciation thereon have been
valued at the original purchase rate.
(iv) The net exchange difference resulting from the translation of
items in respect of foreign branches is charged or credited to Profit &
Loss Account except to the extent adjusted in the carrying amount of
the related fixed assets in accordance with para 6(a)(iii) above.
e) Inland projects
Foreign currency liabilities are translated in Indian Rupees at the
closing buying rates. The difference, if any, is transferred to fixed
assets in case liabilities are related to fixed assets and in other
case the difference, if any, is recognised as revenue / expenditure, as
the case may be, during the year.
7. VALUATION OF INVENTORIES
- Valuation of Direct Material is done at lower of historical cost and
net realisable value.
- Stores and spare parts are valued at cost.
- Steel scrap, Tools & Equipments etc. are valued at estimated
realisable value.
- Centering, shuttering & Scaffolding and furniture, fixture &
equipments in hostel/staffcamps are valued at written down value
arrived at after deducting amortisation/depreciation indicated in para
5 above.
8. INVESTMENTS
Long Term Investments are valued at cost.
9. RETIREMENT BENEFITS
f) Gratuity
The provision for gratuity is made in the accounts in accordance with
the provisions of the Payment of Gratuity Act on actuarial basis.
b) Leave Encashment
The provision for leave encashment of employees is made on actuarial
basis.
10. TECHNICAL KNOW-HOW
Expenditure incurred for acquiring Technical know-how is treated as
Deferred Revenue Expenditure and charged to Profit & Loss Account in
equal yearly installments over a period of six years or estimated life
of the know-how, whichever is less.
11. The consumption of material at site is net of recovery/sale from/to
PRW/ Others and inter-unit transfers. Shortage of materials on account
of theft, pilferage etc., if any, is booked separately under the
appropriate discrepancy head.
12. PRIOR PERIOD EXPENDITURE/INCOME
Expenditure/Income upto Rs.50,000/- in each case relating to prior
period has been charged/accounted for to the respective head of
accounts.
13. Sales Tax / Turnover Tax is adjusted in the books of accounts at
the time of final assessment except where composite tax scheme is
adopted.
TAXES ON INCOME
14. Current tax is determined as the amount of tax payable in respect
of taxable income for the period. Deferred tax is recognised, subject
to the consideration of prudence in respect of deferred tax assets, on
timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.