Accounting Policies of Samay Project Services Ltd. Company

Mar 31, 2024

NATURE OF OPERATIONS:

SAMAY Project Services Private Limited is a Private Limited Company with registered office at No.l218, 17^th street, West End Colony, Mogappair, Chennai - 600 050.

Samay Project Services Private Limited is in the business of supply/sale of Firefighting Equipment, components, pipeline material and also in erecting and commissioning of fire fighting systems both as EPC operator and as turnkey contractor.

1. Disclosure of Accounting Policies:

The financial Statements of the Company are prepared under the historical cost convention, on accrual basis of accounting on a going concern basis to comply in all material respects with the Generally Accepted Accounting Principles in India to comply with the Accounting Standards notified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act. The accounting policies have been consistently applied by the Company and are consistent with those used in previous year unless and other wise specifically indicated. For recognition of income and expenses, accrual basis of accounting is followed.

2. Use of Estimates:

The presentation of financial statements in conformity with generally accepted accounting principles require estimates and assumptions to be made by the management that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates and the associated assumption are based upon management’s best knowledge, historical experience, other facts that are considered to be relevant and also based on the inputs obtained from internal and external sources, of current events and actions, actual results could differ from these estimates. The Estimates and the underlying assumptions are reviewed on an ongoing basis. Significant judgments and estimates about the carrying amount of assets and liabilities include useful lives of tangible and intangible assets, impairment of tangible assets, intangible assets which may include goodwill, investments, employee benefits and other provisions and recoverability of differed tax assets. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Any differences arising between the actual figures and estimates are recognized in the period in which the result becomes known or the events materialize.

3. Revenue recognition:

Revenue is recognized as under:

Domestic Sales: Revenue in respect of Sales of equipment, material, pipe lines etc is recognized when such equipment, material, pipelines etc as per specifications are delivered at client/customer site and the same are accepted by the client/customer. That is, at the point when the seller has transferred the rights and property in the goods to the buyer for a consideration and when all significant risks and rewards of ownership have been transferred to the buyer and the seller retains no effective control of goods so transferred to a degree usually associated with the ownership and when no significant uncertainty exists regarding the amount of consideration that will be derived from the sale of goods. At this point of time an invoice is raised and the sale recognized. But as per terms of sale agreed a portion of the invoice value will be retained by the buyer for certain period till all quality checks are carried out. This retention period and the percentage of amount to be retained depend on the terms negotiated. Nevertheless, the entire amount as per invoices raised is accounted as income which includes the retention money agreed to be retained and the entire invoice value is recognized as income and this method is being followed consistently from many years.

Export Sales: Revenue in respect of Sales of equipment, material, pipes etc is recognized when such equipment, material, pipes etc as per specifications are delivered at port and treated as constructive delivery and income recognized.

This retention money receivable is segregated and shown separately as retention money under the head short term loans and advances. This has been done with a view to adopt better disclosure norms. This accounting of the amounts differently does not have any effect on the profitability or on the Balance Sheet.

in case of installations and erection works, revenue is recognized based on the terms of the agreement and by reference to stage of completion of the installation or erection work. The work for which check measurement is done, and accepted by the client, progressive invoices raised and accepted by the customer are accounted as income at the point of acceptance of the invoices as the risk and rewards generally associated with such work are passed on to the customer when the invoices are accepted. In other cases where work is executed and check measured and measurements accepted by client but no invoices are raised or could not be raised, depending upon the stage of execution of the work and as per the estimate of the site engineers, the cost of such portion of work is taken as work in progress and is accordingly dealt in the accounts. In this case also the retention money involved is accounted as per invoices raised as revenue. For better disclosure purposes this amount is segregated and shown separately as in the case of sales and this will not have any effect either on the profit or on the Balance Sheet.

Discounts receivable is recognized as and when the supplier grants the same and a right accrues to the company for claiming the same or at the point when payment is received for such discount or when such discount is adjusted against payments to be made to such supplier of goods.

Interest and commission are recognized on a time proportion basis, taking in to account the amount outstanding and the rates applicable. In cases where the receipt is doubtful the income is not recognized till such time that such eventuality is removed as prudence and as per the income recognition norms of AS-9.

In case of interest on refunds the same is recognized as and when orders are passed quantifying the interest payable on such refunds by respective authorities.

Miscellaneous income and income on sale of scrap is recognized as and when such income is received.

4. Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any directly attributable costs of bringing the asset to its working condition for intended use. The cost also includes all the indirect expenses incurred during project implementation time that are allocated to such assets till such time they are brought to working condition for intended use. Financing costs relating to the acquisition of fixed asset are also included to the extent they relate to the period till such assets are ready for the intended use.

5. Impairment of Assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to Statement of profit and loss in the year in which the asset is identified as impaired. The impairment loss

recognized in prior accounting periods is reversed if there has been a change in the estimate of the recoverable amount. No impairment is recognized in this year and hence no provision is required to be made.

6. Depreciation:

Depreciation has been provided as laid down in schedule II of the Companies act, 2013. Depreciation on tangible assets is provided on Written down value at rates arrived at as per the provisions of Schedule II and the guidance note of ICAI issued thereon. The residual estimated life of the assets is arrived at taking the life of the assets as given in part “C” to the Schedule II of the Companies Act, 2013 in to account. Depreciation is charged by WDV method. Depreciation on the asset Purchased or Sold during the year are proportionately charged.

Intangible assets if any are depreciated on amortized on straight ling method over a period often year as laid down in schedule II of the Companies Act, 2013.

7. Borrowing costs:

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of such assets. A qualifying asset is the one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as expenses in the period in which they are incurred.

8. Leases:

There are no leased assets or assets taken on lease and hence accounting for leases and disclosures pertaining to the recognition are not applicable hence no further disclosures are required ti be made as per AS19.

9. Investments:

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined for each category of such investment. Long term investments are carried at cost. However, no provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. The investments in subsidiaries Joint ventures are shown at cost as they are long term investments.

10. Inventories:

Inventories are valued at cost or realizable value whichever is lower on FIFO basis. Closing stock as at the end of the financial year is arrived at by physical verification also. On such physical verification the differences if any that arise between physical verified figures and the book stocks such differences are dealt with accordingly in the accounts. All traded stock items are valued at cost price or net realizable value whichever is less on FIFO basis. All other items of inventory, consumables bought for the works are charged to the works directly and for such items no inventory is maintained and hence is not valued.

Work in progress with respect to the work completed to a particular stage and check measured and accepted by the customer but for which no invoice is raised is recognized taking in to account the terms of Contract, at estimated cost incurred to such stage of completion which is calculated based on the percentage of completion as certified by the site engineers or at realizable value whichever is lower. In case of works which are not check measured or accepted by the customer no value of work in progress is recognized.

11. Research and Development:

No expenditure is incurred on Research and Development by the company during the year or in earlier years and hence the disclosures under AS26 as this standard are not applicable to the company.

12. Retirement Benefits to the Employees:

The Company covers all the eligible employees under PF, ESI, Bonus, Mediclaim, and Gratuity as mentioned below.

EPF is paid to all employees working in the Company except employee/s in probation period/or aged above 60 years. Sub-contractor employees in few project sites are also to be covered in this scheme. Majority of the sub-contractors have enrolled for PF and are submitting the PF records to the company

With respect to ESI, all employees excepting those under probation and those who are not on the roll for more than 6 months are covered. Majority of the sub-contractors have enrolled for ESI and are submitting payment records to the company. Mediclaim Insurance is provided to all employees other than those covered under ESI. Workmen Compensation is provided for the subcontractor employees in those project sites.

The Company operates Group Gratuity Plan for employees. The cost of providing defined benefits is determined using the Projected Unit Credit Method with actuarial valuations being carried out at each reporting date. The defined benefit obligations recognized in the Balance Sheet represent the present value of the defined benefit obligations as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative defined benefit obligations resulting from this calculation) is recognized representing the present value of available refunds and reductions in future contributions to the plan. The entire liability towards gratuity is considered as current as the company is expected to contribute this amount to the gratuity fund within the next twelve months.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. The Group presents the leave as a current liability in the balance sheet; to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date

The minimum amount of bonus payable is equated for twelve month and is paid added to monthly salary. Additional bonus is considered based on profitability and cash flow of the Company for the year. Temporary employees are not covered under this scheme as the attrition is high and they seldom stay with the Company for more than 5 or 6 months.

To this extent AS 15(Revised) is followed by the company.

13. Foreign Currency Transaction

Income and expenses in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities other than net investments in non-integral foreign operations are translated at the exchange rate prevailing on the balance sheet date. Exchange difference arising on a monetary item that in substance, forms part of an enterprise’s net investments in a non-integral foreign operation are accumulated in a foreign currency translation reserve. Premium or discount on forward exchange contracts and currency option contracts are amortized and recognized in the Statement of profit and loss over the period of the contract. Forward exchange contracts and currency option contracts outstanding at the Balance Sheet dates, other than designated cash flow hedges, are stated at fair value and any gains or losses are recognized in the Statement of profit and loss.

14. Accounting for taxes:

Tax expenses charged to Statement of profit and loss comprises of Income tax and deferred tax. The deferred tax is recognized for all temporary differences subject to the consideration of prudence and at currently available rates. Deferred tax assets are recognized only if there is virtual certainty that they will be realized.

15. Segment Reporting

The Company as EPC contractor has only one segment of operations. Thus, all the activities both selling and contract are treated as falling under one segment namely EPC and hence no further disclosures are required. The Company has one contract undertaken in South Africa which is not treated as a separate and distinguishable segment or operation. Hence segment reporting is not applicable to the company. Though not applicable for disclosure purpose, the details of particulars from such foreign contract operations are given for disclosure purposes for the users of the financial statements as follows:

South Africa Operations: (Rs. in hundreds)

Income: Rs. 1,89,251

Expenses: Rs.75,436

Profit: Rs.1,13,815

Assets: Rs. 1,36,592

Liabilities: Nil

16. Related party disclosures:

The related party relationships and or transactions with them have been identified in accordance with the related accounting standard and are reported else where in the notes on accounts. The required disclosures are given in the notes on account.

17. Earnings per Share

The paid-up share capital of the company consists of only one class of shares and there are no other coupons, convertible bonds, ESOPs issued and as such both the basic earnings and diluted earnings will be the same and the earnings are mentioned in the Statement of Profit and Loss. But as fresh capital issued will be taken in to account based on the timing of such issue and the weighted average for equity calculated and the earning per share arrived at based on such weighted average equity.

18. Cash Flow Statement:

Cash Flow Statement is prepared under the Indirect Method as set out in the Accounting Standard 3 on Cash Flow Statements. Cash and cash equivalents in the Cash Flow Statement comprise Cash at bank and in hand, demand deposits and cash equivalents which are short-term and held for the purpose of meeting short-term cash commitments.

19. Provisions, contingent Liabilities and Contingent Assets:

Provisions are recognized when the Company has present legal or constructive obligation, as a result of past events, for which 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 for the amount of obligation.

¦Contingent liability is recognized and disclosed only when there is a possible obligation, as a result of past events, the existence of which will be confirmed only by the occurrence, or non occurrence of one or more future uncertain events not wholly within the control of the enterprise.

Contingent assets are possible assets that arise from past events, the existence of which will be confirmed by the occurrence or non occurrence of one or more uncertain future events, not wholly within the control of the enterprise.

Contingent assets are neither recognized nor disclosed in the Financial Statements.

20. Net Profit/Loss of the Prior Period and Prior Period Items:

All items of income and expenditure pertaining to the period are included in arriving at the net profit or loss for the year, unless specifically mentioned elsewhere in the financial statements or is required by an accounting standard.

Prior year items & Extra Ordinary items are disclosed separately in the Statement of Profit and Loss and required note about the same is covered in notes on accounts.

21. Intangible Assets:

In Intangible assets are accounted at the consideration paid for acquisition of such asset and are carried at cost less accumulated amortization and Impairment.

22. Contingencies and events occurring after Balance Sheet date:

All events which fall under definition of significant events or considered as significant events which have occurred after the Balance Sheet date and which have a bearing on the operations of the Company or which have significant effect on the financial position of the Company will be disclosed separately and will be covered in notes on accounts and also will be disclosed in the report of the directors to the shareholders under appropriate head.

There are no significant events which have occurred after the Balance Sheet date which will have a bearing on the operations of the Company or which have significant effect on the financial position of the Company and hence no disclosures are required under AS 4.

23. Government Grants:

No grants of any kind are received by the Company except export incentives from the government which are treated as income on accrual basis and hence no disclosures under AS 12.

24. Discontinuing Operations:

There are no such operations during the year which the company is proposing to discontinue immediately or in coming periods. Hence no further disclosures are required as per AS24.