Accounting Policies of Sadbhav Engineering Ltd. Company
Mar 31, 2023
Significant Accounting Policies & Notes on Accounts1. Company overview
Sadbhav Engineering Limited, the Company is engaged in the business of development of infrastructure facilities in areas of canals, irrigations projects, roads, bridge, mining activities on contract basis, dams which includes civil, electrical and mechanical contractor, designer and engineers, structural contractor, earthwork contractor for repairing, reconstruction, renovation, demolitions and construction of canals, irrigations projects, roads, bridge, dams. The Company is also engaged in carrying out the construction works as per EPC contract entered between the Company and its subsidiaries.
2. Basis of preparation2.1. Statement of compliance
These standalone financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) including rules notified under the relevant provisions of the Companies Act, 2013, ("the Act") and guidelines issued by Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendments issued thereafter.
These standalone Financial Statements have been prepared on the historical cost basis except for the following items which are measured at fair values:
- certain financial assets and liabilities (including derivative instruments)
- defined benefit plans assets
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
2.3. Functional and presentation currency
Indian rupee is the functional and presentation currency. The Standalone Financial statements are presented in INR and all values are rounded to the nearest lakhs (INR 00,000), except when otherwise indicated.
The preparation of the standalone financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions.
These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period.
Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the standalone financial statements.
2.5. Current versus Non-current Classification
a) The Company presents assets and liabilities in the Balance Sheet based on current/non-current classification. An asset is current when it is:
- Expected to be realized or intended to be sold or consumed in the normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realized within twelve months after the reporting period, except in case of trade receivables; or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
b) All other assets are classified as non-current.
c) A liability is current when:
- It is expected to be settled in the normal operating cycle;
- Held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
d) The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
e) The Company classifies all other liabilities as non-current.
f) Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating cycle for the business activities of the Company covers the duration of the specific project/contract/product line/service including the defect liability period, wherever applicable and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective lines of business.
3. Summary of Significant Accounting Policies:3.1. Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment, if any.
The cost comprises the purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.
Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the company and the cost of the item can be measured reliably.
All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Property, Plant and Equipment not ready for the intended use on the date of the Balance Sheet are disclosed as "Capital Wok in Progress".
Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset at the time of disposal and are recognized in the statement of profit and loss when the asset is derecognized.
Depreciation on all Property, Plant and Equipment except vehicles is provided on straight-line method and depreciation on vehicles is provided on written down value method as per the useful life prescribed in schedule II to the Companies Act, 2013.
Depreciation is provided for all Property, Plant and Equipment as per the useful life prescribed in the Schedule II of the Companies Act, 2013 except in respect of plant and machineries used other than in mining activity, where useful life is considered lesser than those prescribed in schedule II.
The estimated useful life of Property, Plant and Equipment as prescribed in the Schedule II to the Companies Act, 2013 & useful life adopted by the company are as follows :
|
Asset Class |
Useful life as per Schedule II |
Useful life adopted by the company |
|
Building |
30 Years |
30 Years |
|
Building component |
10 Years |
10 Years |
|
Office Building |
60 Years |
60 Years |
|
Plant and Equipment |
9 to12 Years |
8 Years |
|
Plant and Equipment for Mining |
8 Years |
8 Years |
|
Furniture and Fixture |
10 Years |
10 Years |
|
Vehicle |
8-10 Years |
8-10 Years |
|
Temporary Structure |
3 Years |
1 Years |
In respect of Property, Plant and Equipment purchased/sold during the year, depreciation is provided on a pro-rata basis from the date on which such asset is ready to use or till the date when asset is sold, as the case may be. Assets costing less than rupees fifty thousand each are fully depreciated in the year of purchase.
The residual value, useful live and method of depreciation of Property, Plant and Equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
a) Revenue from contracts with customer
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The specific recognition criteria described below must also be met before revenue is recognized. The company has concluded that it is principal in its revenue arrangements because it typically controls goods or services before transferring them to the customer.
i. Revenue from construction / project related activity:
⢠Cost plus contracts: Revenue from cost plus contracts is recognized over time and is determined with reference to the extent performance obligations have been satisfied. The amount of transaction price allocated to the performance obligations satisfied represents the recoverable costs incurred during the period plus the margin as agreed with the customer.
⢠Fixed price contracts: Contract revenue is recognised over time to the extent of performance obligation satisfied and control is transferred to the customer. Contract revenue is recognised at allocable transaction price which represents the cost of work performed on the contract plus proportionate margin, using the percentage of completion method.
Impairment loss (termed as provision for foreseeable losses in the standalone financial statements) is recognized in profit or loss to the extent the carrying amount of the contract asset exceeds the remaining amount of consideration that the Company expects to receive towards remaining performance obligations (after deducting the costs that relate directly to fulfill such remaining performance obligations). In addition, the Company recognises impairment loss (termed as provision for expected credit loss on contract assets in the standalone financial statements) on account of credit risk in respect of a contract asset using expected credit loss model on similar basis as applicable to trade receivables.
ii. Contract Balances:⢠Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to customer. If the company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognized for the earned consideration that is conditional.
A receivable is recognised if an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of Financial instruments - initial recognition and subsequent measurement.
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Company transfers the related goods or services. Contract liabilities are recognised as revenue when the Company performs under the contract (i.e., transfers control of the related goods or services to the customer).
Revenue from contracts to provide services (other than those covered under construction contracts referred above) are recognized by reference to the stage of completion of the contract.
b) Other incomeInterest income
Interest income is recognized using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through expected life of the financial asset to the gross carrying amount of the financial asset. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
Dividend income is recognized when the right to receive dividend is established.
Inventories are valued at lower of cost and net realizable value. Cost of materials is determined on first-infirst-out basis except in case of items produced by the company, where the cost are derived on weighted average basis. Net realizable value is the estimated selling price less estimated cost necessary to make the sale.
An intangible asset is recognized, only where it is probable that future economic benefits attributable to the asset will accrue to the enterprise and the cost can be measured reliably.
Intangible assets are stated at cost, less accumulated amortization and impairment losses, if any.
Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as intangible assets under development.
Intangible assets are amortized over their estimated useful life on straight line method. The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern. Software being Intangible Assets used at Head office and work-shop are amortized over a period of three years and software used at Project sites are amortized over the project completion period.
In respect of intangible assets acquired / purchased during the year, amortization is provided on a pro-rata basis from the date on which such asset is ready to use.
3.5. Investment in subsidiaries
Investments in subsidiaries are recognized at cost as per Ind AS 27. If there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the net investment in a subsidiary (a ''loss event'') and that loss event (or events) has an impact on the estimated future cash flows from the net investment that can be reliably estimated, then it is necessary to recognize impairment loss with respect the Company''s investment in a subsidiary.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
a) Financial Assetsi. Initial recognition and measurement of financial assets
All financial assets are recognized initially at fair value. Transaction costs that are directly attributable to the acquisition of financial assets that are not at fair value through profit or loss are added to the fair value on initial recognition.
ii. Subsequent measurement of financial assets
For purposes of subsequent measurement, financial assets are classified in below categories:
- Financial assets at amortized cost
- Financial assets at fair value through profit or loss
⢠Financial assets at amortized cost
A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
⢠Debt instruments at amortized cost
A ''debt instrument'' is measured at the amortized cost if both the above conditions mentioned in "Financial assets at amortized cost" are met. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss.
The Company invests in perpetual securities (sub ordinated debt), without coupon and redeemable at the issuer''s option. The Company classifies this instrument as equity under Ind AS 32.
⢠Financial assets at fair value through profit or loss:
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the statement of profit and loss.
In addition, the company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch''). The company has not designated any debt instrument as at FVTPL.
iii. De-recognition of financial assets
A financial asset is de-recognized when the contractual rights to the cash flows from the financial asset expire or the Company has transferred its contractual rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
b) Financial Liabilitiesi. Initial recognition and measurement of financial liabilities
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.
All financial liabilities are recognized initially at fair value in case of loan and borrowings and payable, fair value is reduced by directly attributable transaction costs.
ii. Subsequent measurement of financial liabilities
For purposes of subsequent measurement, financial liabilities are classified in two categories:
- Financial liabilities at fair value through profit or loss
- Financial liabilities at amortized cost (loans and borrowings)
⢠Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind-AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses on changes in fair value of such liability are recognized in the Standalone Statement of Profit and Loss.
⢠Financial liabilities at amortised cost (Loans and Borrowings)
After initial recognition, interest-bearing borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Standalone Statement of Profit and Loss. This category generally applies to borrowings.
⢠Compound financial instruments
Compound financial instruments are separated into liability and equity components based on the terms of the contract. At inception, the fair value of the liability component is determined using a market rate. This amount is classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on redemption.
⢠Financial guarantee contracts
Financial guarantee contracts issued by the company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance
determined as per impairment requirements of Ind AS 109 and the amount recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 115.
iii. Derecognition of financial liabilities
A financial liability (or a part of a financial liability) is derecognized from its balance sheet when the obligation specified in the contract is discharged or cancelled or expired.
When an existing financial liability is replaced by another liability 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 amount is recognized in the Standalone Statement of Profit and Loss.
c) Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if the Company currently has 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.
3.7. Impairment⢠Financial assets other than investments in subsidiaries
The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss.
Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL.
For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.
The impairment loss allowance (or reversal) recognized during the period is recognized as income / expense in the statement of profit and loss.
⢠Financial assets - investments in subsidiaries
The company assesses at each reporting date whether there is an indication that an asset may be impaired.
If any indication exists the company estimates the asset''s recoverable amount based on value in use.
To arrive at the value in use of the investment, the Company has used expected future cash flows of projects in subsidiaries which generally covering period of the concession agreement using long term growth rate applied to future cash flows.
In assessing value in use, the estimated future cash flows are discounted to their present.
Value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Where the carrying amount of an asset exceeds its value in use amount, the asset is considered impaired and is written down to its recoverable amount. The impairment loss is recognized in statement of profit and loss.
⢠Non-financial assets - Tangible and intangible assets
The company assesses at each reporting date whether there is an indication that an asset may be impaired.
If any indication exists the company estimates the asset''s recoverable amount.
An asset''s recoverable amount is the higher of an assets net selling price and its value in use.
The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The impairment loss is recognized in the statement of profit and loss.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefit by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorized within the fair value hierarchy. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - inputs are other than quoted prices included within level 1 that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived prices)
Level 3 - inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumption that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
Income tax expense comprises current tax, deferred tax and MAT Credit.
Current tax is recognized in profit or loss.
Current tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
Current tax assets and current tax liabilities are offset, where company has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred tax is recognized in profit or loss.
Deferred tax liabilities are recognized for all taxable temporary differences, except to the extent that the deferred tax liability arises from initial recognition of goodwill; or initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit or loss.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax losses and carry forward of unused tax credits to the extent that it is probable that taxable profit will be available against which those temporary differences, losses and tax credit can be utilized, except when deferred tax asset on deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit or loss.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the tax rules and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset, where company has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Minimum Alternate Tax (MAT) paid in a year is charged to statement of profit and loss as current Tax. The company recognizes MAT Credit available as an assets only when and to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on "Accounting for Credit Available in respect of Minimum Alternative Tax under Income Tax Act, 1961", the said assets is created by way of credit to the statement of Profit and loss and shown as "Deferred Tax". The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the assets to the extent the company does not have convincing evidence that it will pay normal tax during the specified period.
Borrowing cost includes interest and other costs that company has incurred in connection with the borrowing of funds.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset.
All other borrowing costs are expensed in the year they occur.
3.11. Employee Benefitsa) Short Term Employee Benefits
All employee benefits payable are expected to be settled wholly within 12 months after the end of the reporting period are classified as short-term benefits. Such benefits include salaries, wages, bonus, short term compensation etc. and the same are recognized as an expense in the Standalone Statement of Profit and Loss in the period in which the employee renders the related services.
b) Post-Employment Benefits(i) Defined contribution plan
The Company''s approved provident fund scheme is defined contribution plans. The Company has no obligation, other than the contribution paid/payable under such schemes. The contribution paid/payable under the schemes is recognized and charged to Standalone Statement of Profit and Loss during the period in which the employee renders the related service.
The employee''s gratuity scheme is a defined benefit plan. The present value of the obligation under such defined benefit plans is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance sheet.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income (OCI) in the period in which they occur. Re-measurements are not reclassified to Standalone Statement of Profit and Loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the Standalone Statement of Profit and Loss:
⢠Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
⢠Net interest expense or income
The employee''s compensated absences, which is expected to be utilized or encashed within the next 12 months, is treated as short-term employee benefit. The company measures the expected cost of such absences as the additional amount that it expects to pay as result of the unused entitlement that has accumulated at the reporting date. As per Company''s policy, no leave are expected to be carried forward beyond 12 months from the reporting date.
3.12. Provisions, Contingent Liabilities & Contingent Assetsa) Provision
A provision is recognized when the company has a present obligation as a result of past event and 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.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Provisions are not discounted to their present value and are 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.
b) Contingent Liabilities and Commitments :
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the standalone financial statements.
Commitments are future liabilities for contractual expenditure, classified and disclosed as estimated amount of contracts remaining to be executed on capital account and not provided for.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only be occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company. The company does not recognize a contingent asset.
3.13. Foreign Currency Transactions & Translationsa) Initial recognition
Foreign currency transactions are recorded in the functional currency, by applying to the foreign currency amount the exchange rate between the functional 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.
The company accounts for exchange differences arising on translation / settlement of foreign currency monetary items as below:
i. Exchange differences arising from translation of foreign currency monetary items:
Exchange differences arising on settlement/ restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.
Exchange differences arising on long-term foreign currency monetary items related to acquisition of a fixed asset are capitalised and depreciated over the remaining useful life of the asset and exchange differences arising on other long-term foreign currency monetary items are accumulated in the "Foreign Currency Monetary Translation Account" and amortised over the remaining life of the concerned monetary item.
ii. Exchange differences on other monetary items:
All other exchange differences are recognized as income or as expenses in the year in which they arise.
iii. Exchange differences arising from translation of foreign currency non monetary items:
Nonmonetary assets and liabilities that are measured at fair value in a foreign currency are translated into functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Exchange differences are recognised in profit or loss.
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank (including demand deposits) and in hand and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
A receivable is classified as a ''trade receivable'' if it is in respect of the amount due on account of goods sold or services rendered in the normal course of business. Trade receivables are recognised initially at transaction price and subsequently measured at amortised cost using the EIR method, less provision for impairment. Trade receivables ageing has been presented based on the date of transactions.
A payable is classified as a ''trade payable'' if it is in respect of the amount due on account of goods purchased or services received in the normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. These amounts are unsecured and are usually settled as per the payment terms stated in the contract. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the EIR method. Trade payables ageing has been presented based on the due date of transactions.
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
The Company''s lease asset classes primarily consist of leases for Plant & Machinery. The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term leases) and leases of low value assets. For these short term and leases of low value assets, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made. A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets. Lease liability and ROU asset have been separately presented in the Balance Sheet.
An operating segment is component of the company that engages in the business activity from which the company earns revenues and incurs expenses, for which discrete financial information is available and
whose operating results are regularly reviewed by the chief operating decision maker, in deciding about resources to be allocated to the segment and assess its performance. The company''s Chief Operating Decision Maker is the Chief Financial Officer and Executive Director.
Investment Property is measured initially at cost including related transaction costs. Such cost comprises the purchase price, borrowing cost if capitalization criteria are met. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. All day-to-day repair and maintenance expenditure are charged to the Standalone Statement of profit and loss for the period during which such expenses are incurred.
An Investment property is derecognized either when it has been disposed of or when it has been permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
Transfers are made to (or from) investment property only when there is a change in use.
3.21. Cash Dividend Distribution to Equity Shareholders
The company recognizes a liability to make cash distributions to equity holders when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in Equity.
3.22. Non-Current Assets Held for Sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use.
The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale and the sale expected within one year from the date of classification.
Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset excluding finance costs and income tax expense.
Assets and liabilities classified as held for sale are presented separately from other items in the balance sheet.
3.23. Significant Accounting judgements, estimates & estimates
The preparation of the Company''s Standalone Financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the accompanying disclosure, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the Standalone Financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
The Company reviews its carrying value of its investments carried at cost annually, or more frequently when there is indication for impairments. If the recoverable amount is less than it carrying amount, the impairment loss is accounted for.
Deferred tax assets are recognized for unused tax credits to the extent that it is probable that taxable profit will be available against which the credits can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Revenue from contract with customer
The Company use the input method for recognize construction revenue. Use of the input method require the company to estimate the efforts or costs expended to the date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion of performance obligation as there is a direct relationship between input and productivity. Provision for estimated losses, if any, on uncompleted performance obligation are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date. Due to technical complexities involved in the budgeting process, contract estimates are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include
considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
When items of income and expense within profit or loss from ordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the Company for the period, the nature and amount of such material items are disclosed separately as exceptional items.
3.25. Recent Accounting Pronouncements
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.
1. 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 financial statements.
2. 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 financial statements.
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 financial statement.
Mar 31, 2018
1.1 Revenue Recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
a. Contract revenue
When the outcome of a fixed price construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of cost incurred that it is probable will be recoverable.
When the outcome of a fixed price contract is ascertained reliably, contract revenue is recognized by reference to the stage of completion of the contract activity at the end of the reporting period.
The outcome of a fixed price construction contract can be estimated reliably when total contract revenue can be measured reliably, it is probable that economic benefits associated with the contract will flow to the company, contract costs to complete the contract and stage of contract completion at the end of the reporting period can be measured reliably and contract cost attributable to the contract can be identified and measured reliably.
Percentage of completion is determined by survey of work performed and/or completion of physical proportion of the contract work as the case may be at the end of each year. The effect of a change in the estimate of contract revenue or contract costs, or the effect of a change in the estimate of the outcome of a contract, is accounted for as a change in accounting estimate and the effect of which are recognized in the Statement of Profit and Loss in the period in which the change is made and in subsequent periods.
Contract revenue comprises the initial amount of revenue agreed in the contract, the variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured. Contract revenue is measured at the fair value of the consideration received or receivable.
Contract cost associated with contract revenue is recognized as expense by reference to the stage of completion of the contract activity at the end of the reporting period. Contract cost comprises of cost that relate directly to the specific contract, cost that are attributable to contract activity in general and can be allocated to the contract and such other cost as are specifically chargeable to the customer under the terms of the contract.
An expected loss on construction contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.
Rendering of Services:
Revenue from contracts to provide services (other than those covered under construction contracts referred above) are recognized by reference to the stage of completion of the contract.
b. Other income
i. Revenue from wind mill power generation
Revenue from wind mill power generation is recognized when the electricity is delivered to electricity Distribution Company at a common delivery point and the same is measured on the basis of meter reading.
ii. Interest income
Interest income is recognized using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through expected life of the financial asset to the gross carrying amount of the financial asset. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
iii. Dividend income
Dividend income is recognized when the right to receive dividend is established.
1.2 Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
The cost comprises the purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.
Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the company and the cost of the item can be measured reliably.
All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Property, Plant and Equipment not ready for the intended use on the date of the Balance Sheet are disclosed as âAssets not put to useâ.
Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset at the time of disposal and are recognized in the statement of profit and loss when the asset is derecognized.
Depreciation is provided for all Property, Plant and Equipment except for vehicles on straight-line method and depreciation on vehicles is provided on written down value method as per the useful life prescribed in schedule II of the Companies Act, 2013.
Depreciation is provided for all Property, Plant and Equipment as per the useful life prescribed in the Schedule II of the Companies Act, 2013 except in respect of plant and machineries used other than in mining activity, where less useful life is considered than those prescribed in schedule II.
The estimated useful life of Property, Plant and Equipment as prescribed in the Schedule II of the Companies Act, 2013 & useful life adopted by the company are as follows
In respect of Property, Plant and Equipment purchased during the year, depreciation is provided on a pro-rata basis from the date on which such asset is ready to use. Assets costing less than rupees fifty thousand each are fully depreciated in the year of purchase.
The residual value, useful live and method of depreciation of Property, Plant and Equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
1.3 Intangible assets
An intangible asset is recognized, only where it is probable that future economic benefits attributable to the asset will accrue to the enterprise and the cost can be measured reliably.
Intangible assets are stated at cost, less accumulated amortization and impairment losses, if any.
Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as intangible assets under development.
Intangible assets are amortized over their estimated useful life on straight line method. The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern. Software being Intangible Assets used at Head office and work-shop are amortized over a period of three years and software used at Project sites are amortized over the project completion period.
In respect of intangible assets acquired / purchased during the year, amortization is provided on a pro-rata basis from the date on which such asset is ready to use.
1.4 Financial Instruments
1.4.1 Initial recognition
The company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument.
All financial assets and liabilities are recognized at fair value on initial recognition.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are not at fair value through profit or loss are added to or deducted from the fair value of financial assets or financial liabilities on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
Regular way purchase and sale of financial assets are accounted for at trade date.
1.4.2 Subsequent measurement
a. Non-derivative financial instruments
i. Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
ii. Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model. For such equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.
iii. Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories is subsequently measured at fair valued through profit or loss.
iv. Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method.
v. Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are carried at cost in the separate financial statements.
b. Derivative financial instruments
The company holds certain derivative contracts such as cross currency interest rate swaps and forward contracts to hedge risks. These contracts do not qualify for hedge accounting under Ind AS 109, Financial Instruments. Hence these contracts are not designated as hedges and are accounted for at fair value through profit or loss.
c. Equity instruments
An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Incremental costs directly attributable to the issuance of equity instruments are recognized as a deduction from equity instrument net of any tax effects.
d. Debt Instrument at amortised cost
A âdebt instrumentâ is measured at the amortised cost if both the above conditions mentioned in 3.4.2 a(i) are met. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss.
1.4.3 De-recognition
The company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability is derecognized when obligation specified in the contract is discharged or cancelled or expires.
1.4.4 Off-setting
Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the company currently has a legally enforceable right to offset the recognized amount and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
1.5 Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefit by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - inputs are other than quoted prices included within level 1 that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived prices)
Level 3 - inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumption that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
1.6 Income tax
Income tax expense comprises current tax, deferred tax and MAT Credit.
Current Tax
Current tax is recognized in profit or loss.
Current tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
Current tax assets and current tax liabilities are offset, where company has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred Tax
Deferred tax is recognized in profit or loss.
Deferred tax liabilities are recognized for all taxable temporary differences, except to the extent that the deferred tax liability arises from initial recognition of goodwill; or initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit or loss.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax losses and carry forward of unused tax credits to the extent that it is probable that taxable profit will be available against which those temporary differences, losses and tax credit can be utilized, except when deferred tax asset on deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit or loss.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the tax rules and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are off set, where company has a legally enforceable right to set off the recognized amount sand where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
MAT Credit
Minimum Alternate Tax (MAT) paid in a year is charged to statement of profit and loss as current Tax. The company recognizes MAT Credit available as an assets only when and to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on âAccounting for Credit Available in respect of Minimum Alternative Tax under Income Tax Act , 1961â , the said assets is created by way of credit to the statement of Profit and loss and shown as âDeferred Taxâ. The Company reviews the âMAT credit entitlementâ asset at each reporting date and writes down the assets to the extent the company does not have convincing evidence that it will pay normal tax during the specified period.
1.7 Impairment
1.7.1 Financial assets other than investments in subsidiaries
The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss.
Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL.
For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.
The impairment loss allowance (or reversal) recognized during the period is recognized as income / expense in the statement of profit and loss.
1.7.2 Financial assets - investments in subsidiaries
The company assesses at each reporting date whether there is an indication that an asset may be impaired.
If any indication exists the company estimates the assetâs recoverable amount based on value in use.
To arrive at the value in use of the investment, the Company has used expected future cash flows of projects in subsidiaries which generally covering period of the concession agreement using long term growth rate applied to future cash flows.
In assessing value in use, the estimated future cash flows are discounted to their present Value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Where the carrying amount of an asset exceeds its value in use amount, the asset is considered impaired and is written down to its recoverable amount. The impairment loss is recognized in statement of profit and loss.
1.7.3 Non-financial assets - Tangible and intangible assets
The company assesses at each reporting date whether there is an indication that an asset may be impaired.
If any indication exists the company estimates the assetâs recoverable amount.
An assetâs recoverable amount is the higher of an assets net selling price and its value in use.
The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The impairment loss is recognized in the statement of profit and loss.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
1.8 Borrowing costs
Borrowing cost includes interest and other costs that company has incurred in connection with the borrowing of funds.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset.
All other borrowing costs are expensed in the year they occur.
1.9 Employee Benefits
Contribution to âDefined Contribution Planâ such as Provident Fund is charged to the profit and loss account as incurred. Provident Fund contribution is made to the Government Administered Provident Fund. Company has no further obligation beyond this contribution charged in financial statement. The company recognizes contribution payable to the provident fund scheme as expenditure, when an employee renders the related service.
Company also provides for Defined Benefit Plans in the form of Gratuity. Such Benefits are provided for, based on valuation, as at the Balance Sheet date, made by independent actuaries. Company has taken Group Gratuity Policy of L.I.C. of India. Actuarial valuation is carried out using the projected unit credit method made at the end of each reporting date. Remeasurement of the net defined benefit liability (asset) comprise of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset) and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability / (asset)). Re-measurement is recognized in other comprehensive income and will not be reclassified to profit or loss in a subsequent period.
Short term employee benefits including leave are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related services are rendered
1.10 Provisions
A provision is recognized when the company has a present obligation as a result of past event and 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.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Provisions are not discounted to their present value and are 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.
1.11 Contingent Liability
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.
1.12 Contingent Asset
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only be occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company. The company does not recognize a contingent asset but discloses its existence in the financial statements.
1.13 Foreign Currency
a. Initial recognition
Foreign currency transactions are recorded in the functional currency, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction.
b. Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.
c. Exchange difference
The company accounts for exchange differences arising on translation / settlement of foreign currency monetary items as below:
i. Exchange differences arising from translation of long term foreign currency monetary items
- Long-term foreign currency monetary items recognized in the financial statements as on March 31, 2016 related to acquisition of a fixed asset are capitalized and depreciated over the remaining useful life of the asset.
- Long-term foreign currency monetary items recognized in the financial statements after March 31, 2016 related to acquisition of a fixed asset are charged to the Profit and Loss statement.
- Other long-term foreign currency monetary items are accumulated in the âForeign Currency Monetary Item Translation Difference Accountâ and amortized over the remaining life of the concerned monetary item.
ii. Exchange differences on other monetary items
All other exchange differences are recognized as income or as expenses in the year in which they arise.
1.14 Cash and cash equivalent
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank (including demand deposits) and in hand and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
1.15 Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
1.16 Inventories
Inventories are valued at lower of cost and net realizable value. Cost of materials is determined on first-in-first-out basis. Net realizable value is the estimated selling price less estimated cost necessary to make the sale.
1.17 Lease
Lease agreements where the risks and the rewards incident to ownership of an asset substantially vest with the lessor, are recognized as operating leases.
a) Company as lessee
Lease rents under operating leases are recognized in the statement of profit and loss on a straight-line basis.
b) Company as lessor
Assets given on operating lease are included in Property, Plant and Equipment. Lease income is recognized in the statement of profit and loss on a straight-line basis.
1.18 Segment Reporting
An operating segment is component of the company that engages in the business activity from which the company earns revenues and incurs expenses, for which discrete financial information is available and whose operating results are regularly reviewed by the chief operating decision maker, in deciding about resources to be allocated to the segment and assess its performance. The companyâs chief operating decision maker is the Chief Executive Officer and Managing Director. There is only one reportable segment in accordance with the requirements of Ind AS-108- âOperating Segmentsâ, prescribed under Companies (Indian Accounting Standards) Rules, 2015.
Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as un-allocable.
Revenue and expenses directly attributable to segments are reported under each reportable segment. All other expenses which are not attributable or allocable to segments have been disclosed as un-allocable expenses.
The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.
1.19 Share based payment
The company recognizes shared based compensation expenses in net profit using fair value in accordance with Ind AS 102, Share Based Payments, with a corresponding increase in equity. The expense is recognized over vesting period on a straight line basis.
1.20 Operating Cycle
Operating cycle for the business activities of the Company covers the duration of the specific project/contract/product line/service including the defect liability period, wherever applicable and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective lines of business.
Mar 31, 2017
1. Company overview
The Company, Sadbhav Engineering Limited is engaged in the business of development of infrastructure facilities in areas of canals, irrigations projects, roads, bridge, mining activities on contract basis, dams which includes civil, electrical and mechanical contractor, designer and engineers, structural contractor, earthwork contractor for repairing, reconstruction, renovation, demolitions and construction of canals, irrigations projects, roads, bridge, dams. The Company is engaged in carrying out the construction works as per EPC contract entered between the Company and its subsidiaries. Company is also engaged in business of energy generation through Wind Power Project.
2. Basis of preparation
2.1 Statement of compliance
The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
These financial statements are the company''s first Ind AS financial statements.
The financial statements up to year ended March 31, 2016 were prepared in accordance with the Accounting standards notified under Companies (Accounting Standards) Rules, 2006 (previous GAAP) and other relevant provisions of the Act. Previous period numbers in the financial statements have been restated to Ind AS.
In accordance with Ind AS 101 First time Adoption of Indian Accounting Standard, the Company has presented reconciliations and explanations of the effects from Previous GAAP to Ind AS on financial position, financial performance and cash flows in the note no. 5.
2.2 Basis of measurement
The Financial Statements have been prepared on the historical cost basis except for the following items which are measured at fair values:
- certain financial assets and liabilities (including derivative instruments)
- defined benefit plans assets
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. 2.3 Functional and presentation currency
Indian rupee is the functional and presentation currency.
2.4 Use of estimates
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions.
These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period.
Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements are:
- Revenue recognition of construction services based on percentage of completion method
- Useful lives of Property, plant and equipment
- Valuation of financial instruments
- Provisions and contingencies
- Income tax and deferred tax
- Measurement of defined employee benefit obligations
3. Significant Accounting Policies
3.1 Revenue Recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
a. Contract revenue
When the outcome of a fixed price construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of cost incurred that it is probable will be recoverable.
When the outcome of a fixed price contract is ascertained reliably, contract revenue is recognized by reference to the stage of completion of the contract activity at the end of the reporting period.
The outcome of a fixed price construction contract can be estimated reliably when total contract revenue can be measured reliably, it is probable that economic benefits associated with the contract will flow to the company, contract costs to complete the contract and stage of contract completion at the end of the reporting period can be measured reliably and contract cost attributable to the contract can be identified and measured reliably.
Percentage of completion is determined based on the survey of work performed at the end of each year. The effect of a change in the estimate of contract revenue or contract costs, or the effect of a change in the estimate of the outcome of a contract, is accounted for as a change in accounting estimate and the effect of which are recognized in the Statement of Profit and Loss in the period in which the change is made and in subsequent periods.
Contract revenue comprises the initial amount of revenue agreed in the contract, the variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured. Contract revenue is measured at the fair value of the consideration received or receivable.
Contract cost associated with contract revenue is recognized as expense by reference to the stage of completion of the contract activity at the end of the reporting period. Contract cost comprises of cost that relate directly to the specific contract, cost that are attributable to contract activity in general and can be allocated to the contract and such other cost as are specifically chargeable to the customer under the terms of the contract.
An expected loss on construction contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.
b. Other income
i. Revenue from wind mill power generation
Revenue from wind mill power generation is recognized when the electricity is delivered to electricity Distribution Company at a common delivery point and the same is measured on the basis of meter reading.
ii. Interest income
Interest income is recognized using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through expected life of the financial asset to the gross carrying amount of the financial asset. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
iii. Dividend income
Dividend income is recognized when the right to receive dividend is established.
3.2 Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
The cost comprises the purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.
Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the company and the cost of the item can be measured reliably.
All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
For transition to Ind AS, the carrying value of Property Plant and Equipment under previous GAAP as on 01 April 2015 is regarded as its cost. The carrying value was original cost less accumulated depreciation and cumulative impairment.
Property, Plant and Equipment not ready for the intended use on the date of the Balance Sheet are disclosed as "Assets not put to use".
Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset at the time of disposal and are recognized in the statement of profit and loss when the asset is derecognized.
Depreciation is provided for all Property, Plant and Equipment except for vehicles on straight-line method and depreciation on vehicles is provided on written down value method as per the useful life prescribed in schedule II of the Companies Act, 2013.
Depreciation is provided for all Property, Plant and Equipment as per the useful life prescribed in the Schedule II of the Companies Act, 2013 except in respect of plant and machineries used other than in mining activity, where less useful life is considered than those prescribed in schedule II.
In respect of Property, Plant and Equipment purchased during the year, depreciation is provided on a pro-rata basis from the date on which such asset is ready to use. Assets costing less than rupees fifty thousand each are fully depreciated in the year of purchase.
The residual value, useful live and method of depreciation of Property, Plant and Equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
3.3 Intangible assets
An intangible asset is recognized, only where it is probable that future economic benefits attributable to the asset will accrue to the enterprise and the cost can be measured reliably.
Intangible assets are stated at cost, less accumulated amortization and impairment losses, if any.
Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as intangible assets under development.
Intangible assets are amortized over their estimated useful life. The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern. Software being Intangible Assets used at Head office and work-shop are amortized over a period of three years and software used at Project sites are amortized over the project completion period.
In respect of intangible assets acquired / purchased during the year, amortization is provided on a pro-rata basis from the date on which such asset is ready to use.
3.4 Financial Instruments
3.4.1 Initial recognition
The company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument.
All financial assets and liabilities are recognized at fair value on initial recognition.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are not at fair value through profit or loss are added to or deducted from the fair value of financial assets or financial liabilities on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in statement of profit or loss.
Regular way purchase and sale of financial assets are accounted for at trade date.
3.4.2 Subsequent measurement
a. Non-derivative financial instruments
i. Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
ii. Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model. For such equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.
iii. Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories is subsequently measured at fair valued through profit or loss.
iv. Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method.
v. Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are carried at cost in the separate financial statements.
b. Derivative financial instruments
The company holds certain derivative contracts such as cross currency interest rate swaps and forward contracts to hedge risks. These contracts do not qualify for hedge accounting under Ind AS 109, Financial Instruments. Hence these contracts are not designated as hedges and are accounted for at fair value through profit or loss.
c. Equity instruments
An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Incremental costs directly attributable to the issuance of equity instruments are recognized as a deduction from equity instrument net of any tax effects.
3.4.3 De-recognition
The company de-recognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109. A financial liability is de-recognized when obligation specified in the contract is discharged or cancelled or expires.
3.4.4 Off-setting
Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the company currently has a legally enforceable right to offset the recognized amount and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
3.5 Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefit by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - inputs are other than quoted prices included within level 1 that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived prices)
Level 3 - inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumption that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
3.6 Income tax
Income tax expense comprises current tax, deferred tax and MAT Credit.
Current Tax
Current tax is recognized in statement of profit or loss.
Current tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
Current tax assets and current tax liabilities are offset, where company has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred Tax
Deferred tax is recognized in statement of profit or loss.
Deferred tax liabilities are recognized for all taxable temporary differences, except to the extent that the deferred tax liability arises from initial recognition of goodwill; or initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit or loss.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax losses and carry forward of unused tax credits to the extent that it is probable that taxable profit will be available against which those temporary differences, losses and tax credit can be utilized, except when deferred tax asset on deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit or loss.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the tax rules and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset, where company has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
MAT Credit
Minimum Alternate Tax (MAT) paid in a year is charged to statement of profit and loss as current Tax. The company recognizes MAT Credit available as an assets only when and to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on "Accounting for Credit Available in respect of Minimum Alternative Tax under Income Tax Act , 1961" , the said assets is created by way of credit to the statement of Profit and loss and shown as "Deferred Tax". The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the assets to the extent the company does not have convincing evidence that it will pay normal tax during the specified period.
3.7 Impairment
3.7.1 Financial assets other than investments in subsidiaries
The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss.
Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL.
For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.
The impairment loss allowance (or reversal) recognized during the period is recognized as income / expense in the statement of profit and loss.
3.7.2 Financial assets - investments in subsidiaries
The company assesses at each reporting date whether there is an indication that an asset may be impaired.
If any indication exists the company estimates the asset''s recoverable amount based on value in use.
To arrive at the value in use of the investment, the Company has used expected future cash flows of projects in subsidiaries which generally covering period of the concession agreement using long term growth rate applied to future cash flows.
In assessing value in use, the estimated future cash flows are discounted to their present.
Value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Where the carrying amount of an asset exceeds its value in use amount, the asset is considered impaired and is written down to its recoverable amount. The impairment loss is recognized in statement of profit and loss.
3.7.3 Non-financial assets - Tangible and intangible assets
The company assesses at each reporting date whether there is an indication that an asset may be impaired.
If any indication exists the company estimates the asset''s recoverable amount.
An asset''s recoverable amount is the higher of an assets net selling price and its value in use.
The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The impairment loss is recognized in the statement of profit and loss.
In assessing value in use, the estimated future cash flows are discounted to their present.
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
3.8 Borrowing costs
Borrowing cost includes interest and other costs that company has incurred in connection with the borrowing of funds.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset.
All other borrowing costs are expensed in the year they occur.
Investment income earned on temporary investment of specific borrowing pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
3.9 Employee Benefits
Contribution to "Defined Contribution Schemes" such as Provident Fund is charged to the statement of profit and loss account as incurred. Provident Fund contribution is made to the Government Administered Provident Fund. Company has no further obligation beyond this contribution charged in financial statement. The company recognizes contribution payable to the provident fund scheme as expenditure, when an employee renders the related service.
Company also provides for Retirement Benefits in the form of Gratuity. Such Benefits are provided for, based on valuation, as at the Balance Sheet date, made by independent actuaries. Company has taken Group Gratuity Policy of L.I.C. of India. Actuarial valuation is carried out using the projected unit credit method made at the end of each reporting date. Re-measurement of the net defined benefit liability (asset) comprise of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset) and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability / (asset)). Re-measurement is recognized in other comprehensive income and will not be reclassified to profit or loss in a subsequent period.
Short term employee benefits including leave are recognized as an expense at the undiscounted amount in the statement of profit and loss account of the year in which the related services are rendered.
In respect of employee stock options, the excess of fair price on the date of grant over the exercise price is recognized as deferred compensation cost amortised over the vesting period.
3.10 Provisions
A provision is recognized when the company has a present obligation as a result of past event and 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.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Provisions are not discounted to their present value and are 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.
3.11 Contingent Liability
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.
3.12 Contingent Asset
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only be occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company. The company does not recognize a contingent asset but discloses its existence in the financial statements.
3.13 Foreign Currency
a. Initial recognition
Foreign currency transactions are recorded in the functional currency, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction.
b. Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.
c. Exchange difference
The company accounts for exchange differences arising on translation / settlement of foreign currency monetary items as below:
i. Exchange differences arising from translation of long term foreign currency monetary items
- Long-term foreign currency monetary items recognized in the financial statements as on March 31, 2016 related to acquisition of a fixed asset are capitalized and depreciated over the remaining useful life of the asset.
- Other long-term foreign currency monetary items are accumulated in the "Foreign Currency Monetary Item Translation Difference Account" and amortized over the remaining life of the concerned monetary item.
ii. Exchange differences on other monetary items
All other exchange differences are recognized as income or as expenses in the year in which they arise.
3.14 Cash and cash equivalent
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank (including demand deposits) and in hand and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
3.15 Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
3.16 Inventories
Inventories are valued at lower of cost and net realizable value. Cost of materials is determined on first-in-first-out basis. Net realizable value is the estimated selling price less estimated cost necessary to make the sale.
3.17 Lease
Lease agreements where the risks and the rewards incident to ownership of an asset substantially vest with the lessor, are recognized as operating leases.
a) Company as lessee
Lease rents under operating leases are recognized in the statement of profit and loss on a straight-line basis.
b) Company as lessor
Assets given on operating lease are included in Property, Plant and Equipment. Lease income is recognized in the statement of profit and loss on a straight-line basis.
3.18 Segment Reporting
An operating segment is component of the company that engages in the business activity from which the company earns revenues and incurs expenses, for which discrete financial information is available and whose operating results are regularly reviewed by the chief operating decision maker, in deciding about resources to be allocated to the segment and assess its performance. The company''s chief operating decision maker is the Chief Executive Officer and Managing Director.
Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as un-allocable.
Revenue and expenses directly attributable to segments are reported under each reportable segment. All other expenses which are not attributable or allocable to segments have been disclosed as un-allocable expenses.
The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.
3.19 Share based payment
The company recognizes shared based compensation expenses in net profit using fair value in accordance with Ind AS 102, Share Based Payments, with a corresponding increase in equity. The expense is recognized over vesting period on a straight line basis.
4. Recent Accounting Pronouncements issued but not yet effective
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ''Statement of cash flows''. This amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of cash flows'' .The amendments are applicable to the company from April 1, 2017.
"The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement."
5. Transition to Ind AS
These standalone financial statements of The Company for the year ended March 31, 2017 have been prepared in accordance with Ind AS. For the purposes of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101 First Time Adoption of Indian Accounting Standards with April 01, 2015 as the transition date and Indian GAAP as the previous GAAP.
The transition to Ind AS has resulted in changes in presentation of the financial statements, disclosures in the notes thereto and accounting policies and principles. The accounting policies set out in Note 3 have been applied in preparing the standalone financial statements for the year ended March 31, 2017 and the comparative information.
5.1 First time adoption of IND AS
An explanation of how transition from previous GAAP to Ind AS has affected the company''s financial position, financial performance and cash flows are set hereunder:
5.1.1 Exception to the retrospective application of other Ind AS
Company''s estimates in accordance with Ind AS as at the date of transition to Ind AS (April 01, 2015) are consistent with the estimates made for the same date as per previous GAAP.
The classification of financial assets to be measured at amortised cost is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.
5.1.2 Exemption from other Ind AS Deemed cost of Property, plant and equipment and Intangible Assets
Company has elected to measure all of its Property, Plant and Equipment and Intangible Assets at their previous GAAP carrying amount on the date of transition to Ind AS
Investment in subsidiaries, Joint Ventures and Associate
Company has elected to measure its investments in subsidiaries and associates in separate financial statements at their previous GAAP carrying amount on the date of transition to Ind AS. The company does not have any investment in Joint Ventures.
Designation of previously recognised financial instruments
The Company has designated its investments in equity shares at fair value through other comprehensive income on the basis of facts and circumstances that existed at the date of transition to Ind AS.
Long-term foreign currency monetary items
Exchange difference arising from translation of long-term foreign currency monetary items, which was recognised in the financial statements as on March 31, 2016, related to acquisition of a fixed asset are capitalized and depreciated over the remaining useful life of the asset.
5.3 Notes to First time adoption of Ind AS
(i) Finance cost recognition on account of amortised cost of financial liability:
The financial liability has been recognised at effective interest rate method under Ind AS. Under previous GAAP, the same is disclosed at transaction value.
(ii) MTM on derivative financial instruments:
Under previous GAAP, net mark to market losses on derivative financial instruments as at the Balance Sheet date, were recognised in profit and loss, and the net gains, if any, were ignored. Under Ind AS, such derivative financial instruments are to be recognised at fair value and the movement is recognised in the statement of Profit & Loss.
(iii) Deferred Tax:
The impact of transition adjustments together with lnd AS mandate of using balance sheet approach (against profit and loss approach in the previous GAAP) for computation of deferred taxes has resulted in charge to the Reserves, on the date of transition, with consequential impact to the statement of Profit and Loss account for the subsequent periods.
(iv) Dividend:
Under Ind AS Dividend to holder of equity instrument is recognized as a liability in the year in which the obligation to pay is established. Under previous GAAP dividend payable is recognized as liability in the year to which it relates.
(v) Recognition of Actuarial Gain / Loss:
Actuarial gains and losses are recognized in other comprehensive income as compared to being recognized in the statement of profit and loss under IGAAP.
(vi) Interest Income:
The financial asset has been recognised at effective interest rate method under Ind AS. Under previous GAAP, the same is disclosed at transaction value.
(vii) Depreciation on Tangible Assets:
Mar 31, 2016
Forming part of the Financial Statement
Corporate Information:
The Company, Sadbhav Engineering Limited is engaged in the business of development of infrastructure facilities in areas of canals, irrigations projects, roads, bridge, mining activities on contract basis, dams which includes civil, electrical and mechanical contractor, designer and engineers, structural contractor, earthwork contractor for repairing, reconstruction, renovation, demolitions and construction of canals, irrigations projects, roads, bridge, dams. The Company is engaged in carrying out the construction works as per EPC contract entered between the Company and its subsidiaries. Company is also engaged in business of energy generation through Wind Power Project.
Note 1. Significant Accounting Policies:
a) Basis of Preparation:
The Financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared on accrual basis and under the historical cost convention.
The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
b) Use of Accounting Estimates:
The preparation of the financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect reported amount of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amount of income and expenses during the year of account. Example of such estimates includes contract costs expected to be incurred to complete construction contracts, provision for doubtful debts, income taxes etc. Management periodically assesses whether there is an indication that an assets may be impaired and makes provision in the account for any impairment losses estimated. Contingencies are recorded when it is probable that a liabilities will be incurred and the amount can be reasonably estimated. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future result could differ from those estimates and the difference between actual results and the estimates are recognized in the periods in which the results are known / materialize.
c) Inventories:
Stock of material, Spare-parts, Diesel is valued at the lower of cost or net realizable value after providing any other losses, where considered necessary. Cost is determined on first-in-first-out basis. Cost includes all the charges in bringing the goods to the point of use, including octopi and other levies, transit insurance and receiving charges.
Work in progress is valued at contract rates.
d) Cash and Cash Equivalent:
Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less.
e) Cash Flow Statement:
Cash flows are reported using the indirect method, whereby profit/(loss) before extra-ordinary items and tax is adjusted for the effects of transactions of non-cash nature. The cash flow from operating, investing and financing activities of the Company are segregated based on the available information.
f) Depreciation and Amortization:
Depreciation is provided for all Plant, property and equipments except for vehicles on straight-line method and depreciation on vehicles is provided on written down value method as per the useful life prescribed in schedule II of the Companies Act, 2013.
Depreciation is provided for all Plant, property and equipments as per the useful life prescribed in the Schedule II of the Companies Act, 2013 except in respect of plant and machineries used other than in mining activity, where less useful life considered than those prescribed in schedule II.
Depreciation on assets sold, discarded or demolished during the year is being provided on their respective useful life on pro-rata up to the date on which such assets are sold, discarded or demolished.
Intangible assets are amortized over their estimated useful life. The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern. Software being Intangible Assets used at Head office and work-shop are amortized over a period of three years and software used at Project sites are amortized over the project completion period.
g) Recognition of Contract Revenue and Expenses:
(i) In case of Item rate contracts Revenue is recognized over the life of the contract using percentage completion method, on the basis of physical measurement of work actually completed at the balance sheet date.
(ii) In the case of lump sum contracts, revenue is recognized on the completion of milestones as specified in the contract or as identified by the management.
(iii) In case of Construction Contracts received in the name of joint ventures the income and expenditure are included in financial statements of the company to the extent of its share in the joint ventures.
(iv) Revenue from Wind Mill power generation is recognized when the electricity is delivered to electricity Distribution Company at a common delivery point and the same is measured on the basis of meter reading.
(v) An expected loss on construction contract is recognized as an expense immediately when it is certain that the total contract costs will exceed the total contract revenue.
(vi) Price escalation and other Claims and/or variations in the contract work are included in contract revenue only when:
(a) Negotiations have reached at an advanced stage such that it is probable that customer will accept the claim; and
(b) The amount that is probable will be accepted by the customer can be measured reliably.
(vii) Incentive payments, as per customer-specified performance standards, are included in contract revenue only when:
(a) The contract is sufficiently advanced that it is probable that the specified performance standards will be met; and
(b) The amount of the incentive payment can be measured reliably.
(viii) Site mobilization (Camp) Expenditure for site installation is written off over the period of contract in proportion to the value of work done.
h) Other Income:
Interest Income on investment and bank deposits are recognized on a time proportion basis taking into account the amount invested and the rate applicable. Dividend income is accounted for when the right to receive it is established.
i) Property Plant and Equipment:
Property Plant and Equipments are valued as per cost model at cost less accumulated depreciation and accumulated impairment losses, if any. Direct cost is inclusive of all expenditure of capital in nature attributable to bring the fixed assets to working conditions, duties and taxes, incidental expenses including interest relating to acquisition and cost of improvements thereon are capitalized until fixed assets are ready for use. Subsequent expenditure on fixed assets after its purchase/ completion is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
j) Impairment of Assets:
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. On such indication, the recoverable amount of the assets is estimated and if such estimation is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
k) Foreign Currency Transactions and Translations:
Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transactions or rates that closely approximate the rate at the date of the transaction.
Monetary items denominated in foreign currencies at the year-end are restated at year end rates. As the Company has adopted para 46A of AS-11, the exchange differences arising on settlement / restatement of long-term foreign currency monetary items are Capitalized as part of the depreciable fixed assets. If such monetary items do not relate to acquisition of depreciable fixed assets, the exchange difference is amortized over the maturity period/up to the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss. The unamortized exchange difference is carried in the Balance Sheet as "Foreign Currency Monetary Item Translation Difference Account" net of the tax effect thereon, where applicable.
Non monetary foreign currency items are carried at cost.
l) Investments:
Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments. All other investments are classified as long term investments. On initial recognition, all investments are made at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerages, fees and duties. Current investments are carried in the financial statements at the lower of cost or quoted / fair value, determined on an individual investment basis. Long term Investments are stated at cost. However provision for diminution in the value of Long Term investments is made only if such a decline is other than temporary. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.
m) Employee Benefits:
Contribution to "Defined Contribution Schemes" such as Provident Fund is charged to the profit and loss account as incurred. Provident Fund contribution is made to the Government Administered Provident Fund. Company has no further obligation beyond this contribution charged in financial statement.
Company also provides for Retirement Benefits in the form of Gratuity. Such Benefits are provided for, based on valuation, as at the Balance Sheet date, made by independent actuaries. Company has taken Group Gratuity Policy of L.I.C. of India. Actuarial gains and loss in respect of Gratuity are charged to Profit & Loss Account.
Short term employee benefits including leave are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related services are rendered.
In respect of employee stock options, the excess of fair price on the date of grant over the exercise price is recognized as deferred compensation cost amortized over the vesting period.
n) Employee Share Based Payment:
The Company has constituted Employee Stock Option Plan - 2008. Employee Stock Option granted on 4th October, 2010 is accounted under ''Fair Value Method'' stated in the Guidance Note on Employee Share Based Payments issued by the Institute of Chartered Accountants of India.
o) Borrowing Costs:
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing Costs directly attributable and identifiable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. A qualifying asset is one that required substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Profit & Loss Account as period costs.
p) Leases:
Where the Company is the lessee,
Leases where the lesser effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.
q) Earnings per share (EPS):
Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of Equity Shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted average number of Equity Shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
r) Income Taxes:
Tax Expenses comprise Current Tax and Deferred Tax.
Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid in a year is charged to statement of profit and loss as current Tax. The company recognizes MAT Credit available as an assets only when and to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on "Accounting for Credit Available in respect of Minimum Alternative Tax under Income Tax Act, 1961", the said assets is created by way of credit to the statement of Profit and loss and shown as "MAT credit entitlement". The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the assets to the extent the company does not have convincing evidence that it will pay normal tax during the specified period.
Deferred Tax is recognized on timing difference being the differences between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. In situation where the company has unabsorbed depreciation or carry forward losses, all Deferred Tax Assets subject to the consideration of prudence are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized. The tax effect is calculated on the accumulated timing difference at year end based on the tax rates and laws enacted or substantially enacted on Balance Sheet date.
s) Provisions:
A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
t) Contingent Liabilities & Contingent assets:
Contingent liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events but is not recognized because (i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or (ii)a reliable estimate of the amounts of the obligation cannot be made. Contingent liabilities are not provided for and are disclosed by way of notes.
Contingent assets are neither recognized nor disclosed in the financial statement.
u) Derivative Contracts:
The Company uses derivative financial instrument, such as derivative option contract, interest rate swap contract, derivative contracts in the nature of foreign currency swaps, currency options, and forward contracts to take advantage of lower interest rate of foreign currency loan and the hedge the foreign exchange fluctuation. In accordance with the ICAI announcement , derivative contracts, other than forward contracts covered under AS 11, are marked to market on a portfolio basis, and the net loss if any after considering the offsetting effect of gain on the underlying hedged item, are charged to the statement of profit or loss. Net gain, if any, after considering the offsetting effect of loss on the underlying hedge item, is ignored.
In respect of derivative contracts, premium paid, gains/losses on settlement and provision for losses for cash flow hedges are recognized in the consolidated statement of profit and loss.
v) Sales Tax / VAT / WCT:
Sales Tax / VAT / WCT on construction contracts are accounted on accrual basis. The cost of material (inputs) is accounted at purchase cost net of Value added tax, wherever the company is eligible for credit. The Value Added Tax element of materials (inputs) is debited under the head "Loans and Advances" to the extent of eligibility of input credit.
w) Service Tax Input Credit:
Service tax input credit is accounted in the books, wherever the company is eligible, in the period in which the underlying service received and when there is no uncertainty in availing/utilizing the credits. Service tax input credit is is debited under the head "Loans and Advances".
x) Operating Cycle:
Operating cycle for the business activities of the company covers the duration of the specific projects/contract/product line/ service including the defect liability period wherever applicable and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective lines of business.
y) General:
Accounting policies not specifically referred to are consistent with generally accepted accounting principles.
Mar 31, 2014
A) Basis of Preparation
The Financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
b) Use of accounting Estimates:
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect
reported amount of assets and liabilities and disclosures relating to
contingent liabilities as at the reporting date of the financial
statements and amount of income and expenses during the year of
account. Example of such estimates includes contract costs expected to
be incurred to complete construction contracts, provision for doubtful
debts, income taxes etc. Management periodically assesses whether there
is an indication that an assets may be impaired and makes provision in
the account for any impairment losses estimated. Contingencies are
recorded when it is probable that a liabilities will be incurred and
the amount can be reasonably estimated. The management believes that
the estimates used in preparation of the financial statements are
prudent and reasonable. Future result could differ from those estimates
and the difference between actual results and the estimates are
recognised in the periods in which the results are known / materialise.
c) Inventories:
Stock of material, Spare-parts, Diesel oil is valued at the lower of
cost or net realizable value after providing any other losses, where
considered necessary. Cost is determined on first-in-first-out basis.
Cost includes all the charges in bringing the goods to the point of
use, including octroi and other levies, transit insurance and receiving
charges.
Work in progress is valued at contract rates.
d) Cash and Cash Equivalent:
Cash and cash equivalents for the purpose of cash flow statement
comprise cash at bank and in hand and short term investments with an
original maturity of three months or less from the date of acquisition.
e) Cash Flow Statement:
Cash flows are reported using the indirect method, whereby
profit/(loss) before extra-ordinary items and tax is adjusted for the
effects of transactions of non-cash nature. The cash flow from
operating, investing and financing activities of the Company are
segregated based on the available information.
f) Depreciation and Amortisation:
Depreciation is provided for all assets except for vehicles on
straight-line method and depreciation on vehicles is provided on
written down value method at the rates prescribed in schedule XIV to
the Companies Act, 1956.
Depreciation on assets sold, discarded or demolished during the year is
being provided at their respective rates on pro-rata up to the date on
which such assets are sold, discarded or demolished.
Intangible assets are amortised over their estimated useful life. The
estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation method is revised to reflect the changed pattern.Software
being Intangible Assets used at Head office and work-shop are amortised
over a period of three years and software used at Project sites are
amortised over the project completion period.
g) Recognition of contract revenue and expenses:
(i) In case of Item rate contracts Revenue is recognized over the life
of the contract using percentage completion method, on the basis of
physical measurement of work actually completed at the balance sheet
date.
(ii) In the case of lumpsum contracts, revenue is recognized on the
completion of milestones as specified in the contract or as identified
by the management.
(iii) An expected loss on construction contract is recognized as an
expense immediately when it is certain that the total contract costs
will exceed the total contract revenue.
(iv) Price escalation and other Claims and/or variations in the
contract work are included in contract revenue only when:
(a) Negotiations have reached at an advanced stage such that it is
probable that customer will accept the claim; and
(b) The amount that is probable will be accepted by the customer can be
measured reliably.
(v) Incentive payments, as per customer-specified performance
standards, are included in contract revenue only when:
(a) The contract is sufficiently advanced that it is probable that the
specified performance standards will be met; and
(b) The amount of the incentive payment can be measured reliably.
(vi) Site mobilization (Camp) Expenditure for site installation is
written off over the period of contract in proportion to the value of
work done.
(vii) Income and expenses of previous years up to Rs. 500000/- are
recognized in the current year as such. However income and expenses
over and above Rs. 500000/- of previous year are accounted for as Prior
Period item.
h) Other Income:
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
i) Fixed Assets (Tangible / Intangible):
Tangible Fixed Assets are valued at cost less accumulated depreciation.
Direct cost is inclusive of all expenditure of capital in nature
attributable to bring the fixed assets to working conditions, duties
and taxes, incidental expenses including interest relating to
acquisition and cost of improvements thereon are capitalized until
fixed assets are ready for use. Subsequent expenditure on fixed assets
after its purchase/completion is capitalised only if such expenditure
results in an increase in the future benefits from such asset beyond
its previously assessed standard of performance.
Intangible Fixed Assets are valued at cost less accumulated
amortization/ depletion. Direct cost is inclusive of all expenditure of
capital in nature attributable to bring the fixed assets to working
conditions, duties and taxes, incidental expenses including interest
relating to acquisition and cost of improvements thereon are
capitalized until fixed assets are ready for use.
j) Impairment of Assets:
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. On such indication, the recoverable amount of the assets is
estimated and if such estimation is less than its carrying amount, the
carrying amount is reduced to its recoverable amount. The recoverable
amount is the greater of the asset''s net selling price and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and
risks specific to the asset.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
k) Foreign Currency Transactions and Translations:
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of transactions or rates that
closely approximate the rate at the date of the transaction.
Monetary items denominated in foreign currencies at the year-end are
restated at year end rates. As the Company has adopted para 46A of
AS-11, the exchange differences arising on settlement / restatement of
long-term foreign currency monetary items are Capitalised as part of
the depreciable fixed assets. If such monetary items do not relate to
acquisition of depreciable fixed assets, the exchange difference is
amortised over the maturity period/up to the date of settlement of such
monetary items, whichever is earlier, and charged to the Statement of
Profit and Loss. The unamortised exchange difference is carried in the
Balance Sheet as "Foreign Currency Monetary Item Translation Difference
Account" net of the tax effect thereon, where applicable.
Non monetary foreign currency items are carried at cost.
l) Investments:
Trade Investments are the investments made to enhance the Company''s
business interest. Investments are either classified as Current or
Non-Current based on the management''s intention at the time of purchase
or Investment. Current investments are carried at the lower of cost or
quoted / fair value, computed category wise. Non-Current Investments
are stated at cost. Provision for diminution in the value of
Non-Current investments is made only if such a decline is other than
temporary.
m) Employee Benefits:
Contribution to "Defined Contribution Schemes" such as Provident Fund
is charged to the profit and loss account as incurred. Provident Fund
contribution is made to the Government Administered Provident Fund.
Company has no further obligation beyond this contribution charged in
financial statement.
Company also provides for Retirement Benefits in the form of Gratuity.
Such Benefits are provided for, based on valuation, as at the Balance
Sheet date, made by independent actuaries. Company has taken Group
Gratuity Policy of L.I.C. of India and Premium paid is recognized as
expenses when it is incurred. Actuarial gains and loss in respect of
Gratuity are charged to Profit & Loss Account.
Short term employee benefits including leave are recognized as an
expense at the undiscounted amount in the profit and loss account of
the year in which the related services are rendered.
In respect of employee stock options, the excess of fair price on the
date of grant over the exercise price is recognized as deferred
compensation cost amortised over the vesting period.
n) Employee Share Based payment:
The Company has constituted Employee Stock Option Plan - 2008. Employee
Stock Option granted on 4th October, 2010 is accounted under ''Fair
Value Method'' stated in the Guidance Note on Employee Share Based
Payments issued by the Institute of Chartered Accountants of India.
o) Borrowing Costs:
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost.
Cost in connection with the borrowing of the funds to the extent not
directly related to the acquisition of qualifying assets are charged to
the Statement of Profit and Loss over the tenure of the loan.
Borrowing Costs directly attributable and identifiable to the
acquisition or construction of qualifying assets are capitalized till
the date such qualifying assets are ready to be put to use. A
qualifying asset is one that required substantial period of time to get
ready for its intended use. All other borrowing costs are charged to
the Profit & Loss Account as period costs.
p) Earning per share (EPS):
Basic earnings per share are calculated by dividing the net profit for
the year attributable to equity shareholders by the weighted average
number of Equity Shares outstanding during the year.
For the purpose of calculating diluted earning per share, the net
profit for the year attributable to equity shareholders and the
weighted average number of Equity Shares outstanding during the year
are adjusted for the effects of all dilutive potential equity shares.
q) Income Taxes:
Tax Expenses comprise Current Tax and Deferred Tax.
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid in a year is charged to statement of
profit and loss as current Tax. The company recognizes MAT Credit
available as an assets only when & to the extent that there is
convincing evidence that the company will pay normal income tax during
the specified period, i.e. the period for which MAT credit is allowed
to be carried forward. In the year in which the Company recognizes MAT
credit, the said assets is created by way of credit to the statement of
Profit and loss and shown as "MAT credit entitlement". The Company
reviews the "MAT credit entitlement" asset at each reporting date and
writes down the assets to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
Deferred Tax is recognized on timing difference being the differences
between the taxable incomes and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
In situation where the company has unabsorbed depreciation or carry
forward losses, all Deferred Tax Assets subject to the consideration of
prudence are recognized and carried forward only to the extent that
there is a reasonable certainty that sufficient future taxable income
will be available against which such Deferred Tax Assets can be
realized. The tax effect is calculated on the accumulated timing
difference at the year end based on the tax rates and laws enacted or
substantially enacted on Balance Sheet date.
r) Provisions:
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
s) Contingent Liabilities & contingent assets:
Contingent liabilities are not provided for and are disclosed by way of
notes. Contingent assets are neither recognized nor disclosed in the
financial statement.
t) Recognition of receipt on joint venture contracts:
In case of Construction Contracts received in the name of joint
ventures the income and expenditure are included in financial
statements of the company to the extent of share of the company in the
joint ventures.
u) Derivative Contracts:
The Company enters into derivative contracts in the nature of foreign
currency swaps, currency options, and forward contracts with an
intention to hedge its existing assets and liabilities, firm
commitments and highly probable transactions in foreign currency.
Derivative contracts which are closely linked to the existing assets
and liabilities are accounted as per the policy stated for Foreign
Currency Transactions and Translations.
All the derivative contracts are marked-to-market and losses are
recognised in the Statement of Profit and Loss. Gains arising on the
same are not recognised until realised on grounds of prudence.
v) Insurance Claims:
Insurance claims are accounted for on the basis of claims
admitted/expected to be admitted and to the extent that there is no
uncertainty in receiving the claims.
w) Service Tax Input Credit:
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing/utilizing the credits.
x) Operating Cycle:
Operating cycle for the business activities of the company covers the
duration of the specific projects/contract/product line/ service
including the defect liability period wherever applicable and extends
up to the realization of receivables (including retention monies)
within the agreed credit period normally applicable to the respective
lines of business.
y) General:
Accounting policies not specifically referred to are consistent with
generally accepted accounting principles.
Mar 31, 2013
A) Basis of Preparaton
The Financial statements of the Company have been prepared in
accordance with the Generally Accepted Accountng Principles in India
(Indian GAAP) to comply with the Accountng Standards notfed under the
Companies (Accountng Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The fnancial statements
have been prepared on accrual basis under the historical cost
conventon. The accountng policies adopted in the preparaton of the
fnancial statements are consistent with those followed in the previous
year.
b) Use of accountng Estmates:
The preparaton of the fnancial statements in conformity with Indian
GAAP requires management to make estmates and assumptons that afect
reported amount of assets and liabilites and disclosures relatng to
contngent liabilites as at the reportng date of the fnancial statements
and amount of income and expenses during the year of account. Example
of such estmates includes contract costs expected to be incurred to
complete constructon contracts, provision for doubtul debts, income
taxes etc. Management periodically assesses whether there is an
indicaton that an assets may be impaired and makes provision in the
account for any impairment losses estmated. Contngencies are recorded
when it is probable that a liabilites will be incurred and the amount
can be reasonably estmated. The management believes that the estmates
used in preparaton of the fnancial statements are prudent and
reasonable. Future result could difer from those estmates and the
diference between actual results and the estmates are recognised in the
periods in which the results are known / materialise.
c) Inventories:
Stock of material, Spare-parts, Diesel oil is valued at the lower of
cost or net realizable value afer providing any other losses, where
considered necessary. Cost is determined on frst-in-frst-out basis.
Cost includes all the charges in bringing the goods to the point of
use, including octroi and other levies, transit insurance and receiving
charges.
Work in progress is valued at contract rates.
d) Cash and Cash Equivalent:
Cash and cash equivalents for the purpose of cash fow statement
comprise cash at bank and in hand and short term investments with an
original maturity of three months or less from the date of acquisiton.
e) Cash Flow Statement
Cash fows are reported using the indirect method, whereby proft/(loss)
before extra-ordinary items and tax is adjusted for the efects of
transactons of non-cash nature. The cash fow from operatng, investng
and fnancing actvites of the Company are segregated based on the
available informaton.
f) Depreciaton and Amortsaton
Depreciaton is provided for all assets except for vehicles on
straight-line method and depreciaton on vehicles is provided on writen
down value method at the rates prescribed in schedule XIV to the
Companies Act, 1956.
Depreciaton on assets sold, discarded or demolished during the year is
being provided at their respectve rates on pro-rata up to the date on
which such assets are sold, discarded or demolished.
Intangible assets are amortsed over their estmated useful life. The
estmated useful life of the intangible assets and the amortsaton period
are reviewed at the end of each fnancial year and the amortsaton method
is revised to refect the changed patern.Sofware being Intangible Assets
used at Head ofce and work-shop are amortsed over a period of three
years and sofware used at Project sites are amortsed over the project
completon period.
g) Recogniton of contract revenue and expenses:
(i) In case of Item rate contracts Revenue is recognized over the life
of the contract using proportonate completon method, on the basis of
physical measurement of work actually completed at the balance sheet
date
(ii) In the case of lumpsum contracts, revenue is recognized on the
completon of milestones as specifed in the contract or as identfed by
the management.
(iii) An expected loss on constructon contract is recognized as an
expense immediately when it is certain that the total contract costs
will exceed the total contract revenue.
(iv) Price escalaton and other Claims and/or variatons in the contract
work are included in contract revenue only when:
(a) Negotatons have reached at an advanced stage such that it is
probable that customer will accept the claim; and
(b) The amount that is probable will be accepted by the customer can be
measured reliably.
(v) Incentve payments, as per customer-specifed performance standards,
are included in contract revenue only when:
(a) The contract is sufciently advanced that it is probable that the
specifed performance standards will be met; and
(b) The amount of the incentve payment can be measured reliably.
(vi) Site mobilizaton (Camp) Expenditure for site installaton is writen
of over the period of contract in proporton to the value of work done.
(vii) Income and expenses of previous years up to Rs. 500000/- are
recognized in the current year as such. However income and expenses
over and above Rs. 500000/- of previous year are accounted for as Prior
Period item.
h) Other Income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
i) Fixed Assets (Tangible / Intangible)
Tangible Fixed Assets are valued at cost less accumulated depreciaton.
Direct cost is inclusive of all expenditure of capital in nature
atributable to bring the fxed assets to working conditons, dutes and
taxes, incidental expenses including interest relatng to acquisiton and
cost of improvements thereon are capitalized untl fxed assets are ready
for use. Subsequent expenditure on fxed assets afer its
purchase/completon is capitalised only if such expenditure results in
an increase in the future benefts from such asset beyond its previously
assessed standard of performance.
Intangible Fixed Assets are valued at cost less accumulated
amortzaton/depleton. Direct cost is inclusive of all expenditure of
capital in nature atributable to bring the fxed assets to working
conditons, dutes and taxes, incidental expenses including interest
relatng to acquisiton and cost of improvements thereon are capitalized
untl fxed assets are ready for use.
j) Impairment of Assets:
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indicaton of impairment based on internal/external
factors. On such indicaton, the recoverable amount of the assets is
estmated and if such estmaton is less than its carrying amount, the
carrying amount is reduced to its recoverable amount. The recoverable
amount is the greater of the asset''s net selling price and value in
use. In assessing value in use, the estmated future cash fows are
discounted to their present value using a pre-tax discount rate that
refects current market assessments of the tme value of money and risks
specifc to the asset.
Afer impairment, depreciaton is provided on the revised carrying amount
of the asset over its remaining useful life.
k) Foreign Currency Transactons and Translatons:
Transactons denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of transactons or rates that
closely approximate the rate at the date of the transacton.
Monetary items denominated in foreign currencies at the year-end are
restated at year end rates. As the Company has adopted para 46A of
AS-11, the exchange diferences arising on setlement / restatement of
long-term foreign currency monetary items are Capitalised as part of
the depreciable fxed assets. If such monetary items do not relate to
acquisiton of depreciable fxed assets, the exchange diference is
amortsed over the maturity period/up to the date of setlement of such
monetary items, whichever is earlier, and charged to the Statement of
Proft and Loss. The unamortsed exchange diference is carried in the
Balance Sheet as "Foreign Currency Monetary Item Translaton Diference
Account" net of the tax efect thereon, where applicable.
Non monetary foreign currency items are carried at cost.
l) Investments:
Trade Investments are the investments made to enhance the Company''s
business interest. Investments are either classifed as current or
long-term based on the management''s intenton at the tme of purchase or
Investment. Current investments are carried at the lower of cost or
quoted / fair value, computed category wise. Long Term Investments are
stated at cost. Provision for diminuton in the value of long-term
investments is made only if such a decline is other than temporary.
m) Employee Benefts:
Contributon to "Defned Contributon Schemes" such as Provident Fund is
charged to the proft and loss account as incurred. Provident Fund
contributon is made to the Government Administered Provident Fund.
Company has no further obligaton beyond this contributon charged in
fnancial statement.
Company also provides for Retrement Benefts in the form of Gratuity.
Such Benefts are provided for, based on valuaton, as at the Balance
Sheet date, made by independent actuaries. Company has taken Group
Gratuity Policy of L.I.C. of India and Premium paid is recognized as
expenses when it is incurred. Actuarial gains and loss in respect of
Gratuity are charged to Proft & Loss Account.
Short term employee benefts including leave are recognized as an
expense in the proft and loss account of the year in which the related
services are rendered.
In respect of employee stock optons, the excess of fair price on the
date of grant over the exercise price is recognized as deferred
compensaton cost amortsed over the vestng period.
n) Employee Share Based payment
The Company has consttuted Employee Stock Opton Plan - 2008. Employee
Stock Opton granted on 4th October, 2010 is accounted under ÂFair Value
Method'' stated in the Guidance Note on Employee Share Based Payments
issued by the Insttute of Chartered Accountants of India.
o) Borrowing Costs:
Borrowing costs include interest, amortsaton of ancillary costs
incurred and exchange diferences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost.
Cost in connecton with the borrowing of the funds to the extent not
directly related to the acquisiton of qualifying assets are charged to
the Statement of Proft and Loss over the tenure of the loan.
Borrowing Costs directly atributable and identfable to the acquisiton
or constructon of qualifying assets are capitalized tll the date such
qualifying assets are ready to be put to use. A qualifying asset is one
that required substantal period of tme to get ready for its intended
use. All other borrowing costs are charged to the Proft & Loss Account
as period costs.
p) Earning per share (EPS):
Basic earnings per share are calculated by dividing the net proft for
the year atributable to equity shareholders by the weighted average
number of Equity Shares outstanding during the year.
For the purpose of calculatng diluted earning per share, the net proft
for the year atributable to equity shareholders and the weighted
average number of Equity Shares outstanding during the year are
adjusted for the efects of all dilutve potental equity shares.
q) Income Taxes:
Tax Expenses comprise Current Tax and Deferred Tax.
Provision for current tax is made afer taking into consideraton benefts
admissible under the provision of the Income Tax Act, 1961.
Deferred Tax is recognized on tming diference being the diferences
between the taxable incomes and accountng income that originate in one
period and are capable of reversal in one or more subsequent periods.
In situaton where the company has unabsorbed depreciaton or carry
forward losses, all Deferred Tax Assets subject to the consideraton of
prudence are recognized and carried forward only to the extent that
there is a reasonable certainty that sufcient future taxable income
will be available against which such Deferred Tax Assets can be
realized. The tax efect is calculated on the accumulated tming
diference at the year end based on the tax rates and laws enacted or
substantally enacted on Balance Sheet date.
r) Impairment of Assets
The carrying values of assets at each balance sheet date are reviewed
for impairment. If any indicaton of impairment exists, the recoverable
amount of such assets is estmated and impairment is recognised, if the
carrying amount of these assets exceeds their recoverable amount. The
recoverable amount is the greater of the net selling price and their
value in use. Value in use is arrived at by discountng the future cash
fows to their present value based on an appropriate discount factor.
When there is indicaton that an impairment loss recognised for an asset
in earlier accountng period no longer exists or may have decreased,
such reversal of impairment loss is recognised in the Statement of
Proft and Loss, except in case of revalued assets.
s) Provisions:
A provision is recognized when an enterprise has a present obligaton as
a result of past event; it is probable that an outlow of resources will
be required to setle the obligaton, in respect of which a reliable
estmate can be made. Provisions are not discounted to its present value
and are determined based on best estmate required to setle the
obligaton at the balance sheet date. These are reviewed at each balance
sheet date and adjusted to refect the current best estmates.
t) Contngent Liabilites & contngent assets:
Contngent liabilites are not provided for and are disclosed by way of
notes. Contngent assets are neither recognized nor disclosed in the
fnancial statement
u) Recogniton of receipt on joint venture contracts:
In case of Constructon Contracts received in the name of joint ventures
the income and expenditure are included in fnancial statements of the
company to the extent of share of the company in the joint ventures.
v) Derivatve Contracts:
The Company enters into derivatve contracts in the nature of foreign
currency swaps, currency optons, and forward contracts with an intenton
to hedge its existng assets and liabilites, frm commitments and highly
probable transactons in foreign currency. Derivatve contracts which are
closely linked to the existng assets and liabilites are accounted as
per the policy stated for Foreign Currency Transactons and Translatons.
All the derivatve contracts are marked-to-market and losses are
recognised in the Statement of Proft and Loss. Gains arising on the
same are not recognised untl realised on grounds of prudence.
w) Insurance Claims
Insurance claims are accounted for on the basis of claims
admited/expected to be admited and to the extent that there is no
uncertainty in receiving the claims.
x) Service Tax Input Credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing/utlizing the credits.
y) Operatng Cycle
Operatng cycle for the business actvites of the company covers the
duraton of the specifc projects/contract/product line/ service
including the defect liability period wherever applicable and extends
up to the realizaton of receivables (including retenton monies) within
the agreed credit period normally applicable to the respectve lines of
business.
z) General:
Accountng policies not specifcally referred to are consistent with
generally accepted accountng principles.
Mar 31, 2012
A) Basis of preparation
The Financial Statements are based on historical cost convent on and
prepared in accordance with Generally Accepted Accounting Principles
(Indian GAAP) comprising the mandatory Accounting standards issued by
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956.
b) Use of Accounting estimates:
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect the
balance sheet of assets and Liabilities and disclosures relating to
contingent Liabilities as at the Reporting date of the financial statements
and amount of income and expenses during the year of account. Example
of such estimates includes contract costs expected to be incurred to
complete Construction contracts, provision for doubtful debts, income
taxes etc. Management periodically assesses whether there is an
indication that an assets may be impaired and makes provision in the
account for any impairment losses estimated. Contingencies are recorded
when it is probable that a Liabilities will be incurred and the amount
can be reasonably estimated. Actual result could differ from those
estimates.
c) recognition of contract revenue and expenses:
(i) In case of Item rate contracts Revenue is recognized on the basis
of physical measurement of work actually completed at the balance sheet
date.
(ii) In the case of lump sum contracts, revenue is recognized on the
Completion of milestones as specified in the contract or as identified by
the management.
(iii) An expected loss on Construction contract is recognized as an
expense immediately when it is certain that the total contract costs
will exceed the total contract revenue.
(iv) Price escalation and other Claims and/or variations in the contract
work are included in contract revenue only when:
(a) Negotiations have reached at an advanced stage such that it is
probable that customer will accept the claim; and
(b) The amount that is probable will be accepted by the customer can be
measured reliably.
(v) Incentive payments, as per customer-specified performance standards,
are included in contract revenue only when:
(a) The contract is sufficiently advanced that it is probable that the
specified performance standards will be met; and
(b) The amount of the incentive payment can be measured reliably.
(vi) Insurance claims are accounted for on cash basis.
(vii) Site mobilizaton (Camp) Expenditure for site installation is
written of over the period of contract in proportion to the value of work
done.
(viii) Income and expenses of previous years up to Rs. 500000/- are
recognized in the current year. However income and expenses over and
above Rs. 500000/- of previous year are accounted for as Prior Period
item.
(ix) Dividend income is accounted when the right to receive dividend is
established.
d) recognition of receipt on joint venture contracts:
In case of Construction Contracts received in the name of joint ventures
the income and expenditure are included in financial statements of the
company to the extent of share of the company in the joint ventures.
e) Fixed Assets and Depreciation:
(i) Tangible Fixed Assets are valued at cost less accumulated
Depreciation. Direct cost is inclusive of all expenditure of capital in
nature attributable to bring the fixed assets to working conditions, duties
and taxes, incidental expenses including interest relating to acquisition
and cost of improvements thereon are capitalized until fixed assets are
ready for use.
(ii) Intangible Fixed Assets are valued at cost less accumulated
amortzaton/depletion. Direct cost is inclusive of all expenditure of
capital in nature attributable to bring the fixed assets to working
conditions, duties and taxes, incidental expenses including interest
relating to acquisition and cost of improvements thereon are capitalized
until fixed assets are ready for use. Sofware being Intangible Assets
used at Head office and work-shop are amortised over a period of three
years and sofware used at Project sites are amortised over the project
Completion period.
(iii) Depreciation is provided for all assets except for vehicles on
straight-line method and Depreciation on vehicles is provided on written
down value method at the rates specified in schedule XIV to the
Companies Act, 1956, except Heavy Earthmoving Equipments, on which
higher rate has been charged.
(iv) Depreciation on assets sold, discarded or demolished during the
year is being provided at their respective rates on pro-rata up to the
date on which such assets are sold, discarded or demolished.
f) Impairment of Assets:
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. On such indication, the recoverable amount of the assets is
estimated and if such estimation is less than its carrying amount, the
carrying amount is reduced to its recoverable amount. The recoverable
amount is the greater of the asset's net selling price and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and risks
specific to the asset.
after impairment, Depreciation is provided on the revised carrying amount
of the asset over its remaining useful life.
g) Inventories:
(i) Stock of material, Spare-parts, Diesel oil is valued at cost or net
realizable value, whichever is less. Cost is determined on
first-in-first-out basis.
(ii) Work in progress is valued at contract rates.
h) Employee benefits:
(i) contribution to "defined contribution Schemes" such as Provident Fund
is charged to the profit and loss account as incurred. Provident Fund
contribution is made to the Government Administered Provident Fund.
Company has no further obligation beyond this contribution charged in
financial statement.
(ii) Company also provides for Retirement benefits in the form of
Gratuity. Such benefits are provided for, based on valuation, as at the
Balance Sheet date, made by independent actuaries. Company has taken
Group Gratuity Policy of L.I.C. of India and Premium paid is recognized
as expenses when it is incurred. Actuarial gains and loss in respect of
Gratuity are charged to profit & Loss Account.
(iii) Short term employee benefits including leave are recognized as an
expense in the profit and loss account of the year in which the related
services are rendered.
(iv) In respect of employee stock Options, the excess of fair price on
the date of grant over the exercise price is recognized as deferred
compensation cost amortised over the vesting period.
i) Investments:
Trade Investments are the investments made to enhance the Company's
business interest. Investments are either classified as current or
long-term based on the management's intention at the time of purchase or
Investment. Current investments are carried at the lower of cost or
quoted / fair value, computed category wise. Long Term Investments are
stated at cost. Provision for diminution in the value of long-term
investments is made only if such a decline is other than temporary.
j) Foreign Currency Transactions:
(i) Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of transactions.
(ii) Monetary items denominated in foreign currencies at the year end
are restated at year end rates. In case of items which are covered by
forward exchange contracts, the difference between the year end rate and
rate on the date of the contract is recognized as exchange difference
and charged to profit & Loss account and the premium or discount on
forward contracts is recognized over the life of the contract. Any
profit or loss arising on cancellation or renewal of such a forward
exchange contract is recognized as income or as expenses for the
period.
(iii) Non monetary foreign currency items are carried at cost.
(iv) Foreign currency transactions are recorded in the Reporting currency
either on settlement or on year end by applying to the foreign currency
amount the exchange rate between the Reporting currency and the foreign
currency at the date of the settlement or year end.
k) Derivative Contracts:
The Company uses Derivative contracts to hedge its risks. In respect of
Derivative contracts, premiums paid, gains / losses on settlement and
provision for losses for cash flow hedges are recognized in the
statement of profit and loss.
l) Borrowing Costs:
Borrowing Costs directly attributable and identifiable to the acquisition
or Construction of qualifying assets are capitalized till the date such
qualifying assets are ready to be put to use. A qualifying asset is one
that required substantial period of time to get ready for its intended
use. All other borrowing costs are charged to the profit & Loss Account
as period costs.
m) Income Taxes:
Tax Expenses comprise Current Tax and Deferred Tax.
Provision for current tax is made after taking into consideration benefits
admissible under the provision of the Income Tax Act, 1961.
Deferred Tax is recognized on timing difference being the differences
between the taxable incomes and Accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
In situation where the company has unabsorbed Depreciation or carry
forward losses, all Deferred Tax Assets subject to the consideration of
prudence are recognized and carried forward only to the extent that
there is a reasonable certainty that sufficient future taxable income
will be available against which such Deferred Tax Assets can be
realized. The tax effect is calculated on the accumulated timing
difference at the year end based on the tax rates and laws enacted or
substantially enacted on Balance Sheet date.
n) Provisions:
A provision is recognized when an enterprise has a present obligation as
a result of past event; it is probable that an outflow of resources will
be required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present value
and are determined based on best estimate required to settle the
obligation at the balance sheet date. These are reviewed at each balance
sheet date and adjusted to reflect the current best estimates.
o) Earning per share (EPS):
Basic earnings per share are calculated by dividing the net profit for
the year attributable to equity shareholders by the weighted average
number of Equity Shares outstanding during the year.
For the purpose of calculating diluted earning per share, the net profit
for the year attributable to equity shareholders and the weighted
average number of Equity Shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
p) Contingent Liabilities & contingent assets:
Contingent Liabilities are not provided for and are disclosed by way of
notes. Contingent assets are neither recognized nor disclosed in the
financial statement.
q) Cash and Cash Equivalent:
Cash and cash equivalents for the purpose of cash flow statement
comprise cash at bank and in hand and short term investments with an
original maturity of three months or less.
r) General:
Accounting policies not specifically referred to are consistent with
generally accepted Accounting principles.
Mar 31, 2011
A) Method of Accounting:
The Financial Statements are based on historical cost convention and
prepared in accordance with Generally Accepted Accounting Principles
(Indian GAAP) comprising the mandatory accounting standards issued by
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956.
b) Use of accounting Estimates:
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect
the balance sheet of assets and liabilities and disclosures relating to
contingent liabilities as at the reporting date of the financial
statements and amount of income and expenses during the year of
account. Example of such estimates includes contract costs expected to
be incurred to complete construction contracts, provision for doubtful
debts, income taxes etc. Management periodically assesses whether there
is an indication that an assets may be impaired and makes provision in
the account for any impairment losses estimated. Contingencies are
recorded when it is probable that a liabilities will be incurred and
the amount can be reasonably estimated. Actual result could differ from
those estimates.
c) Recognition of contract revenue and expenses:
i) Revenue from contract is recognized on the percentage completion
method based on billing schedules agreed with the client on a
progressive completion basis.
ii) An expected loss on construction contract is recognized as an
expense immediately when it is certain that the total contract costs
will exceed the total contract revenue.
iii) Price escalation and other Claims and/or variations in the
contract work are included in contract revenue only when:
a) Negotiations have reached an advanced stage such that it is probable
that customer will accept the claim; and
b) The amount that is probable will be accepted by the customer can be
measured reliably.
iv) Incentive payments, as per customer-specified performance standards,
are included in contract revenue only when:
a) The contract is sufficiently advanced that it is probable that the
specified performance standards will be met; and
b) The amount of the incentive payment can be measured reliably.
v) Insurance claims are accounted for on cash basis.
vi) Site mobilization (Camp) Expenditure for site installation is
written off over the period of contract in proportion to the value of
work done.
vii) Income and expenses of previous years up to Rs. 500000/- are
recognized in the same year. However income and expenses over and above
Rs. 500000/- are accounted for as Prior Period item, which are also
shown in a separate schedule in the financial statement.
viii) Dividend income is accounted when the right to receive dividend
is established.
d) Recognition of receipt on joint venture contracts:
In case of Construction Contracts received in the name of joint
ventures the income and expenditure are included in financial
statements of the company to the extent of share of the company in the
joint ventures.
e) Fixed Assets and Depreciation:
i) Fixed Assets are valued at cost less accumulated depreciation.
Direct cost is inclusive of all expenditure of capital in nature
attributable to bring the fixed assets to working conditions, duties
and taxes, incidental expenses including interest relating to
acquisition and cost of improvements thereon are capitalized until
fixed assets are ready for use.
ii) Depreciation is provided for all assets except for vehicles on
straight-line method and depreciation on vehicles is provided on
written down value method at the rates specified in schedule XIV to the
Companies Act, 1956, except Heavy Earthmoving Equipments, on which
higher rate has been charged.
iii) Depreciation on assets sold, discarded or demolished during the
year is being provided at their respective rates on pro-rata up to the
date on which such assets are sold, discarded or demolished.
iv) Software used at Head Office and work-shop are amortised over a
period of three years and software used at Project sites are amortised
over the project completion period.
f) Impairment of Assets:
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. On such indication, the recoverable amount of the assets is
estimated and if such estimation is less than its carrying amount, the
carrying amount is reduced to its recoverable amount. The recoverable
amount is the greater of the asset's net selling price and value in
use. In assessing value in use, the estimated future cash fows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and risks
specific to the asset.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
g) Value of Inventories:
i) Stock of material, Spare-parts, Diesel oil is valued at cost or net
realizable value, whichever is less. Cost is determined on
frst-in-frst-out basis.
ii) Work in progress is valued at contract rate.
h) Retirement Benefts:
i) Contribution to "Defined Contribution Schemes" such as Provident Fund
is charged to the Profit and loss account as incurred. Provident Fund
contribution is made to the Government Administered Provident Fund.
Company has no further obligation beyond this contribution charged in
financial statement.
ii) Company also provides for Retirement Benefts in the form of
Gratuity. Such Benefts are provided for, based on valuation, as at the
Balance Sheet date, made by independent actuaries. Company has taken
Group Gratuity Policy of L.I.C. of India and Premium paid is recognized
as expenses when it is incurred. Actuarial gains and loss in respect of
Gratuity are charged to Profit & Loss Account.
iii) Leave encashment is paid to employees on annual basis and
recognized as expenses when it is accured.
i) Investments:
Current investments are carried at the lower of cost or quoted / fair
value, computed category wise. Long Term Investments are stated at
cost. Provision for diminution in the value of long-term investments is
made only if such a decline is other than temporary.
j) Foreign Currency Transactions:
i) Initial Recognition
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.
ii) Imported Machinery spare parts, Diesel and Raw materials are
recorded at the exchange rate prevailing on the date of transaction and
exchange rate difference arises on account of payment and foreign
currency rate on balance-sheet date are charged/credited to Profit &
Loss Account.
iii) In case of advance received in foreign currency for construction
projects in India, the exchange rate difference arises on account of
repayment of advances received from customers are debited to foreign
exchange rate difference and charged to Profit & Loss Account.
iv) Any foreign currency exchange rate difference arises on account of
deemed exports are debited to foreign exchange rate difference account
and charged to Profit and Loss Account.
v) Exchange rate difference arising on account of payment made during
current year for outstanding liability as on last day of previous
financial year on account of imported spare parts & Raw materials are
debited/credited to foreign exchange rate difference account and
charged/credited to Profit & Loss Account.
vi) In case of items which are covered by forward exchange contracts,
the difference between the year end rate and rate on the date of the
contract is recognized as exchange difference and the premium or
discount on forward contracts is recognized over the life of the
contract. Any Profit or loss arising on cancellation or renewal of such
a forward exchange contract is recognised as income or as expenses for
the period.
k) Borrowing Costs:
Borrowing Costs directly attributable and identifable to the
acquisition or construction of qualifying assets are capitalized till
the date such qualifying assets are ready to be put to use. A
qualifying asset is one that required substantial period of time to get
ready for its intended use. All other borrowing costs are charged to
the Profit & Loss Account as period costs.
l) Income Taxes:
Tax Expenses comprise Current Tax and Deferred Tax.
Provision for current tax is made after taking into consideration
benefts admissible under the provision of the Income Tax Act, 1961.
Deferred Tax is recognized on timing difference being the differences
between the taxable incomes and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
Deferred Tax Assets subject to the consideration of prudence are
recognized and carried forward only to the extent that there is a
reasonable certainty that sufficient future taxable income will be
available against which such Deferred Tax Assets can be realized. The
tax effect is calculated on the accumulated timing difference at the
year end based on the tax rates and laws enacted or substantially
enacted on Balance Sheet date.
m) Provisions:
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outfow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
n) Earning per share (EPS):
In carrying at the EPS, the company's net Profit after tax, computed in
terms of the Indian GAAP, is divided by the weighted average number of
Equity Shares outstanding on the last day of the reporting period. In
determining EPS, the company considers the net Profit after tax and it
includes the short provision of current tax and deferred tax of earlier
year and the exceptional item. The EPS thus arrived is known as Basic
EPS. To arrive at diluted EPS, net Profit after tax, refereed as above
is increased by the amount of dividend, interest and other expenses
that will be saved and reduced by the amount of income that will cease
to accrue, on the conversion of the dilutive potential equity shares,
is divided by average number of Equity Shares as computed above and
weighted number average of Equity Share that could have been issued on
conversion of shares/warrants having potentials dilute effect subject
to the terms of the issue of those potential shares. The amounts of
dividends, interest and other expenses or income are adjusted for any
attributable taxes. The date of issue of such potential shares
determined the amount of the weighted average number of potential
shares.
0) Contingent Liabilities & contingent assets:
Contingent liabilities are not provided for and are disclosed by way of
notes. Contingent assets are neither recognized nor disclosed in the
financial statement.
p) Cash and Cash Equivalent:
Cash and cash equivalents for the purpose of cash fow statement
comprise cash at bank and in hand and short term investments with an
original maturity of three months or less.
q) General:
Accounting policies not specifically referred to are consistent with
generally accepted accounting policies.
Mar 31, 2010
A) Method of Accounting:
The Financial Statements are based on historical cost convention and
prepared in accordance with Generally Accepted Accounting Principles
(Indian GAAP) comprising the mandatory accounting standards issued by
the Institute of Chartered Accountants of India and the provisions of
the Companies Act, 1956.
b) Use of accounting Estimates:
The preparation of the financial statements in conformity with Indian
GAAP requires management to make estimates and assumptions that affect
the balance sheet of assets and liabilities and disclosures relating to
contingent liabilities as at the reporting date of the financial
statements and amount of income and expenses during the year of
account. Example of such estimates includes contract costs expected to
be incurred to complete construction contracts, provision for doubtful
debts, income taxes etc. Management periodically assesses wheather
there is an indication that an assets may be impaired and makes
provision in the account for any impairment losses estimated.
Contingencies are recorded when it is probable that a liabilities will
be incurred and the amount can be reasonably estimated. Actual result
could differ from those estimates.
c) Recognition of contract revenue and expenses:
i) Revenue from contract is recognized on the percentage completion
method based on billing schedules agreed with the client on a
progressive completion basis.
ii) An expected loss on construction contract is recognized as an
expense immediately when it is certain that the total contract costs
will exceed the total contract revenue.
iii) Price escalation and other Claims and/or variations in the
contract work are included in contract revenue only when:
a) Negotiations have reached an advanced stage such that it is probable
that customer will accept the claim; and
b) The amount that is probable will be accepted by the customer can be
measured reliably.
iv) Incentive payments, as per customer-specified performance
standards, are included in contract revenue only when:
a) The contract is sufficiently advanced that it is probable that the
specified performance standards will be met; and
b) The amount of the incentive payment can be measured reliably. v)
Insurance claims are accounted for on cash basis.
vi) Site mobilization (Camp) Expenditure for site installation is
written off over the period of contract in proportion to the value of
work done. vii) Income and expenses of previous years up to Rs.
10000/- are recognized in the same year. However income and expenses
over and above Rs. 10000/- are accounted for as Prior Period item,
which are also shown in a separate schedule in the financial statement.
viii) Dividend income is accounted when the right to receive dividend
is established.
d) Recognition of receipt on joint venture contracts:
In case of Construction Contracts received in the name of joint
ventures the income and expenditure are included in financial
statements of the company to the extent of share of the company in the
joint ventures.
e) Fixed Assets and Depreciation:
i) Fixed Assets are valued at cost less accumulated depreciation.
Direct cost is inclusive of all expenditure of capital in nature
attributable to bring the fixed assets to working conditions, duties
and taxes, incidental expenses including interest relating to
acquisition and cost of improvements thereon are capitalized until
fixed assets are ready for use.
ii) Depreciation is provided for all assets except for vehicles on
straight-line method and depreciation on vehicles is provided on
written down value method at the rates specified in schedule XIV to the
Companies Act, 1956, except Heavy Earthmoving Equipments, on which
higher rate has been charged.
iii) Depreciation on assets sold, discarded or demolished during the
year is being provided at their respective rates on pro-rata up to the
date on which such assets are sold, discarded or demolished.
iv) Software used at Head office and work-shop are amortised over a
period of three years and software used at Project sites are amortised
over the project completion period.
f) Impairment of Assets:
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of carrying amount of companyÃs
fixed assets. If any indication exists, the recoverable amount is
estimated. An impairment loss is recognized whenever the carrying
amount of an asset exceeds its recoverable value.
An impairment loss is charged to profit and loss account in the year in
which an asset is identified as impaired. The impairment loss
recognized in prior accounting year is reversed if there has been a
change in the estimate of recoverable amount.
g) Value of Inventories:
i) Stock of material, Spare-parts, Diesel oil is valued at cost or net
realizable value, whichever is less. Cost is determined on
first-in-first-out basis.
ii) Work in progress is valued at contract rate.
h) Retirement Benefits:
i) Contribution to ÃDefned Contribution Schemesà such as Provident Fund
is charged to the profit and loss account as incurred. Provident Fund
contribution is made to the Government Administered Provident Fund.
Company has no further obligation beyond this contribution charged in
financial statement.
ii) Company also provides for Retirement Benefits in the form of
Gratuity. Such Benefits are provided for, based on valuation, as at the
Balance Sheet date, made by independent actuaries. Company has taken
Group Gratuity Policy of L.I.C. of India and Premium paid is recognized
as expenses when it is incurred. Actuarial gains and loss in respect of
Gratuity are charged to Profit & Loss Account.
iii) Leave encashment is paid to employees on annual basis and
recognized as expenses when it is incurred.
i) Investments:
Current investments are carried at the lower of cost or quoted / fair
value, computed category wise. Long Term Investments are stated at
cost. Provision for diminution in the value of long-term investments is
made only if such a decline is other than temporary.
j) Foreign Currency Transactions:
i) Imported Machinery spare parts, Diesel and Raw materials are
recorded at the exchange rate prevailing on the date of transaction and
exchange rate difference arises on account of payment and foreign
currency rate on balance-sheet date are charged/credited to Profit &
Loss Account.
ii) In case of advance received in foreign currency for construction
projects in India, the exchange rate difference arises on account of
repayment of advances received from customers are debited to foreign
exchange rate difference and charged to Profit & Loss Account.
iii) Any foreign currency exchange rate difference arises on account of
deemed exports are debited to foreign exchange rate difference account
and charged to Profit and Loss Account.
iv) Exchange rate difference arising on account of payment made during
current year for outstanding liability as on last day of previous
financial year on account of imported spare parts & Raw materials are
debited/credited to foreign exchange rate difference account and
charged/credited to Profit & Loss Account.
v) In case of items which are covered by forward exchange contracts,
the difference between the year end rate and rate on the date of the
contract is recognized as exchange difference and the premium or
discount on forward contracts is recognized over the life of the
contract. Any profit or loss arising on cancellation or renewal of such
a forward exchange contract is recognised as income or as expenses for
the period.
k) Borrowing Costs:
Borrowing Costs directly attributable and identifiable to the
acquisition or construction of qualifying assets are capitalized till
the date such qualifying assets are ready to be put to use. A
qualifying asset is one that required substantial period of time to get
ready for its intended use. All other borrowing costs are charged to
the Profit & Loss Account as period costs.
l) Income Taxes:
Tax Expenses comprise Current Tax and Deferred Tax.
Provision for current tax is made after taking into consideration
benefits admissible under the provision of the Income Tax Act, 1961.
Deferred Tax is recognized on timing difference being the differences
between the taxable incomes and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
Deferred Tax Assets subject to the consideration of prudence are
recognized and carried forward only to the extent that there is a
reasonable certainty that suffcient future taxable income will be
available against which such Deferred Tax Assets can be realized. The
tax effect is calculated on the accumulated timing difference at the
year end based on the tax rates and laws enacted or substantially
enacted on Balance Sheet date.
m) Provisions:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
event and it is probable that there will be outflow of resources.
n) Earning per share (EPS):
In carrying at the EPS, the companyÃs net profit after tax, computed in
terms of the Indian GAAP, is divided by the weighted average number of
Equity Shares outstanding on the last day of the reporting period. In
determining EPS, the company considers the net profit after tax and it
includes the short provision of current tax and deferred tax of earlier
year and the exceptional item. The EPS thus arrived is known as Basic
EPS. To arrive at diluted EPS, net profit after tax, refereed as above
is increased by the amount of dividend, interest and other expenses
that will be saved and reduced by the amount of income that will cease
to accrue, on the conversion of the dilutive potential equity shares,
is divided by average number of Equity Shares as computed above and
weighted number average of Equity Share that could have been issued on
conversion of shares/warrants having potentials dilute effect subject
to the terms of the issue of those potential shares. The amounts of
dividends, interest and other expenses or income are adjusted for any
attributable taxes. The date of issue of such potential shares
determined the amount of the weighted average number of potential
shares.
o) Contingent Liabilities & contingent assets:
Contingent liabilities are not provided for and are disclosed by way of
notes. Contingent assets are neither recognized nor disclosed in the
financial statement.
p) General:
Accounting policies not specifically referred to are consistent with
generally accepted accounting policies.
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