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Accounting Policies of Nitin Fire Protection Industries Ltd. Company
Mar 31, 2024
a Basis of accounting and preparation of Financial Statements:
Compliance with Indian Accounting Standards (Ind AS):
a) The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed by Ministry
of Corporate Affairs under Companies (Indian Accounting Standards) Rules, 2015, provisions of the Companies Act, 2013, to the extent notified
and pronouncements of the Institute of Chartered Accountants of India.
Disclosures under Ind AS are made only in respect of material items and in respect of the items that will be useful to the users of financial
statements in making economic decisions.
Pursuant to the commencement of Liquidation as per the provisions of Section 33 of the IBC 2016, The Management of the affairs of the
company is vested with the Liquidator and the powers of BOD stand suspended and be exercised by the Liquidator. The Certificate of Sale/ Sale
deed to transfer the company as a going concern is yet to happen. Certificate of Sale will be completed only on receipt of full consideration
from the successful bidder.
Thus, The financial statements have been prepared on going concern basis.
Functional and Presentation Currency:
These financial statements are presented in Indian rupees, which is the functional currency of the Company. All financial information presented
in Indian rupees has been rounded to the nearest Lakhs, except otherwise indicated.
Basis of measurement:
These Financial statements are prepared under the historical cost convention unless otherwise indicated.
Use of Estimates and Judgments:
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates and assumptions considered
in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year.
Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ
due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are
known/ materialise. Estimates and underlying assumptions are reviewed on an ongoing basis.
Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect
to the carrying amounts of assets and liabilities within the next financial year, are included in the accounting policies.
- Measurement of defined benefit obligations (Refer note 29.1)
- Measurement and likelihood of occurrence of provisions and contingencies (Refer note 37)
- Estimation of tax expenses and liability (Refer note 39)
- Useful lives of property, plant, equipment and intangibles (Refer note 3)
- Impairment of financial assets such as trade receivables (Refer note 8)
- Revenue recognition
b Revenue Recognition:
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty
and net of returns, trade allowances, rebates, value added taxes, Goods and Service Tax.
i) Sale of goods: Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed
to the buyer, usually on delivery of the goods. Revenue is measured net of returns, trade discounts and volume rebates. The timing of the
transfer of risks and rewards varies depending on the individual terms of the sales contract.
ii) Rendering of services : In contracts involving rendering of services, revenue is recognised in profit or loss in the proportion of the stage of
completion of the transaction at the reporting date and are measured net of sales tax, works contract tax, service tax and Goods and Service
Tax.
iii) Contract revenue
Contract revenue is recognised only to the extent of cost incurred till such time the outcome of the job cannot be ascertained reliably. When
the outcome of the contract is ascertained reliably contract revenue is recognised at cost of work performed on the contract plus proportionate
margin, using the percentage of completion method. Percentage of completion is the proportion of work performed to date to the total
estimated contract costs. The estimates of cost and progress of contracts are measured at each reporting date by the Management. The effect
of such changes to estimates is recognized in the period in which such changes are determined. The estimated cost of each contract is
determined based on the estimate of the cost to be incurred till the final completion of the contract and includes cost of materials, services,
and other related overheads. Any projected losses on contracts under execution are recognised in full when identified.
iv) Interest income
Interest income from debt instruments is recognised using the EIR method or proportionate basis. The effective interest rate is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial
asset. While calculating the effective interest rate, the Company estimated the expected cash flows by considering all the contractual terms of
the financial instrument (for example prepayment, extension, call and similar options( but doses not consider the expected credit losses.
c Property, Plant and Equipment, Depreciation and Impairment:
i) Property, Plant and Equipment:
Property, plant and equipment are measured at cost / deemed cost, less accumulated depreciation and impairment losses, if any. Cost of
Property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade
discounts and rebates, any directly attributable cost of bringing the asset to its working condition for its intended use and estimated
attributable costs of dismantling and removing the asset and restoring the site on which it is located.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to
the Statement of Profit and Loss during the reporting period in which they are incurred.
Gains or losses arising from derecognition of plant, property and equipment are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated
recoverable amount. Any gain or loss on disposal of an item of property, plant and equipment is recognised in Statement of Profit and Loss.
Depreciation on additions / disposals is provided on a pro-rata basis i.e. from / up to the date on which asset is ready for use / disposed of
The Company has elected to use the exemption available under Ind AS 101 to continue the carrying value for all of its Property, plant and
equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and used that as
its deemed cost as at the date of transition (April 01,2016).
The carrying values of Property, Plant and Equipment units at each Balance Sheet date are reviewed for impairment if any indication of
impairment exists.
ii) Depreciation:
Depreciation on Property, Plant and Equipment has been provided on written down value basis and manner prescribed in Schedule II to the Act.
Leasehold Land on a straight line basis over the period of lease.i.e.99 years.
Impact of Fixed Assets Valuation report
iii) Intangible Assets:
Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets
are amortised on a Straight Line Basis over their estimated useful lives.
The Company has elected to continue with the carrying value of all its intangible assets as recognised in the standalone financial statements as
at the date of transition to Ind AS, measured as per the previous GAAP and use that as the deemed cost as at the transition date pursuant to
the exemption under Ind AS 101.
iv) Capital work in progress:
Expenditure during the construction/ pre-operative period is included under Capital Work-in-Progress and same is allocated to the respective
Property, Plant and Equipment on the completion of project.
d Impairment of Assets:
i) Financial assets:
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (âECLâ) model for measurement and
recognition of impairment loss on the financial assets measured at amortised cost and debt instruments measured at FVOCI. Loss allowances on
trade receivables are measured following the âsimplified approachâ at an amount equal to the lifetime ECL at each reporting date. In respect of
other financial assets, the loss allowance is measured at 12 month ECL only if there is no significant deterioration in the credit risk since initial
recognition of the asset or asset is determined to have a low credit risk at the reporting date. The amount of ECLs (or reversal) that is required
to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in
Statement of Profit and Loss.
ii) Non-financial assets:
The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment if any indication of impairment
exists.
An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an assetâs fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or
groups of assets (cash generating units). The impairment loss is recognised as an expense in the Statement of Profit and Loss.
e Investment in subsidiaries and associates:
Investments that are readily realisable and intended to be held for not more than a year from the date on which such investments are made,
are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of
cost and fair value determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution
in value is made to recognise a decline, other than temporary, in the value of the long term investments.
The Company has elected to continue with the carrying value of all its equity investments in its subsidiaries and associates as recognized in the
financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as the deemed cost as at the
transition date pursuant to the exemption under Ind AS 101.
f Inventories:
i) Raw Materials and components are valued at lower of cost arrived on First In First Out method (FIFO) and Net Realisable Value. Cost of raw
materials comprises cost of purchases.
ii) Finished Goods are valued at lower of cost and net realisable value. Cost includes direct material, direct labour, excise duty and attributable
overheads.
Impact of Inventory Valuation Report
iii) Traded goods are valued at lower of cost and net realisable value. Cost includes cost of purchase and other costs incurred in bringing the
inventories to their present location and condition. Cost is determined on a FIFO basis.
Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
g Employee Benefits:
i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service are recognised in respect of employees services up to the end of the reporting period
and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit
obligations in the Balance Sheet.
ii) Other long-term employee benefit obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the
employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of
services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using
the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as
a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss.
The obligations are presented as current liabilities in the Balance Sheet if the Company does not have an unconditional right to defer
settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
iii) Post-employment obligations
The Company operates the following post-employment schemes:
(a) defined benefit plans such as gratuity; and
(b) defined contribution plans such as provident fund and Employee State Insurance Fund (ESIC).
Defined Benefit Plans - Gratuity obligations
The liability or asset recognised in the Balance Sheet in respect of defined benefit gratuity plans is the present value of the defined benefit
obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries
using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market
yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan
assets. This cost is included in employee Benefit expense in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the year in which
they occur, directly in other comprehensive income they are included in retained earnings in the Statement of changes in equity and in the
Balance Sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in
the Statement of Profit and Loss as past service cost.
- Defined contribution plan
The Company pays provident fund and ESIC contributions to publicly administered provident funds / ESIC as per local regulations. The Company
has no further payment obligations once The contributions have been paid. The contributions are accounted for as Defined contribution Plans
and The contributions are recognised as employee Benefit expense when they are due. Prepaid contributions are recognised as an asset to the
extent that a cash refund or a reduction in the future payments is available.
h Leases (where the Company is a lessee):
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease. At the inception or on
reassessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement
into those for the lease and those for the other elements on the basis of their relative fair values.
Leases of property, plant and equipment where the Company, as lessee, in which a significant portion of the risks and rewards of ownership are
not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to the Statement of Profit and Loss as per the terms of the lease or on a straight-line basis over the
period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs
expected inflationary cost increases.
i Borrowings:
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Statement of Profit and Loss over
the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction
costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the
draw down occurs.
Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired. The
difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in the Statement of Profit and Loss.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
j Borrowing Costs:
Borrowing costs consist of interest and transactions costs incurred in connection with the borrowing of funds. Borrowing costs may include
exchange differences to the extent regarded as an adjustment to the borrowing costs.
Borrowing costs that are attributable to the acquisition or construction of qualifying assets (i.e. an asset that necessarily takes a substantial
period of time to get ready for its intended use) are capitalized as a part of the cost of such assets. All other borrowing costs are charged to the
Statement of Profit and Loss.
k Foreign Currency Transactions / Translations:
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange rates are generally recognised in Statement of Profit and Loss as either profit or loss. A
monetary item for which settlement is neither planned nor likely to occur in the foreseeable future is considered as a part of the entityâs net
investment in that foreign operation.
Foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis within other income and expenses
accordingly.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair
value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss in
the Statement of Profit and Loss. For example, translation differences on nonmonetary assets and liabilities such as equity instruments held at
fair value through profit or loss are included in net profit in the Statement of Profit and Loss as part of the fair value gain or loss and translation
differences on non-monetary assets such as equity investments classified as Fair Value through Other Comprehensive Income (âFVOGâ) are
recognised in other comprehensive income (âOCIâ).
l Taxes on Income:
Income tax expense comprises current tax and deferred tax. It is recognised in Statement of Profit and Loss except to the extent that it relates
items recognised directly in equity or in OCI.
The income tax expense or credit for the period is tax payable on the current year''s taxable income based on the applicable income tax rate
adjusted by change in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date. Current tax
comprises of expected tax payable or receivable on taxable income/loss for the year or any adjustment or receivable in respect of previous
year. Management periodically evaluates position taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amount expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the Balance Sheet method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the
initial recognition of goodwill. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by
the end of the reporting date and are expected to apply to the Company when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits (Minimum alternate tax
credit entitlement) only if it is probable that future taxable amounts will be available to utilise those temporary differences, unused losses and
unused tax credits. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised / reduced to the
extent that it is probable or no longer probable respectively that the related tax benefit will be realized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
m Earnings Per Share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the Company;
- by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued
during the year.
(ii) Diluted earnings per share
Diluted earnings per share is calculated by dividing:
- the net profit or loss after tax for the year attributable to owners of the Company , and
- the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares
Mar 31, 2014
(a) Fixed Assets and capital work in progress
(i) Tangible Assets are stated at acquisition cost, net of accumulated
depreciation and accumulated impairment losses, if any. Subsequent
expenditures related to an item of fixed asset are added to its book
value only if they increase the future benefits from the existing asset
beyond its previously assessed standard of performance. Items of fixed
assets that have been retired from active use and are held for disposal
are stated at the lower of their net book value and net realisable
value and are shown separately in the financial statements. Any
expected loss is recognised immediately in the Statement of Profit and
Loss. Losses arising from the retirement of, and gains or losses
arising from disposal of fixed assets which are carried at cost are
recognised in the Statement of Profit and Loss.
(ii) Intangible Assets are stated at acquisition cost, net of
accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortised on a straight line basis over their
estimated useful lives. A rebuttable presumption that the useful life
of an intangible asset will not exceed ten years from the date when the
asset is available for use is considered by the Management. The
amortisation period and the amortisation method are reviewed at least
at each financial year end. If the expected useful life of the asset is
significantly different from previous estimates, the amortisation
period is changed accordingly. Gains or losses arising from the
retirement or disposal of an intangible asset are determined as the
difference between the net disposal proceeds and the carrying amount of
the asset and recognised as income or expense in the Statement of
Profit and Loss.
(iii) Capital work in progress (CWIP) & intangible assets under
development includes cost of exploratory wells in progress, cost of
fixed assets not ready to use and interest on loans attributable to the
acquisition of qualifying fixed assets up to the date of their
commissioning, if any.
(iv) Machinery spares which can be used only in connection with an item
of fixed asset and whose use is not of regular nature are capitalised
and written off over the estimated useful life of the relevant asset.
The written down value of such spares is charged to the Statement of
Profit and Loss on issue for consumption.
(b) Depreciation, amortisation and impairment:
(i) Depreciation-tangibles:
Depreciation on fixed assets is provided on written down value method
in accordance with the provisions of Section 205(2) (b) of the Act in
the manner and at the rates specified in Schedule XIV to the Act.
Depreciation on additions/deductions is calculated pro rata from/to the
number of days of additions/deductions. In respect of an asset for
which impairment loss is recognised, depreciation is provided on the
revised carrying amount of the assets over its remaining useful life.
In case of revalued assets, depreciation is computed on such revalued
amounts and an appropriate amount transferred from revaluation reserve
to Statement of Profit and Loss. Cost of leasehold land is amortised in
proportion to the period of lease. Individual assets costing less than
Rs. 5,000 are depreciated in full in the year of acquisition.
(ii) Amortisation-intangibles:
Intangible assets are initially measured at cost and amortised so as to
reflect the pattern in which the asset''s economic benefits are
consumed.
Expenditure on computer software is amortised on straight line method
over a period of two years.
(iii) Impairment of assets:
The carrying amounts of fixed assets are reviewed at each Balance Sheet
date to determine if there is any indication of impairment based on
internal/external factors. An impairment loss will be recognised
wherever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of the assets net selling
price and value in use. In assessing the value in use, the estimated
future cash flows are discounted to the present value by using weighted
average cost of capital. A previously recognised impairment loss is
further provided or reversed depending on changes in circumstances.
However, the carrying value after reversal is not increased beyond the
carrying value that would have prevailed by charging usual depreciation
if there was no impairment.
(c) Investments:
Trade investments are investments made to enhance the Company''s
business interests. Investments those are readily realisable and
intended to be held for not more than a year are classified as "Other
Current Assets". All other investments are classified as non-current
(long term) investments.
Non-current investments including investments in subsidiaries
(profit/loss earned or sustained by subsidiaries is not recognized in
the books of account) and an associate are carried at cost and
provisions recorded to recognise any declines, other than temporary, in
the carrying amount of each investment. Cost of overseas investment
comprises the Indian Rupee Value of the consideration paid for the
investment.
(d) Inventories:
"Inventories are valued as follows:
Items of inventories are valued at lower of cost, computed on First In
First Out basis and net realisable value. Such costs include material
cost and other costs incurred in bringing the goods to their present
location and condition. Goods in transit are valued at cost, which
represents the costs incurred up to the stage at which the goods are in
transit."
(e) Revenue recognition:
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and it can be reliably
measured.
(i) Revenue from domestic sales is recognised on dispatch, which
coincides with transfer of significant risks and rewards to customers
and stated net of taxes and returns, as applicable. Revenue from
exports is recognised when the significant risks and rewards of
ownership of goods have passed to customers.
(ii) Fixed price contracts: Contract revenue is recognized only to the
extent of cost incurred till such time the outcome of the job cannot be
ascertained reliably. When the outcome of the contract is ascertained
reliably contract revenue is recognized at cost of work performed on
the contract plus proportionate margin, using the percentage of
completion method. Percentage of completion is the proportion of cost
of work performed to-date to the total estimated contract costs.
(iii) Income from services rendered on project related activities is
recognised on due dates of the relevant contracts and is exclusive of
service tax, wherever recovered.
(iv) Liquidated damages/penalties, if any, are provided based on
management''s assessment of the estimated liability, as per contractual
terms and/or acceptance.
(v) Interest income is recognised on a time proportion basis taking
into account the amount outstanding and the rate applicable.
(vi) The Company is entitled to refund of Special Additional Duty paid
on imported goods traded or consumed in Company''s activities within the
prescribed time limit. Accordingly, refund is accrued on
sale/consumption of such goods.
(vii) Dividend income is recognised when the right to receive dividend
is established.
(f) Taxation:
(i) Tax expense comprises current tax and deferred tax charge or
credit.
(a) Current tax is measured at the amounts expected to be paid to the
Tax Authorities in accordance with the provisions of the Income Tax
Act, 1961 prevailing for the relevant assessment year.
(b) Deferred tax charge or credit is measured based on the tax rates
and the tax laws enacted or substantively enacted at the balance sheet
date. Deferred tax charge or credit is recognised, subject to the
consideration of prudence, on timing differences, being the difference
between taxable income and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods in
the Statement of Profit and Loss and the cumulative effect thereof is
reflected in the Balance Sheet. In respect of deferred tax charge or
credit resulting from timing differences, which originate during the
tax holiday period but is expected to reverse after such tax holiday
period, is recognised in the year in which the timing differences
originate using the tax rates and laws enacted or substantively enacted
at the Balance Sheet date.
(ii) Tax on distributed profits payable is as per the provisions of
Section 115O of the Income Tax Act, 1961 is in accordance with the
Guidance Note on Accounting for Corporate Dividend Tax regarded as tax
on distribution of profits issued by the ICAI and is not considered in
determination of the profits for the year.
(g) Cash flow statement:
The cash flow statement is prepared by the indirect method, whereby net
profit before tax is adjusted for the effects of transactions of a
non-cash nature and presents the cash flows by operating, investing and
financing activities of the Company. Cash and cash equivalents
presented in the cash flow statement consist of cash on hand and
balances with banks.
(h) Foreign currency transactions:
(i) Initial recognition:
Transactions for import/export of goods are recorded at a rate notified
by the customs authorities for invoice purposes. Other 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) Conversion:
Monetary items are translated at the closing exchange rate as on the
date of the Balance Sheet and non-monetary items are reported using the
exchange rate that existed on the date of the transaction.
(iii) Exchange differences:
Exchange differences arising on settlement of monetary items or on
reporting monetary items at rates different from those at which they
were initially recorded during the year or reported in the previous
financial statements are recognised as income or expenses in the year
in which they arise and disclosed as a net amount in the financial
statements.
(i) Employee benefits:
(i) Employee benefits in the form of provident and family pension fund
are defined contribution schemes and the contributions are charged to
the Statement of Profit and Loss of the year when the contributions to
the funds are due. The Company has no other obligations other than the
contributions payable.
(ii) The present value of the obligation of gratuity is determined
based on an actuarial valuation conducted by an independent actuary,
using the projected unit credit method. Actuarial gains and losses on
such valuation are recognised immediately in the Statement of Profit
and Loss. The fair value of plan assets is administered by Life
Insurance Corporation of India, is reduced from gross obligation under
the defined benefit plan, to recognised the obligation on a net basis
value.
(j) Earnings per share:
The basic earnings per share is computed by dividing the net profit or
loss attributable to equity shareholders (after deducting attributable
taxes) by the weighted average number of equity shares outstanding
during the period. For the purpose of calculating diluted earnings per
share, the net profit or loss for the period attributable to equity
shareholders (after deducting attributable taxes) and the weighted
average number of equity shares outstanding during the year are
adjusted for effects of all dilutive potential equity shares, except
where the results are anti-dilutive. The number of shares and
potentially dilutive equity shares are adjusted for share splits and
bonus shares issued including for changes effected prior to the
approval of the financial statements by the Board of Directors.
(k) Provisions, contingent liabilities and contingent assets:
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the
Notes to the Financial Statements. Contingent assets are neither
recognised nor disclosed in the financial statements.
(l) Operating leases:
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognised as an expense
in the Statement of Profit and Loss on a straight line basis over the
lease period unless another systematic basis is more representative of
the time pattern of the users benefit.
(m) Exploration and Development Costs:
The Company follows successful efforts method for accounting of oil &
gas exploration and production activities, in respect of its
participating interest in un-incorporated joint venture which includes:
(i) Survey costs are recognised as revenue expenditure in the year in
which these are incurred.
(ii) Cost of exploratory wells is carried as exploratory wells in
progress. Such exploratory wells in progress are capitalised in the
year in which the producing property is created or is written off in
the year when determined to be dry/abandoned.
(iii) All wells appearing as exploratory wells in progress which are
more than two years old from the date of completion of drilling are
charged to Statement of Profit and Loss, except those wells which have
proved reserves and the development of the fields in which the wells
are located has been planned.
Mar 31, 2013
(a) Fixed Assets and capital work in progress
(i) Tangible Assets are stated at acquisition cost, net of accumulated
depreciation and accumulated impairment losses, if any. Subsequent
expenditures related to an item of fixed asset are added to its book
value only if they increase the future benefits from the existing asset
beyond its previously assessed standard of performance. Items of fixed
assets that have been retired from active use and are held for disposal
are stated at the lower of their net book value and net realisable
value and are shown separately in the financial statements. Any
expected loss is recognised immediately in the Statement of Profit and
Loss. Losses arising from the retirement of, and gains or losses
arising from disposal of fixed assets which are carried at cost are
recognised in the Statement of Profit and Loss.
(ii) Intangible Assets are stated at acquisition cost, net of
accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortised on a straight line basis over their
estimated useful lives. A rebuttable presumption that the useful life
of an intangible asset will not exceed ten years from the date when the
asset is available for use is considered by the management. The
amortisation period and the amortisation method are reviewed at least
at each financial year end. If the expected useful life of the asset is
significantly different from previous estimates, the amortisation
period is changed accordingly. Gains or losses arising from the
retirement or disposal of an intangible asset are determined as the
difference between the net disposal proceeds and the carrying amount
ofthe asset and recognised as income or expense in the Statement of
Profit and Loss.
(iii) Capital work in progress (CWIP) & intangible assets under
development includes cost of exploratory wells in progress, cost of
fixed assets not ready to use and interest on loans attributable to the
acquisition of qualifying fixed assets up to the date of their
commissioning, if any.
(iv) Machinery spares which can be used only in connection with an item
of fixed asset and whose use is not of regular nature are capitalised
and written off over the estimated useful life of the relevant asset.
The written down value of such spares is charged to the Statement of
Profit and Loss on issue for consumption.
(b) Depreciation, amortisation and impairment:
(i) Depreciation-tangibles:
Depreciation on fixed assets is provided on written down value method
in accordance with the provisions of Section 205(2) (b) of the Act in
the manner and at the rates specified in Schedule XIV to the Act.
Depreciation on additions/deductions is calculated pro rata from/to the
number of days of additions/deductions. In respect of an asset for
which impairment loss is recognised, depreciation is provided on the
revised carrying amount of the assets over its remaining useful life.
In case of revalued assets, depreciation is computed on such revalued
amounts and an appropriate amount transferred from revaluation reserve
to statement of profit and loss. Cost of leasehold land is amortised in
proportion to the period of lease. Individual assets costing less than
Rs.5,000 are depreciated in full in the year of acquisition.
(ii) Amortisation-intangibles:
Intangible assets are initially measured at cost and amortised so as to
reflect the pattern in which the asset''s economic benefits are
consumed.
Expenditure on computer software is amortised on straight line method
over a period of two years.
(iii) Impairment of assets:
The carrying amounts of fixed assets are reviewed at each balance sheet
date to determine if there is any indication of impairment based on
internal/external factors. An impairment loss will be recognized
wherever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of the assets net selling
price and value in use. In assessing the value in use, the estimated
future cash flows are discounted to the present value by using weighted
average cost of capital. A previously recognised impairment loss is
further provided or reversed depending on changes in circumstances.
However, the carrying value after reversal is not increased beyond the
carrying value that would have prevailed by charging usual depreciation
if there was no impairment.
(c) Investments:
Trade investments are investments made to enhance the Company''s
business interests. Investments those are readily realisable and
intended to be held for not more than a year are classified as current
investments. All other investments are classified as non-current (long
term) investments.
Non-current investments including investments in subsidiaries
(profit/loss earned or sustained by subsidiaries is not recognized in
the books of account) and an associate are carried at cost and
provisions recorded to recognize any declines, other than temporary, in
the carrying amount of each investment. Cost of overseas investment
comprises the Indian Rupee Value of the consideration paid for the
investment.
(d) Inventories:
Inventories are valued as follows: Items of inventories are valued at
lower of cost, computed on FIFO basis and net realisable value. Such
costs include material cost and other costs incurred in bringing the
goods to their present location and condition. Goods in transit are
valued at cost, which represents the costs incurred up to the stage at
which the goods are in transit.
(e) Revenue recognition:
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and it can be reliably
measured.
(i) Revenue from domestic sales is recognised on dispatch, which
coincides with transfer of significant risks and rewards to customers
and stated net of taxes and returns, as applicable. Revenue from
exports is recognised when the significant risks and rewards of
ownership of goods have passed to customers.
(ii) Fixed price contracts: Contract revenue is recognized only to the
extent of cost incurred till such time the outcome of the job cannot be
ascertained reliably. When the outcome of the contract is ascertained
reliably contract revenue is recognized at cost of work performed on
the contract plus proportionate margin, using the percentage of
completion method. Percentage of completion is the proportion of cost
of work performed to-date to the total estimated contract costs.
(iii) Income from services rendered on project related activities is
recognised on due dates of the relevant contracts and is exclusive of
service tax, wherever recovered.
(iv) Liquidated damages/penalties, if any, are provided based on
management''s assessment of the estimated liability, as per
contractual terms and/or acceptance.
(v) Interest income is recognised on a time proportion basis taking
into account the amount outstanding and the rate applicable.
(vi) The Company is entitled to refund of Special Additional Duty paid
on imported goods traded or consumed in Company''s activities within
the prescribed time limit. Accordingly, refund is accrued on
sale/consumption of such goods.
(vii) Dividend income is recognised when the right to receive dividend
is established.
(f) Taxation:
(i) Tax expense comprises current tax and deferred tax charge or
credit.
(a) Current tax is measured at the amounts expected to be paid to the
Tax Authorities in accordance with the provisions of the Income Tax
Act, 1961 prevailing for the relevant assessment year.
(b) Deferred tax charge or credit is measured based on the tax rates
and the tax laws enacted or substantively enacted at the balance sheet
date. Deferred tax charge or credit is recognised, subject to the
consideration of prudence, on timing differences, being the difference
between taxable income and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods in
the statement of profit and loss and the cumulative effect thereof is
reflected in the Balance Sheet. In respect of deferred tax charge or
credit resulting from timing differences, which originate during the
tax holiday period but is expected to reverse after such tax holiday
period, is recognised in the year in which the timing differences
originate using the tax rates and laws enacted or substantively enacted
at the balance sheet date.
(ii) Tax on distributed profits payable is as per the provisions of
Section 115O of the Income Tax Act, 1961 is in accordance with the
Guidance Note on Accounting for Corporate Dividend Tax regarded as tax
on distribution of profits issued by the ICAI and is not considered in
determination of the profits for the year.
(g) Cash flow statement:
The cash flow statement is prepared by the indirect method, whereby net
profit before tax is adjusted for the effects of transactions of a
non-cash nature and presents the cash flows by operating, investing and
financing activities of the Company. Cash and cash equivalents
presented in the cash flow statement consist of cash on hand and
balances with banks.
(h) Foreign currency transactions:
(i) Initial recognition:
Transactions for import/export of goods are recorded at a rate notified
by the customs authorities for invoice purposes. Other 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 ofthe transaction.
(ii) Conversion:
Monetary items are translated at the closing exchange rate as on the
date of the balance sheet and non-monetary items are reported using the
exchange rate that existed on the date ofthe transaction.
(iii) Exchange differences:
Exchange differences arising on settlement of monetary items or on
reporting monetary items at rates different from those at which they
were initially recorded during the year or reported in the previous
financial statements are recognised as income or expenses in the year
in which they arise and disclosed as a net amount in the financial
statements.
(i) Employee benefits:
(i) Employee benefits in the form of provident and family pension fund
are defined contribution schemes and the contributions are charged to
the statement of profit and loss of the year when the contributions to
the funds are due. The Company has no other obligations other than the
contributions payable.
(ii) The present value ofthe obligation of gratuity is determined based
on an actuarial valuation, using the Projected unit credit method.
Actuarial gains and losses on such valuation are recognised immediately
in the statement of profit and loss. The fair value of plan assets is
administered by Life Insurance Corporation of India, is reduced from
gross obligation under the defined benefit plan, to recognised the
obligation on a net basis value.
(j) Earnings per share:
The basic earnings per share is computed by dividing the net profit or
loss attributable to equity shareholders (after deducting attributable
taxes) by the weighted average number of equity shares outstanding
during the period. For the purpose of calculating diluted earnings per
share, the net profit or loss for the period attributable to equity
shareholders (after deducting attributable taxes) and the weighted
average number of equity shares outstanding during the year are
adjusted for effects of all dilutive potential equity shares, except
where the results are anti-dilutive. The number of shares and
potentially dilutive equity shares are adjusted for share splits and
bonus shares issued including for changes effected prior to the
approval ofthe financial statements by the Board of Directors.
(k) Provisions, contingent liabilities and contingent assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
Notes to the Financial Statements. Contingent assets are neither
recognized nor disclosed in the financial statements.
(l) Operating leases:
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognised as an expense
in the Statement of Profit and Loss on a straight line basis over the
lease period unless another systematic basis is more representative
ofthe time pattern of the users benefit.
(m) Exploration and Development Costs:
The Company follows successful efforts method for accounting of oil &
gas exploration and production activities, in respect of its
participating interest in un-incorporated joint venture which includes:
(i) Survey costs are recognized as revenue expenditure in the year in
which these are incurred.
(ii) Cost of exploratory wells is carried as exploratory wells in
progress. Such exploratory wells in progress are capitalized in the
year in which the producing property is created or is written off in
the year when determined to be dry/abandoned.
(iii) All wells appearing as exploratory wells in progress which are
more than two years old from the date of completion of drilling are
charged to Statement of Profit and Loss except those wells which have
proved reserves and the development of the fields in which the wells
are located has been planned.
Mar 31, 2012
(a) Fixed Assets and capital work in progress:
(i) Fixed assets are stated at cost of acquisition/installation or at
revalued amounts, net of accumulated depreciation, amortisation and
impairment losses, if any. Cost comprises the purchase price and other
attributable costs of bringing the asset to their working condition for
their intended use.
(ii) Capital work in progress (CWIP) includes cost of fixed assets not
ready to use and interest on loans attributable to the acquisition of
qualifying fixed assets upto the date of their commissioning, if any.
(iii) Machinery spares which can be used only in connection with an
item of fixed asset and whose use is not of regular nature are
capitalised and written off over the estimated useful life of the
relevant asset. The written down value of such spares is charged to the
Statement of Profit and Loss on issue for consumption.
(b) Depreciation, amortisation and impairment:
(i) Depreciation-tangibles:
Depreciation on fixed assets is provided on written down value method
in accordance with the provisions of Section 205(2) (b) of the Act in
the manner and at the rates specified in Schedule XIV to the Act.
Depreciation on additions/deductions is calculated pro rata from/to the
number of days of additions/deductions. In respect of an asset for
which impairment loss is recognised, depreciation is provided on the
revised carrying amount of the assets over its remaining useful life.
In case of revalued assets, depreciation is computed on such revalued
amounts and an appropriate amount transferred from revaluation reserve
to statement of profit and loss. Cost of leasehold land is amortised in
proportion to the period of lease. Individual assets costing less than
Rs.5,000 are depreciated in full in the year of acquisition.
(ii) Amortisation-intangibles:
Intangible assets are initially measured at cost and amortised so as to
reflect the pattern in which the asset's economic benefits are
consumed. Expenditure on computer software is amortised on straight line
method over a period of two years.
(iii) Impairment of assets:
The carrying amounts of fixed assets are reviewed at each balance sheet
date to determine if there is any indication of impairment based on
internal/external factors. An impairment loss will be recognized
wherever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of the assets net selling
price and value in use. In assessing the value in use, the estimated
future cash flows are discounted to the present value by using weighted
average cost of capital. A previously recognised impairment loss is
further provided or reversed depending on changes in circumstances.
However, the carrying value after reversal is not increased beyond the
carrying value that would have prevailed by charging usual depreciation
if there was no impairment.
(c) Investments:
Trade investments are investments made to enhance the Company's
business interests. Investments those are readily realisable and
intended to be held for not more than a year are classified as current
investments. All other investments are classified as non-current (long
term) investments.
Non-current investments including investments in subsidiaries
(profit/loss earned or sustained by subsidiaries is not recognized in
the books of account), an associate and in a non-integrated
un-incorporated joint venture are carried at cost and provisions
recorded to recognize any declines, other than temporary, in the
carrying amount of each investment. Cost of overseas investment
comprises the Indian Rupee Value of the consideration paid for the
investment.
(d) Inventories:
Inventories are valued as follows:
Items of inventories are valued at lower of cost, computed on FIFO
basis and net realisable value. Such costs include material cost and
other costs incurred in bringing the goods to their present location
and condition.
Goods in transit are valued at cost, which represents the costs
incurred upto the stage at which the goods are in transit.
(e) Revenue recognition:
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and it can be reliably
measured.
(i) Revenue from domestic sales is recognised on dispatch, which
coincides with transfer of significant risks and rewards to customers
and stated net of taxes and returns, as applicable. Revenue from
exports is recognised on the date of bill of lading and includes
foreign exchange fluctuation on exports.
(ii) Income from services rendered on project related activities is
recognised on due dates of the relevant contracts and is exclusive of
service tax, wherever recovered.
(iii) Liquidated damages/penalties, if any, are provided based on
management's assessment of the estimated liability, as per
contractual terms and/or acceptance.
(iv) Surplus on sale of investments in subsidiaries is computed on the
basis of the average carrying amount of the investment. Other income is
accounted on accrual basis as and when the right to receive arises.
(v) The Company is entitled to refund of Special Additional Duty paid
on imported goods traded or consumed in Company's activities within
the prescribed time limit. Accordingly, refund is accrued on
sale/consumption of such goods.
(f) Taxation:
(i) Tax expense comprises current tax and deferred tax charge or
credit.
(a) Current tax is measured at the amounts expected to be paid to the
Tax Authorities in accordance with the provisions of the Income Tax
Act, 1961 prevailing for the relevant assessment year.
(b) Deferred tax charge or credit is measured based on the tax rates
and the tax laws enacted or substantively enacted at the balance sheet
date. Deferred tax charge or credit is recognised, subject to the
consideration of prudence, on timing differences, being the difference
between taxable income and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods in
the statement of profit and loss and the cumulative effect thereof is
reflected in the Balance Sheet. In respect of deferred tax charge or
credit resulting from timing differences, which originate during the
tax holiday period but is expected to reverse after such tax holiday
period, is recognised in the year in which the timing differences
originate using the tax rates and laws enacted or substantively enacted
at the balance sheet date.
(ii) Tax on distributed profits payable is as per the provisions of
Section 115O of the Income Tax Act, 1961 is in accordance with the
Guidance Note on Accounting for Corporate Dividend Tax regarded as tax
on distribution of profits issued by the ICAI and is not considered in
determination of the profits for the year.
(g) Cash flow statement:
The cash flow statement is prepared by the indirect method, whereby net
profit before tax is adjusted for the effects of transactions of a
non-cash nature and presents the cash flows by operating, investing and
financing activities of the Company. Cash and cash equivalents
presented in the cash flow statement consist of cash on hand and
balances with banks.
(h) Foreign currency transactions:
(i) Initial recognition:
Transactions for import/export of goods are recorded at a rate notified
by the customs authorities for invoice purposes. Other 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) Conversion:
Monetary items are translated at the closing exchange rate as on the
date of the balance sheet and non-monetary items are reported using the
exchange rate that existed on the date of the transaction.
(iii) Exchange differences:
Exchange differences arising on settlement of monetary items or on
reporting monetary items at rates different from those at which they
were initially recorded during the year or reported in the previous
financial statements are recognised as income or expenses in the year
in which they arise and disclosed as a net amount in the financial
statements.
(i) Retirement benefits:
Retirement benefits in the form of provident and family pension fund
are defined contribution schemes and the contributions are charged to
the statement of profit and loss of the year when the contributions to
the funds are due. The Company has no other obligations other than the
contributions payable.
(j) Earnings per share:
The basic earnings per share is computed by dividing the net profit or
loss attributable to equity shareholders (after deducting attributable
taxes) by the weighted average number of equity shares outstanding
during the period. For the purpose of calculating diluted earnings per
share, the net profit or loss for the period attributable to equity
shareholders (after deducting attributable taxes) and the weighted
average number of equity shares outstanding during the year are
adjusted for effects of all dilutive potential equity shares, except
where the results are anti-dilutive. The number of shares and
potentially dilutive equity shares are adjusted for share splits and
bonus shares issued including for changes effected prior to the
approval of the financial statements by the Board of Directors.
(k) Provisions, contingent liabilities and contingent assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
Notes to the Financial Statements. Contingent assets are neither
recognized nor disclosed in the financial statements.
(l) Operating leases:
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognised as an expense
in the Statement of Profit and Loss on a straight line basis over the
lease period unless another systematic basis is more representative
of the time pattern of the users benefit.
(m) Accounting for interest in a joint venture:
Interest in a non-integrated un-incorporated joint venture being in the
nature of an investment, is accounted as specified in AS-13
'Accounting for Investments'.
(n) Borrowing Costs:
Borrowing cost attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 on "Borrowing
Costs" are capitalized as part of the cost of such assets upto the
date when the asset is ready for its intended use. Other borrowing
costs are expensed as incurred.
Mar 31, 2011
[A] Fixed assets:
(i) Fixed assets are stated at cost of acquisition/installation or at
revalued amounts, net of accumulated depreciation, amortisation and
impairment losses, if any. Cost comprises the purchase price and other
attributable costs of bringing the asset to their
working condition for their intended use.
(ii) Machinery spares which can be used only in connection with an item
of fixed asset and whose use is not of regular nature are capitalised
and written off over the estimated useful life of the relevant asset.
The written down value of such spares is charged
to the profit and Loss Account on issue for consumption.
[B] Depreciation, amortisation and impairment:
(i) Depreciation-tangibles:
Depreciation on fixed assets is provided on written down value method
in accordance with the provisions of Section 205(2) (b) of the Act in
the manner and at the rates specified in Schedule XIV to the Act.
Depreciation on additions/deductions is calculated pro rata from/to the
number of days of additions/deductions. In respect of an asset for
which impairment loss is recognised, depreciation is provided on the
revised carrying amount of the assets over its remaining useful life.
In case of revalued assets" depreciation is computed on such revalued
amounts and an appropriate amount transferred from revaluation reserve
to profit and loss account. Cost of leasehold land is amortised in
proportion to the period of lease. Individual assets
costing less than Rs.5,000 are depreciated in full in the year of
acquisition.
(ii) Amortisation-intangibles:
Intangible assets are initially measured at cost and amortised so as to
reflect the pattern in which the asset's economic benefits are
consumed.
Expenditure on computer software and technical know how fees are
amortised on straight line method over a period of two years.
(iii) Impairment of assets:
The carrying amounts of fixed assets are reviewed at each balance sheet
date to determine if there is any indication of impairment based on
internal/external factors. An impairment loss will be recognized
wherever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of the assets net selling
price and value in use. In assessing the value in use, the estimated
future cash flows are discounted to the present value by using weighted
average cost of capital. A previously recognised impairment loss is
further provided or reversed depending on changes in circumstances.
However, the carrying value after reversal is not increased beyond the
carrying value that would have prevailed by charging usual depreciation
if there was no impairment.
[C] Investments:
Trade investments are investments made to enhance the Company's
business interests. Investments that are readily realisable and
intended to be held for not more than a year are classified as current
investments. All other investments are classified as long-term
investments.
Long term investments including investments in subsidiaries
(profit/loss earned or sustained by subsidiaries is not recognized in
the books of account), an associate and in a non-integrated
un-incorporated joint venture are carried at cost and provisions
recorded to recognize any declines, other than temporary, in the
carrying amount of each investment. Cost of overseas investment
comprises the Indian Rupee Value of the consideration paid for the
investment.
[D] Inventories:
Inventories are valued as follows:
Materials and components are valued at lower of cost, computed on FIFO
basis and net realisable value. Such costs include material cost and
other costs incurred in bringing the goods to their present location
and condition.
Goods in transit are valued at cost, which represents the costs
incurred upto the stage at which the goods are in transit.
[E] Revenue recognition:
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and it can be reliably
measured.
(i) Revenue from domestic sales is recognised on dispatch, which
coincides with transfer of significant risks and rewards to customers
and statednet of taxes andreturns, as applicable. Revenue from exports
is recognised on the date of bill of lading and
includes foreign exchange fluctuation on exports.
(ii) Income from services rendered on project related activities is
recognised on due dates of the relevant contracts and is exclusive of
service tax, wherever recovered
(iii) Liquidated damages/penalties, are provided based on management's
assessment of the estimated liability, as per contractual terms and/or
acceptance.
(iv) Surplus on sale of investments in subsidiaries is computed on the
basis of the average carrying amount of the investment. Other
income is accounted on accrual basis as and when the right to receive
arises.
(v) The Company is entitled to refund of Special Additional Duty paid
on imported goods traded or consumed in Company's activities with in
the prescribed time limit. Accordingly refundi is accured on sale/
consumption of such goods.
[F] Taxation:
(i) Tax expense comprises current tax including wealth tax and deferred
tax charge or credit.
(a) Current tax including wealth tax are measured at the amounts
expected to be paid to the Tax Authorities in accordance with the
provisions ofthe Income Tax Act, 1961 prevailing for the relevant
assessment year.
(b) Deferred tax charge or credit is measured based on the tax rates
and the tax laws enacted or substantively enacted at the balance sheet
date. Deferred tax charge or credit is recognised, subject to the
consideration of prudence, on timing differences, being the difference
between taxable income and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods in
the profit and loss account and the cumulative effect thereof is
reflected in the Balance Sheet. In respect of deferred tax charge or
credit resulting from timing differences, which originate during the
tax holiday period but is expected to reverse after such tax holiday
period, is recognised in the year in which the timing differences
originate using the tax rates and laws enacted or substantively enacted
at the balance sheet date.
(ii) Tax on distributed profits payable is as per the provisions of
Section 1 ISO of the Income Tax Act, 1961 is in accordance with the
Guidance Note on Accounting for Corporate Dividend Tax regarded as tax
on distribution of profits issued by the ICAI and is not considered
in determination of the prof its for the year.
[G] Cash flow statement:
The cash flow statement is prepared by the indirect method, whereby net
profit before tax is adjusted for the effects of transactions of
a non-cash nature and presents the cash flows by operating, investing
and financing activities of the Company. Cash and cash equivalents
presented in the cash flow statement consist of cash balance on hand
and balances with banks.
[H] Foreign currency transactions and balance:
(i) Initial recognition:
Transactions for import/export of goods are recorded at a rate notified
by the customs authorities for invoice purposes. Other 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 transaction.
(ii) Conversion:
Monetary items are translated at the closing exchange rate as on the
date of the balance sheet and non-monetary items are reported using the
exchange rate that existed on the date of the transaction.
(iii) Exchange Differences:
Exchange differences arising on settlement of monetary items or on
reporting monetary items at rates different from those at which they
were initially recorded during the year or reported in the previous
financial statements are recognised as income or expenses mthe year in
which they arise, takento therelevant revenj; heads in the profit and
loss account and disclosed asanet amount in the Notes to the Financial
Statements.
[I] Retirement benefits:
(i) Employee Benefits such as salaries, allowances, non-monetary
benefits and employee benefits under defined contribution plans such as
provident and other funds, which fall due for payment within a period
of twelve months after rendering service, are charged as expense to the
profit and loss account in the period in which the service is rendered.
(ii) Employee Benefits under defined benefit plans, gratuity which fall
due for payment after a period of twelve months from rendering semce or
after completion of employment,are measured by the projected unit cost
method, on the basis of actuarial valuations carried out by third party
actuaries at each balance sheet date. TheCompany's obligations
recognized in the balance sheet represent the present value of
obligations as reduced by the fair value of plan assets, where
applicable. Actuarial Gains and losses are recognised immediately in
the Profit and Loss Account.
[J] Earnings per share:
The basic earnings per share is computed by dividing the net profit or
loss attributable to equity shareholders (after deducting attributable
taxes) by the weighted average number of equity shares outstanding
during the period For the purpose of calculating diluted earnings per
share, the net profit or loss for the year attributable to equity
shareholders (after deducting attributable taxes) and the weighted
average number of equity shares outstanding during the period are
adjusted for effects of all dilutive potential equity shares, except
where the results are anti-dilutive. The number offhares and
potentially dilutive equity shares are adjusted for share splits.
[K] Provisions, contingentliabilities and contingent assets:
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of
past events and it is probable that there will be an out flow of
resources.Contingent liabilities are not recognised but are disclosed
in the Notes to the Financial Statements. Contingent assets are neither
recognised nor disclosed in the financial statements.
(L) Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognised as an expense
in the Profit and Loss Account on a straight line basis over the lease
periodunless another systematic basis is more representative of the
time pattern of the users benefit.
[M] Accountingforinterestin a joint venture:
Interest in a non-integrated un-incorporated joint venture being in the
nature of an investment, is accounted as specified in AS-13 Accounting
for Investments'.
[N] Borrowing Costs:
Borrowing cost attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 on "Borrowing
Costs" are capitalized as part of the cost of such assets upto the date
when the asset is ready for its intended use. Other borrowing costs are
expensed as incurred.
[O] Proposed dividend:
Dividend proposed by the directors as appropriation of profits is
provided for in the books of account, pending approval of
share holders at the annual general meeting.
(P] Miscellaneous expenditure:
Miscellaneous expenditure is charged to revenue in the year of its
occurrence.
Mar 31, 2010
(a) Basis of preparation of financial statements:
(i) The accompanying financial statements have been prepared and
presented in accordance with Indian Generally Accepted Accounting
Principles (GAAP), under the historical cost convention (except for
revaluation of certain fixed assets) on accrual basis of
accounting".GAAP comprises mandatory accounting standards notified
under the Companies (Accounting Standards) Rules, 2006 (as amended)
issued by the Central Government in exercise of the power conferred
under sub-section (I) (a) of section 642, therelevantprovisionsof
the Ac tandguidehnes issuedbythe Securities and ExchangeBoardofmdia.
GAAP also includes other relevant pronouncements of the Institute of
Chartered Accountants of India (ICAI). Accounting policies have been
consistently applied except where a newly issued accounting standard,
if initially adopted or a revision to an existing accounting standard
requires a change in the accounting policy hifherto in use. Management
evaluates all recently issued or revisedaccounting standards onan
ongoing basis.
(ii) The preparation of the financial statements in conformity with
GAAP requires the management make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the results of operations during the reporting periods.
These estimates are based upon the managementsbestknowledgeof
currenteventsandactions.Actoalresultscoulddifferfromtheseestimates.
2. Accountingpolicies:
Significant accounting policies are summarised below:
(a) Fixed assets:
(i) Fixed assets are stated at cost of acquisition/installation or at
revalued amounts, net of accumulated depreciation, amortisation and
impairment losses, if any. Cost comprises the purchase price and other
attributable costs of brmging the asset to their
workingconditionfortheirintendeduse.
(ii) Machinery spares which can be used only in connection with an item
of fixed asset and whose use is not of regular nature are written off
over the estimated useful life of the relevant asset. The written down
value of such spares is charged to the Profit and
LossAccountonissueforconsumption.
(b) Depreciation, amortisation and impairment:
(i) Depreciation-tangibles:
Depreciation onfixed assets isprovided on written
downvaluemethodinaccordancewiththeprovisionsofSection205(2)(b) of the
Act in the manner and at the rates specified in Schedule XIV to the
Act. Depreciation on additions/deductions is calculated pro rata
from/to the number of days of additions/deductions. In respect of an
asset for which impairment loss is recognised, depreciation is provided
on the revised carrying amount of the assets over its remaining useful
life. In case of revalued assets" depreciation is computed on such
revalued amounts and an appropriate amount transferred from revaluation
reserve to profit and loss account. Cost of leasehold land is amortised
in proportion to the period of lease. Individual assets
costinglessthanRs.5,000aredepreciatedinfullintheyearofacquisition.
(ii) Amortisation-intangibles:
Intangible assets are initially measured at cost and amortised so as to
reflect the pattern in which the assets economic benefits are
consumed.
Expenditure on computer software and technical know how fees are
amortised on written down value method over a period of two years.
(iii) Impairment of assets:
The carrying amounts of fixed assets are reviewed at each balance sheet
date to determine if there is any indication of impairment based on
internal/external factors. An impairment loss will be recognized
wherever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of the assets net selling
price and value in use. In assessmgthevalueinuse,theestimated
faturecashflowsarediscountedtothepresentvaluebyusingweightedaveragecostof
capital. A previously recognised impairment loss is further provided or
reversed depending on changes in circumstances. However, me carrying
value after reversal is not increased beyond the carrying value that
would have prevailed by charging usual depreciation if there was no
impairment.
(c) Investments:
Trade investments are investments made to enhance the Companys
business interests. Investments that are readily realisable and
intended to be held for not more than a year are classified as current
investments. All other investments are classified as long term
investments.
(i) Long term investments including investments in wholly owned
subsidiaries (profit/loss earned or sustained by wholly owned
subsidiariesarenotrecogmzedinthebooksofaccount)andinanon4ntegratedun
-mcorporatedjomtventurearecarriedatcost and provisions recorded
to recognize any declines, other than temporary, in the carrying
amount of each investment. Cost of ove 4asinvestment comprises
themdianRupeeValueoftheconsiderationpaidforthe investment.
(ii) Current investments are valuedat lower of costandnetrea
lizablevalue.
(d) Inventories:
Inventories are valued asfollows:
Materials and components are valued at lower of cost, computed on FIFO
basis and net realisable value. Such costs include material
costandother cos*"incurred in bringing the goods to their present
location and condition.
Goods in transit are valued at cost, which represents the costs
incurredupto the stage at which the goods are in transit.
(e) Revenuerecognition:
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and it can be reliably
measured.
(i) The revenues in respect of project related activities are
recognised on percentage completion method as specified in AS-7
Construction Contracts (Revised 2002). Percentage of completion is
determined based on surveys of work performed, which is certified by an
operating agency appointedby the customer
(ii) Revenue from domestic sales (other than project related
activities) is recognised on dispatch which coincides with transfer of
significant risks and rewards to customers and stated net of taxes and
returns, as applicable. Revenue from exports is recognised on the date
of bill of lading and includes foreign exchange fluctuation on exports.
(iii) Income from services rendered onproject related activities is
recognised on due dates of the relevant contracts and is exclusive of
service tax, wherever recovered
(iv) Dividend income on investments is accounted for when the right to
receive the payment is established. Other income is
accountedonaccrualbasisasandwhentherighttoreceivearises
(v) The Company is entitled to refund of Special Additional Duty (SAD)
paid on imported goods traded or consumed in
CompanyWivitieswithmtheprescribedto
(f) Taxation:
(i) Tax expense comprises current tax including wealth tax and deferred
tax charge or credit.
(a) Current tax including wealth tax are measured at the amounts
expected to be paid to the Tax Authorities in accordance
withtheprovisionsofthe Income TaxAct, 1961 prevailing for the relevant
assessment year.
(b) Deferred tax charge or credit is measured based on the tax rates
and the tax laws enacted or substantively enacted at the balance sheet
date. Deferred tax charge or credit is recognised, subject to the
consideration of prudence, on timing differences, being the difference
between taxable income and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods in
the profit and loss account and the cumulative effect thereof is
reflected in the Balance Sheet. In respect of deferred tax charge or
credit resulting from timing differences which originate during the tax
holiday period but is expected to reverse after such tax holiday
period, is recognised in the year in which the timing differences
originate using the tax rates and laws enacted or substantively enacted
at the balance sheet date.
(ii) Tax on distributed profits payable is as per the provisions of
Section 115 O of the Income Tax Act, 1961 is in accordance with the
Guidance Note cm Accounting for Corporate Dividend Tax regarded as tax
on distribution of profits issued by the ICAI and
isnotconsideredindeterminationoftheprofitsfortheyear.
(g) Cash flow statement:
The cash flow statement is prepared by the Indirect Method set out in
AS-3(Revised) Cash Flow Statements and presents the cash flows by
operating, investing and financing activities of the Company. Cash and
cash equivalents presented in the cash flow
statement consist of cash balance on hand and balance swith banks.
(h) Foreigncurrencytran saction sand balance:
(i) Initialrecognition:
Transactions for import/export of goods are recorded at a rate notified
by the customs authorities for invoice purposes. Other foreign currency
transactions are recorded in the reporting currency, by applying to the
foreign currency amount the exchange
rate between there portmgcurrencyandtheforeigncurrenc
yatthetoeofXtransaction.
(ii) Conversion:
Monetary items are translated at the closing exchange rate as on the
date of the balance sheet and non monetary items are
reportedusingtheexchangeratethatexistedonthedafeofthetransaction.
(iii) Exchange Differences:
Exchange differences arising on settlement of monetary items or on
reporting monetary items at rates different from those at which they
were initially recorded during the year or reported in the previous
financial statements are recognised as income or expenses in the year
in which they arise, takento the relevant revenJ;heads in the profit
and loss account and disclosed as a net amount in the Notes to the
Financial Statements.
(i) Securities premium account:
Securities premium account represents premium received pursuant to
issue of equity shares. Expenses pertaining to issue of equity shares
(IPO) are charged to securities premium account.
0) Retirementbeneflts:
(i) Retirement benefits in the form of provident and family pension
fund are defined contribution schemes and the contributions are charged
to the profit and loss account of the year when the contributions to
the funds are due. The Company has no other
obligationsotherthanthecontributionspayable.
(ii) Gratuity liability is a defined benefit obligation and is covered
under a Group Gratuity Cash Accumulation Scheme of the Life Insurance
Corporation of India (LIC) .The gratuity liability is charged to the
profit and loss account on the basis of an actuarial valuation on
ProjectedUnitCreditMethodcarriedoutbyLIConce in threeyears.
(k) Earningspershare:
The basic earnings per share is computed by dividing the net profit or
loss attributable to equity shareholders (after deducting attributable
taxes) by the weighted average number of equity shares outstanding
during the period For the purpose of calculating diluted earnings per
share, the net profit or loss for the year attributable to equity
shareholders (after deducting attributable taxes) and the weighted
average number of equity shares outstanding during the period are
adjusted for effects of all dilutive potential equity shares, except
where the results are anti-dilutive.
(1) Provisions, contingent liabilities and contingent assets:
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Continent liabilities are not recognised but are disclosed in theNotes
to the FinancialStatements.Contingentassetsareneitherrecognisednor
disclosed in thefinancial statements.
(m) Accounting for interest in a joint venture:
Interest in a non-integrated un-incorporated joint venture being in the
nature of an investment, is accounted as specified in AS-13
Accountingforlnvesrments.
(n) Proposed dividend:
Dividend proposed by the directors as appropriation of profits is
provided for in the books of account, pending approval of
shareholdersattheannualgeneralmeeting
(o) Miscellaneous expenditure
Preliminary expenses are charged to revenue in the year of its
occurrence.
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