Accounting Policies of Patel Engineering Ltd. Company

Mar 31, 2025

1.1 SUMMARY OF MATERIAL ACCOUNTING POLICIES

a) Statement of compliance

The financial statements of Patel Engineering Limited
("the Company or PEL”) have been prepared to comply,
in all material respects, with the Indian Accounting
Standards (”Ind AS”) as specified under section 133 of
the Companies Act, 2013 read together with the Rule 4
of the Companies (Indian Accounting Standards) Rules,
2015 and amendment thereof issued by the Ministry of
Corporate Affairs in exercise of the power conferred by
Section 133 of the Companies Act, 2013 and the other
relevant provisions of the Act, pronouncements of the
regulatory bodies applicable to the Company.

These financial statements have been approved for
issue by the Board of Directors, at their meeting held on
May 13, 2025.

b) Basis of preparation

The financial statements are prepared under the
historical cost convention, on a going concern basis
and accrual method of accounting, except for certain
financial assets and liabilities as specified in defined
benefit plans which have been measured at actuarial
valuation as required by relevant Ind AS. The accounting
policies applied are consistent with those used in the
previous year, except otherwise stated.

The standalone financial statements are presented
in Indian Rupees and all values are rounded off to
the nearest millions (Rupees 000,000), except where
otherwise indicated. Any discrepancies in any table
between totals and sums of the amounts listed are due
to rounding off.

The Company adopted Disclosure of Accounting
Policies (Amendments to Ind AS 1) from April 1, 2023.
Although the amendments did not result in any
changes in the accounting policies themselves, they
impacted the accounting policy information disclosed
in the financial statements.

The amendments require the disclosure of ‘material’
rather than ‘significant’ accounting policies. The
amendments also provide guidance on the application
of materiality to disclosure of accounting policies,
assisting entities to provide useful, entity-specific
accounting policy information that users need
to understand other information in the financial
statements.

c) Current/non-current classification

The Company as required by Ind AS 1 presents assets
and liabilities in the balance sheet based on current /
non-current classification.

Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.

The Company has ascertained its operating cycle as
twelve months for the purpose of current / non-current
classification of its assets and liabilities, as it is not
possible to identify the normal operating cycle.

d) Critical accounting estimates and judgements:

The preparation of financial statements in conformity
with Generally Accepted Accounting Principles, requires
management to make estimates and assumptions 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 period. Although these estimates
are based upon management’s best knowledge of
current events and actions, actual results could
differ from these estimates. Revisions to accounting
estimates are recognised prospectively.

The areas involving critical estimates or judgements are:

- Estimation of defined benefit obligation

- Estimation of useful life of property, plant and
equipment and intangibles

- Estimation of total contract revenue and costs for
revenue recognition

- Estimation of recognition of deferred taxes

- Estimation of impairment of financial assets (i.e.
expected credit loss on trade receivables)

- Estimation of provision and contingent liabilities

- Estimation on discounting of lease liability on
application of Ind AS 116

e) Property, plant and equipment

Property, plant and equipment (PPE), except land, are
stated at net of recoverable taxes, trade discount
and rebates less accumulated depreciation and
accumulated impairment losses, if any. Land is stated
at revalued amount determined by an independent
registered valuer from time to time.

Such cost comprises of purchase price and any
attributable cost of bringing the assets to its working
condition for its intended use. Property, plant and
equipment costing '' 5,000 or less are not capitalised
and charged to the statement of profit and loss.

Machinery spares that meet the definition of PPE are
capitalised.

Capital work-in-progress in respect of assets which
are not ready for their intended use are carried at cost,
comprising of direct costs, related incidental expenses
and attributable interest.

Subsequent expenditure is capitalised only if it is
probable that the future economic benefits associated
with the expenditure will flow to the Company and the
cost can be measured reliably.

The carrying amount of an item of PPE are
derecognised on disposal or when no future economic
benefits are expected from its use or disposal. Any gain
or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is
included in the profit or loss.

f) Intangible assets

Intangible assets are stated at cost of acquisition net
of recoverable taxes less accumulated depreciation /
amortisation and impairment loss, if any.

Such cost comprises of purchase price and any
attributable cost of bringing the assets to its working
condition for its intended use. Subsequent expenditure
is capitalised only if it is probable that the future
economic benefits associated with the expenditure will
flow to the Company and the cost can be measured
reliably.

g) Depreciation

Depreciation on the property, plant and equipment
(other than freehold land) is provided based on useful
life of the assets as prescribed in Schedule II to the Act.
Depreciation on property, plant and equipment, which
are added/disposed off during the year, is provided on
pro-rata basis with reference to the month of addition/
deletion, in the profit or loss.

The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and, if expectations
differ from previous estimates, the change(s) are
accounted for as a change in an accounting estimate in
accordance with Ind AS 8, Accounting Policies, Changes
in Accounting Estimates and Errors.

h) Impairment of non-financial assets

The carrying amount of assets/cash generating units
are reviewed at each balance sheet date if there
is any indication of impairment based on internal/
external factors. An impairment loss is recognised in
the statement of profit and loss whenever the carrying
amount of an asset or cash generating unit exceeds its
recoverable amount. The recoverable amount of the
assets (or where applicable, that of cash generating unit
to which the asset belongs) is estimated as the higher
of its net selling price and its value in use. A previously
recognised impairment loss is increased 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.

i) Investments in subsidiaries, joint ventures and
associates

Investments in subsidiaries, joint ventures and
associates are recognised at cost less accumulated
impairment (if any) as per Ind AS 27, except where
investments accounted for in accordance with Ind AS
105, non-current assets held for sale and discontinued
operations, when they are classified as held for sale.

j) Inventories

The stock of land, construction materials, stores, spare
parts, embedded goods and fuel is valued at cost
(on weighted average basis), or net realisable value,
whichever is lower and work-in-progress of construction
contracts at contract rate. Cost includes expenditures
incurred in acquiring the inventories, conversion costs
and other costs incurred in bringing them to their
existing location and condition. Net realisable value is
the estimated selling price in the ordinary course of
business less the estimated costs of completion and the
estimated cost necessary to make the sale.

Work-in-progress in respect of project development
and buildings held as stock-in-trade are valued at cost
or net realizable value, whichever is lower.

k) Recognition of income and expenditure

Revenue toward satisfaction of a performance
obligation is measured at the amount of transaction
price (net of variable consideration) allocated to that
performance obligation. The Company satisfies a
performance obligation and recognises revenue over
time, if one of the following criteria’s are met:

1. The customer simultaneously receives and
consumes the benefits provided by the
Company’s performance as the Company
performs; or

2. The Company’s performance creates or enhances
an asset that the customer controls as the asset
is created or enhanced; or

3. The Company’s performance does not create an
asset with an alternative use to the Company and
the Entity has an enforceable right to payment for
performance completed to date.

i) Construction revenue

The Company constructs various
infrastructure projects on behalf of clients.
Under the terms of the contracts, where
the Company is contractually restricted
from redirecting the properties to another
customer and has an enforceable right
to payment for work done; revenue is
recognised over a period of time. The
percentage-of-completion of a contract is
determined by the proportion that contract
costs incurred for work performed up to
the reporting date bear to the estimated
total contract costs. This is achieved by
estimating total revenue including claims /
variations and total cost till completion of
the contract and the profit is recognised
in proportion to the value of work done
when the outcome of the contract can be
estimated reliably. Revenue also includes
claims / variations when it is highly
probable of recovery based on estimate
and assessment of each item by the
management based on their judgement
of recovery. The management considers
that this input method is an appropriate
measure of the progress towards complete
satisfaction of these performance
obligations under Ind AS 115.

The Company becomes entitled to invoice
customers for construction based on
achieving a series of performance related
milestones. When a particular milestone is
achieved, the customer is sent a statement
of work completed assessed by expert.
Previously recognised contract asset for
any work performed is reclassified to
trade receivables at the point at which it is
invoiced to the customer. Advances received
from customers in respect of contracts are
treated as liabilities and adjusted against
progress billing as per terms of the contract.
Progress payments received are adjusted
against amount receivable from customers
in respect of the contract work performed.

Significant judgement is required to
evaluate assumptions related to the
amount of net contract revenues,
including the impact of any performance
incentives, liquidated damages, and other
forms of variable consideration. When

the outcome of a construction contract
cannot be estimated reliably, contract
revenue is recognised only to the extent of
contract cost incurred that are likely to be
recoverable.

Consideration is adjusted for the time value
of money if the period between the transfer
of goods or services and the receipt of
payment exceeds twelve months and there
is a significant financing benefit either to
the customer or the Company.

Revenue from trading and consultancy
service are recognise when it transfers
control of a product or service to a
customer.

ii) Revenue from real estate development
contracts

The Company constructs and sells
residential properties under long-term
contracts with customers. Such contracts
are entered into before or after construction
of the residential properties begins. Under
the terms of the contracts, the Company is
contractually restricted from redirecting the
properties to another customer and does
not have an enforceable right to payment
for work done. Revenue from construction
of real estate properties is therefore
recognised at a point of time.

Revenue from building development is
measured based on the consideration to
which the Company expects to be entitled
in a contract with a customer and excludes
amounts collected on behalf of third parties.
The Company recognises revenue when it
transfers control of a product or service to a
customer.

l) Interest in joint arrangements

As per Ind AS 111 - Joint arrangements, investment in
joint arrangement is classified as either joint operation
or joint venture. The classification depends on the
contractual rights and obligations of each investor
rather than legal structure of the joint arrangement.

The Company recognises its direct right to assets,
liabilities, revenue and expenses of joint operations and
its share of any jointly held or incurred assets, liabilities,
revenues and expenses. These have been incorporated
in the Standalone Financial Statement under the
appropriate headings.

m) Foreign currency transaction/translations

Transactions in foreign currency including acquisition
of property, plant and equipment are recorded at

the prevailing exchange rates on the date of the
transaction. All monetary assets and monetary
liabilities in foreign currencies are translated at the
relevant rates of exchange prevailing at the year-end.
Foreign exchange gains and losses resulting from
the settlement of such transactions and from the
translation of monetary items denominated in foreign
currency at prevailing reporting date exchange rates are
recognised in profit or loss.

Revenue transactions at the foreign branch/projects
are translated at average rate. Property, plant and
equipment are translated at rate prevailing on the date
of purchase. Net exchange rate difference is recognized
in the statement of profit and loss. Depreciation is
translated at rates used for respective assets.

n) Financial instrument

A financial instrument is any contract that gives rise to
a financial asset of one entity and financial liability or
equity instrument of another entity.

(I) Financial asset:

Initial recognition and measurement :

All financial assets are recognized initially at fair value
plus, in the case of financial assets not recorded at
fair value through P&L, transaction costs that are
attributable to the acquisition of the financial asset.
However, trade receivables that do not contain a
significant financing component are measured at
transaction price. Purchase or sales of financial assets
that require delivery of assets within a time frame
established by regulation or convention in the market
place are recognized on the trade date i.e. the date that
the Company commits to purchase or sell the asset.

Subsequent measurement :

For the purpose of subsequent measurement financial
assets are classified as measured at:

• Amortised cost

• Fair value through profit and loss (FVTPL)

• Fair value through other comprehensive income
(FVTOCI).

(a) Financial asset measured at amortized cost:

Financial assets held within a business
model whose objective is to hold financial
assets in order to collect contractual cash
flows and the contractual terms of the
financial asset give rise on specified dates
to cash flows that are solely payments
of principal and interest on the principal
amount outstanding are measured at
amortized cost using effective interest
rate (EIR) method. The EIR amortization
is recognized as finance income in the

statement of profit and loss. The Company
while applying above criteria has classified
the following at amortized cost:

(a) Trade receivables

(b) Investment in subsidiaries, associates
and joint ventures

(c) Loans

(d) Other financial assets

(b) Financial assets measured at fair value
through other comprehensive income :

Financial assets that are held within a
business model whose objective is achieved
by both, selling financial assets and
collecting contractual cash flows that are
solely payments of principal and interest,
are subsequently measured at fair value
through other comprehensive income. Fair
value movements are recognized in the
other comprehensive income (OCI). Interest
income measured using the EIR method and
impairment losses, if any are recognized
in the Statement of Profit and Loss. On
derecognition, cumulative gain or loss
previously recognised in OCI is reclassified
from the equity to ‘other income’ in the
statement of profit and loss.

(c) Financial assets at fair value through profit
or loss (FVTPL) :

Financial asset are measured at fair value
through profit and loss if it does not meet
the criteria for classification as measured
at amortized cost or at FVTOCI. All fair value
changes are recognized in the statement of
profit and loss.

Equity instruments

All investments in equity instruments
classified under financial assets are initially
measured at fair value , the group may,
on initial recognition, irrevocably elect
to measure the same either at FVTOCI or
FVTPL.

De-recognition of financial assets:

Financial assets are derecognized when the
contractual rights to the cash flows from
the financial asset expire or the financial
asset is transferred and the transfer
qualifies for derecognition. On derecognition
of a financial asset in its entirety, the
difference between the carrying amount
(measured on the date of recognition) and
the consideration received (including any

new asset obtained less any new liability
assumed) shall be recognized in the
statement of profit and loss.

Impairment of financial assets:

In accordance with Ind AS 109, the Company
applies expected credit loss (ECL) model by
adopting the simplified approach using a
provision matrix reflecting current condition
and forecasts of future economic conditions
for measurement and recognition of
impairment loss on the following financial
assets and credit risk exposure:

(a) Financial assets that are debt
instruments, and are measured
at amortized cost e.g. loans, debt
securities, deposits, trade receivables
and bank balance

(b) Lease receivables

(c) Trade receivables or any contractual
right to receive cash or another
financial asset

(d) Loan commitments which are not
measured at FVTPL

(e) Financial guarantee contracts which
are not measured at FVTPL

(II) Financial liability

Initial recognition and measurement :

Financial liabilities are recognized initially at fair value
plus any transaction cost that are attributable to the
acquisition of the financial liability except financial
liabilities at FVTPL that are measured at fair value.

Subsequent measurement :

Financial liabilities are subsequently measured at
amortised cost using the EIR method. Financial
liabilities carried at fair value through profit or loss are
measured at fair value with all changes in fair value
recognised in the statement of profit and loss.

Financial liabilities at amortized cost:

Amortized cost for financial liabilities represents
amount at which financial liability is measured at initial
recognition minus the principal repayments, plus or
minus the cumulative amortization using the effective
interest method of any difference between the initial
amount and the maturity amount.

The Company is classifying the following under
amortized cost

- Borrowings from banks

- Borrowings from others

- Trade payables

- Other financial liabilities
Derecognition:

A financial liability shall be derecognized when, and
only when, it is extinguished i.e. when the obligation
specified in the contract is discharged or cancelled or
expires. The difference between the carrying amount
and fair value of the liabilities shall be recognised in the
statement of profit and loss.

o) Financial derivative and hedging transactions

In respect of financial derivative and hedging contracts,
gain / loss are recognized on mark-to-market basis and
charged to the statement of profit and loss along with
underlying transactions.

p) Fair value measurement

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price
is directly observable or estimated using another
valuation technique. In estimating the fair value of an
asset or a liability, the Company takes into account
the characteristics of the asset or liability if market
participants would take those characteristics into
account when pricing the asset or liability at the
measurement date. Fair value for measurement and/
or disclosure purposes in these Standalone Financial
Statement is determined on such a basis, except for
leasing transactions that are within the scope of Ind
AS 17 - leases, and measurements that have some
similarities to fair value but are not fair value, such as
net realisable value in Ind AS 2 - inventories or value in
use in Ind AS 36 - impairment of assets.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs:

Level 1 — Quoted (unadjusted) market prices in active
markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is unobservable

For assets and liabilities that are recognised in the
Standalone Financial Statement on a recurring basis,
the Company determines whether transfers have
occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level
input that is significant to the fair value measurement
as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the
asset or liability and the level of the fair value hierarchy
as explained above.

q) Employee benefits

Short-term employee benefits :

Short-term employee benefits are expensed as the
related service is provided. A liability is recognised for
the amount expected to be paid if the Company has
a present legal or constructive obligation to pay this
amount as a result of past service provided by the
employee and the obligation can be estimated reliably.

Defined contribution plans :

Contribution towards provident fund/family pensions
are made to the recognized funds, where the Company
has no further obligations. Such benefits are classified
as defined contribution schemes as the Company
does not carry any further obligations, apart from the
contributions made on a monthly basis.

Defined benefit plans :

Provision for incremental liability in respect of gratuity
and leave encashment is made as per independent
actuarial valuation on projected unit credit method
made at the year-end.

Remeasurement of the net defined benefit liability,
which comprise actuarial gains and losses and the
return on plan assets (excluding interest) and the
effect of the asset ceiling (if any, excluding interest),
are recognized immediately in other comprehensive
income (OCI). Net interest expense (income) on the net
defined liability (assets) is computed by applying the
discount rate, used to measure the net defined liability
(asset). Net interest expense and other expenses
related to defined benefit plans are recognised in
statement of profit and loss.

r) Taxation

The tax expenses for the period comprises of current
tax and deferred income tax. Tax is recognised in
Statement of Profit and Loss, except to the extent
that it relates to items recognised in the Other
Comprehensive Income. In which case, the tax is also
recognised in Other Comprehensive Income.

Current tax:

Provision for current tax is recognised based on the
estimated tax liability computed after taking credit for
allowances and exemptions in accordance with the
Income Tax Act, 1961.

Deferred tax:

Deferred tax assets and liabilities are recognised for
the future tax consequences attributable to temporary
differences between the Standalone Financial
Statement carrying amount of existing assets and
liabilities and their respective tax basis. Deferred tax
assets and liabilities are measured at the tax rates that
are expected to apply in the period in which the liability
is settled or the asset realised; using the enacted tax
rates or tax rates that are substantively enacted at
the balance sheet dates. The effect on the deferred
tax assets and liabilities of a change in tax rate is
recognised in the period that includes the enactment
date. Deferred tax assets are recognised to the extent it
is probable that taxable profit will be available against
which the deductible temporary differences, and the
carry forward of unused tax losses can be utilised. The
carrying amount of Deferred tax liabilities and assets
are reviewed at the end of each reporting period.

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Mar 31, 2024

SUMMARY OF MATERIAL ACCOUNTING POLICIES

a) Statement of compliance

The financial statements of Patel Engineering Limited (“the Company or PEL”) have been prepared to comply, in all material respects, with the Indian Accounting Standards (“Ind AS”) as specified under section 133 of the Companies Act 2013 read together with the Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015 and amendment thereof issued by the Ministry of Corporate Affairs in exercise of the power conferred by section 133 of the Companies Act, 2013 and the other relevant provision; of the Act, pronouncements of the regulatory bodies applicable to the company.

These financial statement have been approved for issue by the Board of Directors, at their meeting held on May 18, 2024.

b) Basis of preparation

The financial statements are prepared under the historical cost convention, on a going concern basis and accrual method of accounting, except for certain financial assets and liabilities as specified in defined benefit plans which have been measured at actuarial valuation as required by relevant Ind AS. The accounting policies applied are consistent with those used in the previous year, except otherwise stated.

The standalone financial statements are presented in Indian Rupees and all values are rounded off to the nearest millions (Rupees 000,000), except where otherwise indicated. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding off.

The Company adopted Disclosure of Accounting Policies (Amendments to Ind AS 1) from April 1, 2023. Although the amendments did not result in any changes in the accounting policies themselves, they impacted the accounting policy information disclosec in the financial statements.

The amendments require the disclosure of ‘material'' rather than ‘significant'' accounting policies.

The amendments also provide guidance on the application of materiality to disclosure of accounting policies, assisting entities to provide useful, entity-specific accounting policy information that users need to understand other information in the financial statements.

c) Current/non-current classification

The Company as required by Ind AS 1 presents assets and liabilities in the balance sheet based on current / non-current classification.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The Company has ascertained its operating cycle as twelve months for the purpose of current / noncurrent classification of its assets and liabilities, as it is not possible to identify the normal operating cycle.

d) Critical accounting estimates and judgements:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles, requires management to make estimates and assumptions 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 period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Revisions to accounting estimates are recognised prospectively.

The areas involving critical estimates or judgements are:

- Estimation of defined benefit obligation

- Estimation of useful life of property, plant and equipment and intangibles

- Estimation of total contract revenue and costs for revenue recognition

- Estimation of recognition of deferred taxes

- Estimation of impairment of financial assets (i.e. expected credit loss on trade receivables)

- Estimation of provision and contingent liabilities

- Estimation on discounting of lease liability on application of Ind AS 116

e) Property, plant and equipment

Property, plant and equipment (PPE), except land, are stated at net of recoverable taxes, trade discount and rebates less accumulated depreciation and accumulated impairment losses, if any. Land is stated at revalued amount determined by an independent registered valuer from time to time.

Such cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use. Property, plant and equipment costing '' 5,000 or less are not capitalised and charged to the statement of profit and loss.

Machinery spares that meet the definition of PPE are capitalised.

Capital work-in-progress in respect of assets which are not ready for their intended use are carried at cost, comprising of direct costs, related incidental expenses and attributable interest.

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost can be measured reliably.

The carrying amount of an item of PPE are derecognised on disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss.

f) Intangible assets

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated depreciation / amortisation and impairment loss, if any.

Such cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost can be measured reliably.

g) Depreciation

Depreciation on the property, plant and equipment (other than freehold land) is provided based on useful life of the assets as prescribed in Schedule II to the Act. Depreciation on property, plant and equipment, which are added/disposed-off during the year, is provided on pro-rata basis with reference to the month of addition/deletion, in the profit or loss.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and, if expectations differ from previous estimates, the change(s) are accounted for as a change in an accounting estimate in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors.

Intangible assets

The Company amortises intangible assets with a finite useful life using the straight-line method over the following periods:

Computer software 3 years

h) Impairment of non-financial assets

The carrying amount of assets/cash generating units are reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors. An impairment loss is recognised in the statement of profit and loss whenever the carrying amount of an asset or cash generating unit exceeds its recoverable amount. The recoverable amount of the assets (or where applicable, that of cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. A previously recognised impairment loss is increased 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.

i) Investments in subsidiaries, joint ventures and associates

Investments in subsidiaries, joint ventures and associates are recognised at cost less accumulated impairment (if any) as per Ind AS 27, except where investments accounted for in accordance with Ind AS 105, non-current assets held for sale and discontinued operations, when they are classified as held for sale.

j) Inventories

The stock of land, construction materials, stores, spare parts, embedded goods and fuel is valued at cost (on weighted average basis), or net realisable value, whichever is lower and work in progress of construction contracts at contract rate. Cost includes expenditures incurred in acquiring the inventories, conversion costs and other costs incurred in bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated cost necessary to make the sale.

Work in progress in respect of project development and buildings held as stock-in-trade are valued at cost or net realizable value, whichever is lower.

k) Recognition of income and expenditure

Revenue toward satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The Company satisfies a performance obligation and recognises revenue over time, if one of the following criteria''s are met:

1. The customer simultaneously receives and consumes the benefits provided by the Company''s performance as the Company performs; or

2. The Company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

3. The Company''s performance does not create an asset with an alternative use to the Company and the entity has an enforceable right to payment for performance completed to date.

i) Construction revenue

The company constructs various infrastructure projects on behalf of clients. Under the terms of the contracts, where the company is contractually restricted from redirecting the properties to another customer and has an enforceable right to payment for work done; revenue is recognised over a period of time. The percentage-of-completion of a contract is determined by the proportion that contract costs incurred for work performed upto the reporting date bear to the estimated total contract costs. This is achieved by estimating total revenue including claims / variations and total cost till completion of the contract and the profit is recognised in proportion to the value of work done when the outcome of the contract can be estimated reliably. Revenue also includes claims / variations when it is highly probable of recovery based on estimate and assessment of each item by the management based on their judgement of recovery. The management considers that this input method is an appropriate measure of the progress towards complete satisfaction of these performance obligations under Ind AS 115.

The company becomes entitled to invoice customers for construction based on achieving a series of performance related milestones. When a particular milestone is achieved, the customer is sent a statement of work completed assessed by expert. Previously recognised contract asset for any work performed is reclassified to trade receivables at the point at which it is invoiced to the customer. Advances received from customers in respect of contracts are treated as liabilities and adjusted against progress billing as per terms of the contract. Progress payments received are adjusted against amount receivable from customers in respect of the contract work performed.

Significant judgement is required to evaluate assumptions related to the amount of net contract revenues, including the impact of any performance

incentives, liquidated damages, and other forms of variable consideration. When the outcome of a construction contract can not be estimated reliably, contract revenue is recognised only to the extent of contract cost incurred that are likely to be recoverable.

Consideration is adjusted for the time value of money if the period between the transfer of goods or services and the receipt of payment exceeds twelve months and there is a significant financing benefit either to the customer or the Company.

Revenue from trading and consultancy service are recognises when it transfers control of a product or service to a customer.

ii) Revenue from real estate development contracts

The company constructs and sells residential properties under long-term contracts with customers. Such contracts are entered into before or after construction of the residential properties begins. Under the terms of the contracts, the company is contractually restricted from redirecting the properties to another customer and does not have an enforceable right to payment for work done. Revenue from construction of real estate properties is therefore recognised at a point of time.

Revenue from building development is measured based on the consideration to which the company expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product or service to a customer.

l) Interest in joint arrangements

As per Ind AS 111 - Joint arrangements, investment in joint arrangement is classified as either joint operation or joint venture. The classification depends on the contractual rights and obligations of each investor rather than legal structure of the joint arrangement.

The Company recognises its direct right to assets, liabilities, revenue and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the Standalone Financial Statement under the appropriate headings.

m) Foreign currency transaction/translations

Transactions in foreign currency including acquisition of property, plant and equipment are recorded at

the prevailing exchange rates on the date of the transaction. All monetary assets and monetary liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year-end. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary items denominated in foreign currency at prevailing reporting date exchange rates are recognised in profit or loss.

Revenue transactions at the foreign branch/projects are translated at average rate. Property, plant and equipment are translated at rate prevailing on the date of purchase. Net exchange rate difference is recognized in the statement of profit and loss. Depreciation is translated at rates used for respective assets.

n) Financial instrument:

A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity instrument of another entity.

(I) Financial asset:

Initial recognition and measurement :

All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through P&L, transaction costs that are attributable to the acquisition of the financial asset. However, trade receivables that do not contain a significant financing component are measured at transaction price. Purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place are recognized on the trade date i.e. the date that the company commits to purchase or sell the asset.

Subsequent measurement :

For the purpose of subsequent measurement financial assets are classified as measured at:

• Amortised cost

• Fair value through profit and loss (FVTPL)

• Fair value through other comprehensive income (FVTOCI).

(a) Financial asset measured at amortized cost :

Financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of

principal and interest on the principal amount outstanding are measured at amortized cost using effective interest rate (EIR) method. The EIR amortization is recognized as finance income in the statement of profit and loss. The company while applying above criteria has classified the following at amortized cost:

(a) Trade receivables

(b) Investment in subsidiaries, associates and joint ventures

(c) Loans

(d) Other financial assets

(b) Financial assets measured at fair value through other comprehensive income :

Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to ‘other income'' in the statement of profit and loss.

(c) Financial assets at fair value through profit or loss (FVTPL) :

Financial asset are measured at fair value through profit and loss if it does not meet the criteria for classification as measured at amortized cost or at FVTOCI. All fair value changes are recognized in the statement of profit and loss.

Equity instruments

All investments in equity instruments classified under financial assets are initially measured at fair value , the group may, on initial recognition, irrevocably elect to measure the same either at FVTOCI or FVTPL.

De-recognition of financial assets:

Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred and the transfer qualifies for derecognition. On derecognition of a financial asset in its entirety, the difference between the carrying amount (measured on the date of recognition) and the consideration received (including any new asset obtained less any new liability assumed) shall be recognized in the statement of profit and loss.

Impairment of financial assets:

In accordance with Ind AS 109, the company applies expected credit loss (ECL) model by adopting the simplified approach using a provision matrix reflecting current condition and forecasts of future economic conditions for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

(a) Financial assets that are debt instruments, and are measured at amortized cost e.g. loans, debt securities, deposits, trade receivables and bank balance

(b) Lease receivables

(c) Trade receivables or any contractual right to receive cash or another financial asset

(d) Loan commitments which are not measured at FVTPL

(e) Financial guarantee contracts which are not measured at FVTPL

(II) Financial liability

Initial recognition and measurement :

Financial liabilities are recognized initially at fair value plus any transaction cost that are attributable to the acquisition of the financial liability except financial liabilities at FVTPL that are measured at fair value.

Subsequent measurement :

Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the statement of profit and loss.

Financial liabilities at amortized cost:

Amortized cost for financial liabilities represents amount at which financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount.

The company is classifying the following under amortized cost

- Borrowings from banks

- Borrowings from others

- Trade payables

- Other financial liabilities

Derecognition:

A financial liability shall be derecognized when, and only when, it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled or expires. The difference between the carrying amount and fair value of the liabilities shall be recognised in the statement of profit and loss.

o) Financial derivative and hedging transactions

In respect of financial derivative and hedging contracts, gain / loss are recognized on mark-to-market basis and charged to the statement of profit and loss along with underlying transactions.

p) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these Standalone Financial Statement is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17 - leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - inventories or value in use in Ind AS 36 - impairment of assets.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the Standalone Financial Statement on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

q) Employee benefits

Short term employee benefits :

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Defined contribution plans

Contribution towards provident fund/family pensions are made to the recognized funds, where the Company has no further obligations. Such benefits are classified as defined contribution schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.

Defined benefit plans :

Provision for incremental liability in respect of gratuity and leave encashment is made as per independent actuarial valuation on projected unit credit method made at the year-end.

Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses and the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income (OCI). Net interest expense (income) on the net defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability (asset). Net interest expense and other expenses related to defined benefit plans are recognised in statement of profit and loss.

r) Taxation

The tax expenses for the period comprises of current tax and deferred income tax. Tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in the Other Comprehensive Income. In which case, the tax is also recognised in Other Comprehensive Income.

Current tax:

Provision for current tax is recognised based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Income Tax Act, 1961.

Deferred tax:

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to temporary differences between the Standalone Financial Statement carrying amount of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised; using the enacted tax rates or tax rates that are substantively enacted at the balance sheet dates.

The effect on the deferred tax assets and liabilities of a change in tax rate is recognised in the period that includes the enactment date. Deferred tax assets are recognised to the extent it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax losses can be utilised. The carrying amount of Deferred tax liabilities and assets are reviewed at the end of each reporting period.

---

Mar 31, 2023

SIGNIFICANT ACCOUNTING POLICIES

a) Statement of compliance

Patel Engineering Ltd. (''the Company¹) has prepared
consolidated financial statements to provide the
financial information of its activities along with
its subsidiaries, associates and joint ventures as a
single entity. They are collectively referred as "Group"
herein.

The consolidated financial statements of the group
have been prepared to comply in all material respects
with the Indian Accounting Standards (""Ind AS"")
as specified under section 133 of the Companies Act
2013 read together with the Rule 4 of the Companies
(Indian Accounting Standards) Rules, 2015 and
amendment thereof issued by Ministry of Corporate
Affaires in exercise of the power conferred by section
133 of the Companies Act, 2013 and the other
relevant provisions of the Act, pronouncements of the
regulatory bodies applicable to the Company.

These consolidated financial statement have been
approved for issue by Board of Directors at their
meeting held on May 15, 2023.

b) Basis of preparation

The consolidated financial statements are prepared
under the historical cost convention, on a going
concern basis and accrual method of accounting,
except for certain financial assets and liabilities as
specified in defined benefit plans which have been
measured at actuarial valuation as required by relevant
Ind AS. The accounting policies applied are consistent
with those used in the previous year, except otherwise
stated.

The consolidated financial statements are presented
in Indian Rupees and all values are rounded to the
nearest millions (Rupees 000,000), except where
otherwise indicated. Any discrepancies in any table
between totals and sums of the amounts listed are
due to rounding off.

c) Principles of consolidation

(i) The consolidated financial statements include
the accounts of Patel Engineering Ltd. and its
subsidiaries, associates and joint ventures.

(ii) The financial statements of joint ventures are
consolidated to the extent of the Company''s or

its subsidiaries share in joint venture.

(iii) The financial statements of the Company
including joint operations and its subsidiaries
have been combined on a line-by-line basis by
adding together the book values of like items
of assets, liabilities, income and expenses fully
eliminating material intra group balances and
intra group transactions. Associate entities are
consolidated as per the equity method.

(iv) Goodwill arising out of consolidation of financial
statements of subsidiaries and joint ventures are
tested for impairment at each reporting date.

The consolidated financial statement have been
prepared by the Company in accordance with
the requirements of Ind AS -110 "Consolidated
Financial Statements", Ind AS -111 "Joint
Arrangements" and Ind AS 28 "Investment in
Associates and Joint Ventures", issued by the
Ministry of Corporate Affairs.

Notes to these consolidated financial statements
are intended to serve as a means of informative
disclosure and a guide to better understanding.
Recognizing this purpose, the Company has
disclosed only such notes from the individual
financial statements, which fairly present the
needed disclosure.

d) Current / non-current classification

The Group as required by Ind AS 1 presents assets
and liabilities in the balance sheet based on current /
non-current classification.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

The Company has ascertained its operating cycle as
twelve months for the purpose of current / non¬
current classification of its assets and liabilities, as it
is not possible to identify the normal operating cycle.

e) Method of accounting

The Group maintains its accounts on accrual basis.
Subsidiaries outside India maintain its accounts based
on generally accepted accounting standards of their
respective countries.

f) Critical accounting estimates and judgements

The preparation of consolidated financial statements
in conformity with generally accepted accounting

principles requires management to make estimates
and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent
liabilities at the date of the consolidated financial
statements and the results of operations during the
reporting period. Although these estimates are based
upon management''s best knowledge of current events
and actions, actual results could differ from these
estimates. Revisions to accounting estimates are
recognized prospectively.

The areas involving critical estimates or judgements
are:

- Estimation of defined benefit obligation

- Estimation of useful life of property, plant and
equipment and intangibles

- Estimation of total contract revenue and costs
for revenue recognition

- Estimation of recognition of deferred taxes

- Estimation of impairment of financial assets (i.e.
expected credit loss on trade receivables)

- Estimation of provision and contingent liabilities

- Estimation on discounting of lease liability on
application of Ind AS 116

g) Property, plant and equipment

Property, plant and equipment (PPE) are stated at
net of recoverable taxes, trade discount and rebates
less accumulated depreciation and accumulated
impairment losses, if any.

Such cost comprises of purchase price and any
attributable cost of bringing the assets to its working
condition for its intended use. Property, plant and
equipment costing '' 5,000 or less are not capitalized
and charged to the consolidated statement of profit
and loss.

Machinery Spares that meet the definition of PPE are
capitalised.

Capital work-in-progress in respect of assets which are
not ready for their intended use are carried at cost,
comprising of direct costs, related incidental expenses
and attributable interest.

Subsequent expenditure is capitalized only if it is
probable that the future economic benefits associated
with the expenditure will flow to the Group and the

cost can be measured reliably.

The carrying amount of an items of PPE are
derecognised on disposal or when no future economic
benefits are expected from its use or disposal. Any
gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is
included in the profit or loss.

f) Intangible assets

Intangible assets are stated at cost of acquisition net
of recoverable taxes less accumulated depreciation /
amortisation and impairment loss, if any.

Such cost comprises of purchase price and any
attributable cost of bringing the assets to its
working condition for its intended use. Subsequent
expenditure is capitalised only if it is probable that
the future economic benefits associated with the
expenditure will flow to the Group and the cost can be
measured reliably.

h) Depreciation

Depreciation on the property, plant and equipment
(other than freehold land) is provided based on useful
life of the assets as prescribed in Schedule II to the
Act. Depreciation on property, plant and equipment,
which are added/disposed-off during the year, is
provided on pro-rata basis with reference to the
month of addition/deletion, in the profit or loss.

The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and, if expectations
differ from previous estimates, the change(s) are
accounted for as a change in an accounting estimate in
accordance with Ind AS 8, Accounting Policies, Changes
in Accounting Estimates and Errors.

Depreciation on leasehold land will be amortized after
commencement of operation of the power house. It
will be amortized over the useful life of the lease.

Michigan Engineers Private Limited and Shreeanant
Constructions Private Limited provide depreciation
on written down value method and based on useful
life of the assets as prescribed in schedule II of
the Companies Act, 2013 and in onsite Michigan JV
and Michigan Savitar Consortium as specified in the
income tax act.

The estimated useful life of Patel Michigan JV -
motor car - 10 years, motor truck - 6 years, office
equipments - 5 years, container - 3 years.

For overseas subsidiaries depreciation is provided
based on estimated useful lives of the property, plant
and equipment as determined by the management
of such subsidiaries. In view of different sets of
environment in which such entities operate in their
respective countries, depreciation is provided based
on the management experience of use of assets in
respective geographies, local laws and are in line with
the industry practices. These entities follow straight
line method of depreciation spread over the useful life
of each individual asset. It is practically not possible
to align rates of depreciation of such subsidiaries with
those of the domestic entities.

Intangible assets

The Group amortises intangible assets with a finite
useful life using the straight-line method over the
following periods:

Computer software 3 years

i) Impairment of non-financial assets

The carrying amount of assets/cash generating units
are reviewed at each balance sheet date if there is any
indication of impairment based on internal/external
factors. An impairment loss is recognized in the
consolidated statement of profit and loss whenever
the carrying amount of an asset or cash generating
unit exceeds its recoverable amount. The recoverable
amount of the assets (or where applicable, that of
cash generating unit to which the asset belongs) is
estimated as the higher of its net selling price and
its value in use. A previously recognized impairment
loss is increased 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.

j) Inventories

The stock of land, construction materials, stores,
spare parts, embedded goods and fuel is valued at
cost (on weighted average basis), or net realizable
value, whichever is lower and work in progress of
construction contracts at contract rate. Cost includes
expenditures incurred in acquiring the inventories,
conversion costs and other costs incurred in bringing
them to their existing location and condition. Net
realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of
completion and the estimated cost necessary to make
the sale.

Work in progress in respect of project development
and buildings held as stock-in-trade are valued at cost
or net realizable value, whichever is lower.

Project work in progress is valued at contract rates
and site mobilization expenditure of incomplete
contracts is stated at lower of cost or net realizable
value.

k) Recognition of income and expenditure

Revenue toward satisfaction of a performance
obligation is measured at the amount of transaction
price (net of variable consideration) allocated to
that performance obligation. The Group satisfies a
performance obligation and recognises revenue over
time, if one of the following criterias is met:

1. The customer simultaneously receives and
consumes the benefits provided by the Group''s
performance as the Group performs; or

2. The Group''s performance creates or enhances an
asset that the customer controls as the asset is
created or enhanced; or

3. The Group''s performance does not create an
asset with an alternative use to the Group and
the entity has an enforceable right to payment
for performance completed to date.

i) Construction revenue

The Company constructs various infrastructure
projects on behalf of clients. Under the
terms of the contracts, where the Company is
contractually restricted from redirecting the
properties to another customer and has an
enforceable right to payment for work done;
revenue is recognised over a period of time.
The percentage-of-completion of a contract

is determined by the proportion that contract
costs incurred for work performed upto the
reporting date bear to the estimated total
contract costs. This is achieved by estimating
total revenue including claims / variations
and total cost till completion of the contract
and the profit is recognised in proportion to
the value of work done when the outcome
of the contract can be estimated reliably.
Revenue also includes claims / variations
when it is highly probable of recovery based
on estimate and assessment of each item by
the management based on their judgement of
recovery. The management considers that this
input method is an appropriate measure of
the progress towards complete satisfaction of
these performance obligations under Ind AS
115.

The Company becomes entitled to invoice
customers for construction based on
achieving a series of performance related
milestones. When a particular milestone is
achieved, the customer is sent a statement
of work completed assessed by expert.
Previously recognised contract asset for
any work performed is reclassified to
trade receivables at the point at which
it is invoiced to the customer. Advances
received from customers in respect of
contracts are treated as liabilities and
adjusted against progress billing as per
terms of the contract. Progress payments
received are adjusted against amount
receivable from customers in respect of the
contract work performed.

Significant judgment is required to evaluate
assumptions related to the amount of net
contract revenues, including the impact
of any performance incentives, liquidated
damages, and other forms of variable
consideration. When the outcome of a
construction contract can not be estimated
reliably, contract revenue is recognised
only to the extent of contract cost incurred
that are likely to be recoverable.

Consideration is adjusted for the time value
of money if the period between the transfer
of goods or services and the receipt of
payment exceeds twelve months and there
is a significant financing benefit either to
the customer or the Company.

Revenue from trading and consultancy
service are recognises when it transfers
control of a product or service to a
customer.

ii) Revenue from Real estate development
contracts

The company constructs and sells
residential properties under long-term
contracts with customers. Such contracts
are entered into before or after
construction of the residential properties
begins. Under the terms of the contracts,
the company is contractually restricted
from redirecting the properties to another
customer and does not have an enforceable
right to payment for work done. Revenue
from construction of real estate properties
is therefore recognised at a point of time.

Revenue from building development is
measured based on the consideration to
which the company expects to be entitled
in a contract with a customer and excludes
amounts collected on behalf of third
parties. The company recognises revenue
when it transfers control of a product or
service to a customer.

l) Foreign currency transaction / translations

Transactions in foreign currency including acquisition
of property, plant and equipment are recorded in the
functional currency (Indian rupee) by applying to the
foreign currency amount, at the prevailing exchange
rates between the functional currency and foreign
currency on the date of the transaction. All monetary
assets and monetary liabilities in foreign currencies
are translated at the relevant rates of exchange
prevailing at the year-end. Foreign exchange gains
and losses resulting from the settlement of such
transactions and from the translation of monetary
items denominated in foreign currency at prevailing
reporting date exchange rates are recognised in profit
or loss.

Revenue transactions at the foreign branch/projects
are translated at average rate. Property, plant and
equipment are translated at rate prevailing on the
date of purchase. Net exchange rate difference
is recognized in the statement of profit and loss.
Depreciation is translated at rates used for respective
assets.

However, Michigan Engineers Private Limited opted to
recognize the exchange differences in the statement
of profit and loss.

Revenue items of overseas subsidiaries are translated
into indian rupees at average rate and all other
monetary/non monetary items are translated at
closing rate. Net exchange rate difference is
recognized as foreign exchange translation reserve.

m) Financial instrument:

A financial instrument is any contract that gives rise
to a financial asset of one entity and financial liability
or equity instrument of another entity.

(I) Financial asset:

Initial recognition and measurement :

All financial assets are recognized initially at
fair value plus, in the case of financial assets
not recorded at fair value through the statement
of profit and loss, transaction costs that are
attributable to the acquisition of the financial
asset. However, trade receivables that do not
contain a significant financing component are
measured at transaction price. Purchase or sales
of financial assets that require delivery of assets
within a time frame established by regulation or
convention in the market place are recognized
on the trade date i.e. the date that the Group
commits to purchase or sell the asset.

Subsequent measurement :

For the purpose of subsequent measurement
financial assets are classified as measured at:

• Amortized cost

• Fair value through profit and loss (FVTPL)

• Fair value through other comprehensive

income (FVTOCI).

(a) Financial asset measured at
amortized cost :

Financial assets held within a
business model whose objective is
to hold financial assets in order to
collect contractual cash flows and
the contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely payments of

principal and interest on the principal
amount outstanding are measured
at amortized cost using effective
interest rate (EIR) method. The EIR
amortization is recognized as finance
income in the consolidated statement
of profit and loss. The Group while
applying above criteria has classified
the following at amortized cost:

(a) Trade receivables

(b) Investment in subsidiaries

(c) Loans

(d) Other financial assets

(b) Financial assets measured at fair
value through other comprehensive
income:

Financial assets that are held within
a business model whose objective is
achieved by both, selling financial
assets and collecting contractual
cash flows that are solely payments
of principal and interest, are
subsequently measured at fair value
through other comprehensive income.
Fair value movements are recognized
in the other comprehensive income
(OCI). Interest income measured
using the EIR method and impairment
losses, if any are recognized in the
consolidated statement of profit and
loss. On derecognition, cumulative
gain or loss previously recognized in
OCI is reclassified from the equity to
''other income'' in the consolidated
statement of profit and loss."

(c) Financial assets at fair value
through profit or loss (FVTPL) :

Financial asset are measured at fair
value through profit and loss if it does
not meet the criteria for classification
as measured at amortized cost or
at FVTOCI. All fair value changes
are recognized in the Consolidated
statement of profit and loss.

Equity instruments

All investments in equity instruments
classified under financial assets are

initially measured at fair value , the
group may, on initial recognition,
irrevocably elect to measure the same
either at FVTOCI or FVTPL.

De-recognition of financial assets:

Financial assets are derecognized
when the contractual rights to the
cash flows from the financial asset
expire or the financial asset is
transferred and the transfer qualifies
for derecognition. On derecognition
of a financial asset in its entirety,
the difference between the carrying
amount (measured on the date of
recognition) and the consideration
received (including any new asset
obtained less any new liability
assumed) shall be recognized in the
consolidated statement of profit and
loss.

Impairment of financial assets:

In accordance with Ind AS 109,
the Group applies expected credit
loss (ECL) model by adopting the
simplified approach using a provision
matrix reflecting current condition
and forecasts of future economic
conditions for measurement and
recognition of impairment loss on the
following financial assets and credit
risk exposure:

(a) Financial assets that are debt
instruments, and are measured
at amortized cost e.g. loans,
debt securities, deposits, trade
receivables and bank balance

(b) Lease receivables

(c) Trade receivables or any
contractual right to receive cash
or another financial asset

(d) Loan commitments which are
not measured at FVTPL

(e) Financial guarantee contracts
which are not measured at FVTPL

(II) Financial liability

Initial recognition and measurement :

Financial liabilities are recognized initially at fair
value plus any transaction cost that are attributable
to the acquisition of the financial liability except
financial liabilities at FVTPL that are measured at fair
value.

Subsequent measurement :

Financial liabilities are subsequently measured at
amortized cost using the EIR method. Financial
liabilities carried at fair value through profit or loss
are measured at fair value with all changes in fair
value recognized in the consolidated statement of
profit and loss.

Financial liabilities at amortized cost:

Amortized cost for financial liabilities represents
amount at which financial liability is measured at
initial recognition minus the principal repayments,
plus or minus the cumulative amortization using the
effective interest method of any difference between
the initial amount and the maturity amount.

The Group is classifying the following under amortized
cost

- Borrowings from banks

- Borrowings from others

- Trade payables

- Other financial liabilities

Derecognition:

A financial liability shall be derecognized when, and
only when, it is extinguished i.e. when the obligation
specified in the contract is discharged or cancelled or
expires. The difference between the carrying amount
and fair value of the liabilities shall be recognized in
the consolidated statement of profit and loss.

n) Financial derivative and hedging transactions

In respect of financial derivative and hedging
contracts, gain / loss are recognized on mark-
to-market basis and charged to the consolidated
statement of profit and loss along with underlying
transactions.

o) Fair value measurement

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price
is directly observable or estimated using another
valuation technique. In estimating the fair value of
an asset or a liability, the Group takes into account
the characteristics of the asset or liability if market
participants would take those characteristics into
account when pricing the asset or liability at the
measurement date. Fair value for measurement and/
or disclosure purposes in these consolidated financial
statements is determined on such a basis, except for
leasing transactions that are within the scope of Ind
AS 116 - leases, and measurements that have some
similarities to fair value but are not fair value, such as
net realisable value in Ind AS 2 - inventories or value
in use in Ind AS 36 - impairment of assets.

The Group uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs:

Level 1 — Quoted (unadjusted) market prices in
active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is unobservable

For assets and liabilities that are recognised in the
consolidated financial statements on a recurring basis,
the Group determines whether transfers have occurred
between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole)
at the end of each reporting period.

p) Employee benefits

Short term employee benefits :

Short-term employee benefits are expensed as the
related service is provided. A liability is recognized
for the amount expected to be paid if the Group has
a present legal or constructive obligation to pay
this amount as a result of past service provided by
the employee and the obligation can be estimated
reliably.

Defined contribution plans

Contribution towards provident fund/family pensions
are made to the recognized funds, where the Group
has no further obligations. Such benefits are classified
as defined contribution schemes as the Group does
not carry any further obligations, apart from the
contributions made on a monthly basis.

Defined benefit plans :

Provision for incremental liability in respect of
gratuity and leave encashment is made as per
independent actuarial valuation on projected unit
credit method made at the year-end.

Remeasurement of the net defined benefit liability,
which comprise actuarial gains and losses and the
return on plan assets (excluding interest) and the
effect of the asset ceiling (if any, excluding interest),
are recognized immediately in other comprehensive
income (OCI). Net interest expense /(income) on
the net defined liability /(assets) is computed by
applying the discount rate, used to measure the net
defined liability /(asset). Net interest expense and
other expenses related to defined benefit plans are
recognized in consolidated statement of profit and
loss.

q) Taxation

The tax expenses for the period comprises of current
tax and deferred income tax. Tax is recognised in
Statement of Profit and Loss, except to the extent
that it relates to items recognised in the Other
Comprehensive Income. In which case, the tax is also
recognised in Other Comprehensive Income.

Current tax:

Provision for current tax is recognized based on the
estimated tax liability computed after taking credit
for allowances and exemptions in accordance with the
Income Tax Act, 1961.

Deferred tax:

Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to temporary
differences between the financial statements'' carrying
amount of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities
are measured at the tax rates that are expected to
apply in the period in which the liability is settled or
the asset realised, using the enacted tax rates or tax
rates that are substantively enacted at the balance

sheet dates. The effect on the deferred tax assets and
liabilities of a change in tax rate is recognized in the
period that includes the enactment date. Deferred
tax assets are recognised to the extent it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry
forward of unused tax losses can be utilised. The
carrying amount of Deferred tax liabilities and assets
are reviewed at the end of each reporting period.

---

Mar 31, 2018

a) Basis of preparation

The financial statements of Patel Engineering Limited (“the Company or PEL”) have been prepared to comply in all material respects with the Indian Accounting Standards (“Ind AS”) as specified under section 133 of the Companies Act 2013 read together with the Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards) Amendment Rules 2016 to the extent applicable and the other relevant provisions of the Act, pronouncements of the regulatory bodies applicable to the company.

Effective from April 1, 2016, the Company has adopted all the IND AS statandards, except mention in the financial statements, and the adoption was carried out in accordance with IND AS 101, First-time Adoption of Indian Accounting Standarads, with April 1, 2015 as the transition date.

The transaction was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP).

The financial statements are prepared under the historical cost convention, on a going concern basis and accrual method of accounting, except for certain financial assets and liabilities as specified and defined benefit plans which have been measured at actuarial valuation as required by relevant Ind AS. The accounting policies applied are consistent with those used in the previous year.

b) Use of estimates

The preparation of the financial statements, in conformity with the recognition and measurement principles of Ind AS, requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and the results of operation during the reported period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates which are recognised in the period in which they are determined.

c) Critical accounting estimates and judgements:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions 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 period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. Revisions to accounting estimates are recognised prospectively.

The areas involving critical estimates or judgements are:

- Measurement of defined benefit obligation

- Estimation of useful life of property, plant and equipment and intangibles

- Recognition of deferred taxes

- Estimation of impairment

- Estimation of provision and contingent liabilities

d) Property, plant and equipment

Property, plant and equipment are stated at cost of acquisition including attributable interest and finance costs till the date of acquisition/ installation of the assets and improvement thereon less accumulated depreciation and accumulated impairment losses, if any.

Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use. Property, plant and equipment costing Rs. 5,000 or less are not capitalised and charged to the Statement of Profit and Loss.

Capital work-in-progress in respect of assets which are not ready for their intended use are carried at cost, comprising of direct costs, related incidental expenses and attributable interest.

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

e) Depreciation

As per the Schedule II of the Companies Act 2013, effective April 01, 2014, the management has internally reassessed the useful lives of assets to compute depreciation wherever necessary, to conform to the requirements of the Companies Act, 2013 which is:

Intangible assets

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated depreciation / amortisation and impairment loss, if any.

Intangible assets are amortized over their useful life.

f) Impairment of assets

The carrying amount of assets/cash generating units are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised in the statement of profit and loss whenever the carrying amount of an asset or cash generating unit exceeds its recoverable amount.

The recoverable amount of the assets (or where applicable, that of cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. A previously recognised impairment loss is increased or reversed depending on changes in circumstanses.

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.

g) Investments in subsidiaries, joint ventures and associates

Investments in subsidiaries, joint ventures and associates are recognised at cost as per Ind AS 27. Except where investments accounted for at cost shall be accounted for in accordance with Ind AS 105, non-current assets held for sale and discontinued operations, when they are classified as held for sale.

h) Inventories

The stock of construction materials, stores, spares and embedded goods and fuel is valued at cost (on weighted average basis), or net realisable value, whichever is lower and work in progress of construction contracts at contract rate. Work in progress in respect of project development and buildings held as stock-in-trade are valued at cost or net realizable value, whichever is lower.

Project work in progress is valued at contract rates and site mobilisation expenditure of incomplete contracts is stated at lower of cost or net realisable value.

i) Recognition of income and expenditure

i) Accounting for construction contracts :

Revenue from contracts is recognised on the basis of percentage of completion method, based on the stage of completion at the balance sheet date, billing schedules agreed with the client on a progressive completion basis taking into account the contractual price and the revision thereto by estimating total revenue including claims / variations and total cost till completion of the contract and the profit is recognised in proportion to the value of work done when the outcome of the contract can be estimated reliably. In case the estimated total cost of a contract based on technical and other estimate is expected to exceed the corresponding contract value, such excess is accounted for. Price/quantity escalation claims and/or variations are recognised on acceptance of concerned authorities or on evidence of its final acceptability. Revenue in respect of other claims are accounted as income in the year of receipt of award. Revenue on project development is recognised on execution of sale agreement. Dividend income is recognised when the right to receive payment is established. Other revenues and expenses are accounted on accrual basis.

ii) Revenue from building development is recognised on the percentage completion method of accounting. Revenue is recognised, in relation to the sold areas only, on the basis of percentage of actual cost incurred thereon including cost of land as against the total estimated cost of project under execution subject to such actual cost being 30% or more of the total construction / development cost. The estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognised in the period such changes are determined. However, if and when the total project cost is estimated to exceed the total revenue from the project, the loss is recognised in the same financial year.

iii) Revenue from sale of goods is recognised when the substantial risk and rewards of ownership is transferred to the buyer, which is generally on despatch and the collectability is reasonably measured. Revenue from product sales are shown as net of all applicable taxes and discount.

j) Interest in joint arrangements

As per Ind AS 111 - Joint Arrangements, investment in joint arrangement is classified as either joint operation or joint venture. The classification depends on the contractual rights and obligations of each investor rather than legal structure of the joint arrangement.

The Company recognises its direct right to assets, liabilities, revenue and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings.

k) Foreign currency transaction/translations

Transactions in foreign currency including acquisition of fixed assets are recorded at the prevailing exchange rates on the date of the transaction. All monetary assets and monetary liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year-end. Exchange differences arising out of payment/restatement of long term liabilities relating to property, plant and equipment are capitalized and in other cases amortised over the balance period of such long term monetary items. The unamortized balance is carried in the Balance Sheet as “Foreign currency monetary items translation difference account” as a separate line item under “Other equity”.

Revenue transactions at the Foreign branch/projects are translated at average rate. Property, plant and equipment are translated at rate prevailing on the date of purchase.

Net exchange rate difference is recognized in the Statement of Profit and Loss. Depreciation is translated at rates used for respective assets.

l) Financial instrument:

A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity instrument of another entity.

(I) Financial asset:

Initial recognition and measurement :

All financial instruments are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through P&L, transaction costs that are attributable to the acquisition of the financial asset, purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place are recognized on the trade date i.e. the date that the company commits to purchase or sell the asset.

Subsequent measurement :

For the purpose of subsequent measurement financial assets are classified as measured at:

- Amortised cost

- Fair value through profit and loss (FVTPL)

- Fair value through other comprehensive income (FVTOCI).

(a) Financial asset measured at amortized cost:

Financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at amortized cost using effective interest rate (EIR) method. The EIR amortization is recognized as finance income in the statement of profit and loss. The company while applying above criteria has classified the following at amortized cost:

(a) Trade receivables

(b) Investment in subsidiaries

(c) Loans

(d) Other financial assets

(b) Financial assets Measured at fair value through other comprehensive income :

Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to ‘other income’ in the statement of profit and loss.

(c) Financial assets at fair value through profit or loss (FVTPL) :

Financial asset are measured at fair value through profit and loss if it does not meet the criteria for classification as measured at amortized cost or at FVTOCI. All fair value changes are recognized in the statement of profit and loss.

Equity Instruments

All investments in equity instruments classified under financial assets are initially measured at fair value , the group may, on initial recognition, irrevocably elect to measure the same either at FVTOCI or FVTPL..

De-recognition of financial assets:

Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred and the transfer qualifies for derecognition. On derecognition of a financial asset in its entirety, the difference between the carrying amount (measured on the date of recognition) and the consideration received (including any new asset obtained less any new liability assumed) shall be recognized in the statement of profit and loss..

Impairment of financial assets:

In accordance with Ind AS 109, the company applies expected credit loss (ECL) model by adopting the simplified approach using a provision matrix reflecting current condition and forecasts of future economic conditions for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

(a) Financial assets that are debt instruments, and are measured at amortized cost e.g. loans, debt securities, deposits, trade receivables and bank balance.

(b) Financial assets that are debt instruments and are measured at FVTOCI.

(c) Lease receivables under Ind AS 17.

(d) Trade receivables or any contractual right to receive cash or another financial asset.

(e) Loan commitments which are not measured at FVTPL.

(f) Financial guarantee contracts which are not measured at FVTPL.

(II) Financial liability

Initial recognition and measurement :

Financial liabilities are recognized initially at fair value plus any transaction cost that are attributable to the acquisition of the financial liability except financial liabilities at FVTPL that are measured at fair value.

Subsequent measurement :

Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the statement of profit and loss.

Financial liabilities at amortized cost:

Amortized cost for financial liabilities represents amount at which financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount.

The company is classifying the following under amortized cost

- Borrowings from banks

- Borrowings from others

- Trade payables

- Other financial liabilities Derecognition:

A financial liability shall be derecognized when, and only when, it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled or expires. The difference between the carrying amount and fair value of the liabilities shall be recognised in the statement of profit and loss.

m) Financial derivative and hedging transactions

In respect of financial derivative and hedging contracts, gain / loss are recognized on mark-to-market basis and charged to the statement of profit and loss along with underlying transactions.

n) Employee benefits

Short term employee benefits :

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Defined contribution plans

Contribution towards provident fund/family pensions are made to the recognized funds, where the Company has no further obligations. Such benefits are classified as defined contribution schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.

Defined benefit plans :

Provision for incremental liability in respect of gratuity and leave encashment is made as per independent actuarial valuation on projected unit credit method made at the year-end.

Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses and the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income (OCI). Net interest expense (income) on the net defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability (asset). Net interest expense and other expenses related to defined benefit plans are recognised in statement of profit and loss.

o) Taxation

Current tax:

Provision for current tax is recognised based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Income Tax Act, 1961.

Deferred tax:

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to temporary differences between the finacial statements’ carrying amount of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates or tax rates that are substantively enacted at the balance sheet dates.

The effect on the deferred tax assets and liabilities of a change in tax rate is recognised in the period that includes the enactment date. Deferred tax assets are recognised only to the extent there is virtual certainty of realization in future.

p) Provisions, contingent liabilities and contingent assets

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote , no provision or disclosure is made.

Contingent assets are disclosed where an inflow of economic benefits is probable.

q) Employees stock option plan

Compensation expenses under “Employee Stock Option Plan” representing excess of fair price of the shares on the date of grant of option over the exercise price of option is amortized on a straight-line basis over the vesting period.

r) Borrowing cost

Borrowing costs directly attributable and identifiable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are charged to statement of profit and loss as incurred.

s) Leases

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as expense in the statement of profit and loss on a straight line basis over the lease term.

t) Business combinations

Business Combinations have been accounted for using the acquisition method as per Ind AS 103.

The cost of an acquisition is measured at the fair value of the asset transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition, which is the date on which control is transferred.

Business Combinations between entities under common control are accounted for at carrying value.

Transaction costs that the company incurs in connection with a business combination are expensed as incurred.

u) Earning per share

The Company presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock options granted to employees.

v) Standards issued but not yet effective

The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.

The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard: Ind AS 115 Revenue from Contracts with Customers Ind AS 115 was issued on 29 March 2018 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under Ind AS and the guidance note of real estate issued by ICAI. Ind AS 115 is applicable to the Company for annual periods beginning on or after April 1, 2018.

Based on the preliminary discussion with legal experts, management believes that the contract satisfies the conditions of Ind AS 115 for recognition of revenue at a point of time.

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Mar 31, 2017

a) Basis of preparation

The financial statements of Patel Engineering Limited (the Company or PEL) have been prepared to comply in all material respects with the Indian Accounting Standards (Ind AS) as specified under section 133 of the Companies Act 2013 read together with the Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards) Amendment Rules 2016 to the extent applicable and the other relevant provisions of the Act, pronouncements of the regulatory bodies applicable to the company.

The financial statements for the year ended March 31, 2016 and the opening Balance Sheet as at April 1, 2015 have been restated in accordance with Ind AS for comparative information. The financial statements for the year ended 31 March 2017 are the first financial statements prepared by the Company in accordance with Ind AS. In accordance of Ind AS 101, First time Adoption of Indian Accounting Standard, the Company has given an explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows (Refer note 1.3)

The financial statements are prepared under the historical cost convention, on a going concern basis and accrual method of accounting, except for certain financial assets and liabilities as specified and defined benefit plans which have been measured at actuarial valuation as required by relevant Ind AS. The accounting policies applied are consistent with those used in the previous year.

b) Use of estimates

The preparation of the financial statements, in conformity with the recognition and measurement principles of Ind AS, requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and the results of operation during the reported period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates which are recognised in the period in which they are determined.

c) Critical accounting estimates and judgements:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions 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 period. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates. Revisions to accounting estimates are recognised prospectively.

The areas involving critical estimates or judgements are:

- Measurement of defined benefit obligation

- Estimation of useful life of property, plant and equipment and intangibles

- Recognition of deferred taxes

- Estimation of impairment

- Estimation of provision and contingent liabilities

d) Recent accounting developments

i. Standards issued but not yet effective:

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ‘Statement of Cash Flows’ and Ind AS 102, ‘Share-based payment’ These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ‘Statement of Cash Flows’ and IFRS 2, ‘Share based payment,’ respectively. The amendments are applicable to the Company from April 1, 2017.

ii. Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.

iii. Amendment to Ind AS 102 :

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market based performance conditions and non-vesting conditions are reflected in the ‘fair values’, but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that includes a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement. The Company is evaluating the requirements of the amendment and the impact on the financial statements is being evaluated.

e) Property, plant and equipment

Property, plant and equipment are stated at cost of acquisition including attributable interest and finance costs till the date of acquisition/ installation of the assets and improvement thereon less accumulated depreciation and accumulated impairment losses, if any.

Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use. Property, plant and equipment costing Rs.5,000 or less are not capitalised and charged to the Statement of Profit and Loss.

Capital work-in-progress in respect of assets which are not ready for their intended use are carried at cost, comprising of direct costs, related incidental expenses and attributable interest.

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

On transition to Ind AS, the Company has opted to continue with the carrying values measured under the previous GAAP as at April 01, 2015 of its property, plant and equipment and use that carrying value as the deemed cost of the property, plant and equipment on the date of transition i.e. April 01, 2015.

f) Depreciation

As per the Schedule II of the Companies Act 2013, effective April 01, 2014, the management has internally reassessed the useful lives of assets to compute depreciation wherever necessary, to conform to the requirements of the Companies Act, 2013 which is:

Intangible assets

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated depreciation / amortisation and impairment loss, if any.

Intangible assets are amortized over their useful life.

g) Impairment of assets

The carrying amount of assets/cash generating units are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised in the statement of profit and loss whenever the carrying amount of an asset or cash generating unit exceeds its recoverable amount.

The recoverable amount of the assets (or where applicable, that of cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. A previously recognised impairment loss is increased or reversed depending on changes in circumstanses.

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.

h) Investments in subsidiaries, joint ventures and associates

Investments in subsidiaries, joint ventures and associates are recognised at cost as per Ind AS 27. Except where investments accounted for at cost shall be accounted for in accordance with Ind AS 105, non-current assets held for sale and discontinued operations, when they are classified as held for sale.

i) Inventories

The stock of construction materials, stores, spares and embedded goods and fuel is valued at cost (on weighted average basis), or net realisable value, whichever is lower and work in progress of construction contracts at contract rate. Work in progress in respect of project development and buildings held as stock-in-trade are valued at cost or net realizable value, whichever is lower.

Project work in progress is valued at contract rates and site mobilisation expenditure of incomplete contracts is stated at lower of cost or net realisable value.

j) Recognition of income and expenditure

i) Accounting for construction contracts :

Revenue from contracts is recognised on the basis of percentage of completion method, based on the stage of completion at the balance sheet date, billing schedules agreed with the client on a progressive completion basis taking into account the contractual price and the revision thereto by estimating total revenue including claims / variations and total cost till completion of the contract and the profit is recognised in proportion to the value of work done when the outcome of the contract can be estimated reliably. In case the estimated total cost of a contract based on technical and other estimate is expected to exceed the corresponding contract value, such excess is accounted for. Price/quantity escalation claims and/or variations are recognised on acceptance of concerned authorities or on evidence of its final acceptability. Revenue in respect of other claims are accounted as income in the year of receipt of award. Revenue on project development is recognised on execution of sale agreement. Dividend income is recognised when the right to receive payment is established. Other revenues and expenses are accounted on accrual basis.

ii) Revenue from building development is recognised on the percentage completion method of accounting. Revenue is recognised, in relation to the sold areas only, on the basis of percentage of actual cost incurred thereon including cost of land as against the total estimated cost of project under execution subject to such actual cost being 30% or more of the total construction / development cost. The estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognised in the period such changes are determined. However, if and when the total project cost is estimated to exceed the total revenue from the project, the loss is recognised in the same financial year.

iii) Revenue from sale of goods is recognised when the substantial risk and rewards of ownership is transferred to the buyer, which is generally on despatch and the collectability is reasonably measured. Revenue from product sales are shown as net of all applicable taxes and discount.

k) Interest in joint arrangements

As per Ind AS 111 - Joint Arrangements, investment in joint arrangement is classified as either joint operation or joint venture. The classification depends on the contractual rights and obligations of each investor rather than legal structure of the joint arrangement.

The Company recognises its direct right to assets, liabilities, revenue and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings.

l) Foreign currency transaction/translations

Transactions in foreign currency including acquisition of fixed assets are recorded at the prevailing exchange rates on the date of the transaction. All monetary assets and monetary liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year-end. Exchange differences arising out of payment/restatement of long term liabilities relating to property, plant and equipment are capitalized and in other cases amortised over the balance period of such long term monetary items. The unamortized balance is carried in the Balance Sheet as “Foreign currency monetary items translation difference account” as a separate line item under “Other equity”. Revenue transactions at the foreign branch/projects are translated at average rate. Property, plant and equipment are translated at rate prevailing on the date of purchase.

Net exchange rate difference is recognized in the statement of profit and loss. Depreciation is translated at rates used for respective assets.

Revenue transactions at the foreign branch/projects are translated at average rate. Property, plant and equipment are translated at rate prevailing on the date of purchase.

Net exchange rate difference is recognized in the Statement of Profit and Loss. Depreciation is translated at rates used for respective assets.

m) Financial instrument:

A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity instrument of another entity.

(I) Financial asset:

Initial recognition and measurement :

All financial instruments are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through P&L, transaction costs that are attributable to the acquisition of the financial asset, purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place are recognized on the trade date i.e. the date that the company commits to purchase or sell the asset.

Subsequent measurement :

For the purpose of subsequent measurement financial assets are classified as measured at:

- Amortised cost

- Fair value through profit and loss (FVTPL)

- Fair value through other comprehensive income (FVTOCI).

(a) Financial asset measured at amortized cost:

Financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at amortized cost using effective interest rate (EIR) method. The EIR amortization is recognized as finance income in the statement of profit and loss. The company while applying above criteria has classified the following at amortized cost:

(a) Trade receivables

(b) Investment in subsidiaries

(c) Loans

(d) Other financial assets

(b) Financial assets Measured at fair value through other comprehensive income :

Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income.

Fair value movements are recognized in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to ‘other income’ in the statement of profit and loss.

(c) Financial assets at fair value through profit or loss (FVTPL) :

Financial asset are measured at fair value through profit and loss if it does not meet the criteria for classification as measured at amortized cost or at FVTOCI. All fair value changes are recognized in the statement of profit and loss.

Equity Instruments

All investments in equity instruments classified under financial assets are initially measured at fair value, the group may, on initial recognition, irrevocably elect to measure the same either at FVTOCI or FVTPL.

De-recognition of financial assets:

Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred and the transfer qualifies for derecognition. On derecognition of a financial asset in its entirety, the difference between the carrying amount (measured on the date of recognition) and the consideration received (including any new asset obtained less any new liability assumed) shall be recognized in the statement of profit and loss.

Impairment of financial assets:

In accordance with Ind AS 109, the company applies expected credit loss (ECL) model by adopting the simplified approach using a provision matrix reflecting current condition and forecasts of future economic conditions for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

(a) Financial assets that are debt instruments, and are measured at amortized cost e.g. loans, debt securities, deposits, trade receivables and bank balance

(b) Financial assets that are debt instruments and are measured at FVTOCI.

(c) Lease receivables under Ind AS 17.

(d) Trade receivables or any contractual right to receive cash or another financial asset

(e) Loan commitments which are not measured at FVTPL

(f) Financial guarantee contracts which are not measured at FVTPL

(II) Financial liability

Initial recognition and measurement :

Financial liabilities are recognized initially at fair value plus any transaction cost that are attributable to the acquisition of the financial liability except financial liabilities at FVTPL that are measured at fair value.

Subsequent measurement :

Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the statement of profit and loss.

Financial liabilities at amortized cost:

Amortized cost for financial liabilities represents amount at which financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount.

The company is classifying the following under amortized cost

- Borrowings from banks

- Borrowings from others

- Trade payables

- Other financial liabilities

Derecognition:

A financial liability shall be derecognized when, and only when, it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled or expires.

n) Financial derivative and hedging transactions

In respect of financial derivative and hedging contracts, gain / loss are recognized on mark-to-market basis and charged to the statement of profit and loss along with underlying transactions.

o) Employee benefits

Short term employee benefits :

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Defined contribution plans

Contribution towards provident fund/family pensions are made to the recognized funds, where the Company has no further obligations. Such benefits are classified as defined contribution schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.

Defined benefit plans :

Provision for incremental liability in respect of gratuity and leave encashment is made as per independent actuarial valuation on projected unit credit method made at the year-end.

Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses and the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income (OCI). Net interest expense (income) on the net defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability (asset). Net interest expense and other expenses related to defined benefit plans are recognised in statement of profit and loss.

p) Taxation

Current tax:

Provision for current tax is recognised based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Income Tax Act, 1961.

Deferred tax:

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to temporary differences between the finacial statements’ carrying amount of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates or tax rates that are substantively enacted at the balance sheet dates.

The effect on the deferred tax assets and liabilities of a change in tax rate is recognised in the period that includes the enactment date. Deferred tax assets are recognised only to the extent there is virtual certainty of realization in future.

q) Provisions, contingent liabilities and contingent assets

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are disclosed where an inflow of economic benefits is probable.

r) Employees stock option plan

Compensation expenses under “Employee Stock Option Plan” representing excess of fair price of the shares on the date of grant of option over the exercise price of option is amortized on a straight-line basis over the vesting period.

s) Borrowing cost

Borrowing costs directly attributable and identifiable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are charged to statement of profit and loss as incurred.

t) Leases

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as expense in the statement of profit and loss on a straight line basis over the lease term.

u) Business combinations

Business Combinations have been accounted for using the acquisition method as per Ind AS 103.

The cost of an acquisition is measured at the fair value of the asset transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition, which is the date on which control is transferred.

Business Combinations between entities under common control are accounted for at carrying value.

Transaction costs that the company incurs in connection with a business combination are expensed as incurred.

v) Earning per share

The Company presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock options granted to employees.

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Mar 31, 2016

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation

The financial statements of Patel Engineering Limited ("the Company or PEL") have been prepared to comply in all material respects with the accounting standards notified by the Companies (Accounting Standards) Rules, read with rule 7 to the Companies (Accounts) Rules 2014 in respect of section 133 to the Companies Act, 2013. The financial statements are prepared under the historical cost convention, on an accrual basis of accounting. The accounting policies applied are consistent with those used in the previous year.

(b) Use of estimates

The preparation of financial statements, in conformity with Generally Accepted Accounting Principles, requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and the result of operation during the reported period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates which are recognized in the period in which they are determined.

(c) Fixed asset

i) Tangible fixed assets :

Fixed assets are stated at cost of acquisition including attributable interest and finance costs till the date of acquisition/ installation of the assets and improvement thereon less accumulated depreciation and accumulated impairment losses, if any.

ii) Intangible assets:

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated depreciations / amortization and impairment loss, if any. Fixed Assets costing '' 5,000 or less are not capitalised and charged to the Statement of Profit and Loss."

(d) Depreciation

As per the Schedule II of the Companies Act 2013, effective 1st April 2014, the management has internally reassessed the useful lives of assets to compute depreciation wherever necessary, to conform to the requirements of the Companies Act, 2013 which is:

Assets Estimated useful life Tangible Assets:

Factory Building/ Building 28/60 years

Machinery/ Ship 8 V2 years

Motor Cars/ Motor Truck 8 years Furniture/ Electrical Equipments 6 years

Office Equipments 5 years

Intangible Assets:

Computer / Software 3 years

(e) Impairment of assets

The carrying amount of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized in the statement of profit and loss whenever the carrying

amount of an asset or cash generating unit exceeds its recoverable amount. The recoverable amount of the assets (or where applicable, that of cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. A previously recognized impairment loss is increased 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.

(f) Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments.

Current investments are carried in the financial statements at lower of cost or fair value determined on an individual investment basis. Non-current investments are carried at cost and provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

(g) Inventories

The stock of construction materials, stores, spares and embedded goods and fuel is valued at cost (on weighted average basis), or net realizable value, whichever is lower and Work-in-progress of construction contracts at contract rate as per AS-7. Work in Progress in respect of project development and Buildings held as stock-in-trade are valued at cost or net realizable value, whichever is lower.

Project Work-in-progress is valued at contract rates and site mobilization expenditure of incomplete contracts is stated at lower of cost or net realizable value.

(h) Recognition of income and expenditure

i) Accounting for construction contracts :

Revenue from contracts is recognized on the basis of percentage of completion method, based on the stage of completion at the balance sheet date, billing schedules agreed with the client on a progressive completion basis taking into account the contractual price and the revision thereto by estimating total revenue including claims / variations in terms of Accounting Standard 7 - Construction Contract and total cost till completion of the contract and the profit is recognized in proportion to the value of work done when the outcome of the contract can be estimated reliably. In case the estimated total cost of a contract based on technical and other estimate is expected to exceed the corresponding contract value, such excess is accounted for. Price/Quantity Escalation Claims and/or variations are recognized on acceptance of concerned authorities or on evidence of its final acceptability. Revenue in respect of other claims are accounted as income in the year of receipt of award. Revenue on Project Development is recognized on execution of sale agreement. Dividend income is recognized when the right to receive payment is established. Other revenues and expenses are accounted on accrual basis.

ii) Revenue from building development is recognized on the percentage completion method of accounting. Revenue is recognized, in relation to the sold areas only, on the basis of percentage of actual cost incurred thereon including cost of land as against the total estimated cost of project under execution subject to such actual cost being 30% or more of the total construction / development cost. The estimates of saleable area and costs are revised periodically

by the management. The effect of such changes to estimates is recognized in the period such changes are determined. However, if and when the total project cost is estimated to exceed the total revenue from the project, the loss is recognized in the same financial year.

iii) Revenue from sale of goods is recognized when the substantial risk and rewards of ownership is transferred to the buyer, which is generally on dispatch and the collectability is reasonably measured. Revenue from product sales are shown as net of all applicable taxes and discount.

(i) Accounting for joint venture contracts

a) Where the Joint Venture Agreement provides for execution of contracts under work sharing pattern, the Company''s share of revenue/expenses in the works executed by it is accounted on percentage completion method as per the accounting policies followed by it in respect of contracts.

b) Where the Integrated Joint Venture Agreement provides for execution of contracts under profit sharing arrangement, Company''s share in the profit /loss is accounted for as and when determined. The services rendered to joint Ventures are accounted as income, on accrual basis. The contribution to joint venture along with share of profit/ loss accumulated in the Joint Venture is reflected as investments or loans & advances or current liabilities as per the nature of the transaction.

(j) Foreign currency transaction/translations

Transactions in foreign currency including acquisition of fixed assets are recorded at the prevailing exchange rates on the date of the transaction. All monetary assets and monetary liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year-end. Exchange differences arising out of payment/restatement of long term liabilities relating to Fixed Assets are capitalized and in other cases amortized over the balance period of such long term monetary items. The unamortized balance is carried in the Balance Sheet as " Foreign Currency Monetary items Translation Difference Account" as a separate line item under " Reserve and Surplus Account".

Revenue transactions at the Foreign Branch/projects are translated at average rate. Fixed Assets are translated at rate prevailing on the date of purchase. Net exchange rate difference is recognized in the Profit and Loss Account. Depreciation is translated at rates used for respective assets.

(k) Financial derivative & hedging transactions

In respect of Financial Derivative & Hedging Contracts, gain / loss are recognized on Mark-to-Market basis and charged to Statement of Profit and Loss along with underlying transactions.

(l) Retirement and other employee benefits

Contribution to Provident/Family Pension/Gratuity Funds are made to recognized funds and charged to the Statement of Profit and Loss. Provision for incremental liability in respect of Gratuity and Leave encashment is made as per independent Actuarial valuation at the year-end.

(m) Taxation

Current tax:

Provision for current tax is recognized based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Income Tax Act, 1961.

Deferred tax:

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences between the financial statements¹ carrying amount of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates or tax rates that are substantively enacted at the balance sheet dates. The effect on the deferred tax assets and liabilities of a change in tax rate is recognized in the period that includes the enactment date. Deferred tax assets are recognized only to the extent there is virtual certainty of realization in future.

(n) Provisions, contingent liabilities and contingent assets

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent Assets are neither recognized nor disclosed in the financial statements.

(o) Employees stock option plan

Compensation expenses under “Employee Stock Option Plan" representing excess of market price of the shares on the date of grant of option over the exercise price of option is amortized on a straight-line basis over the vesting period.

(p) Borrowing cost

Borrowing costs directly attributable and identifiable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. Other Borrowing costs are charged to statement of profit and loss as incurred.

(q) Leases

Leases, where the lesser effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as expense in the statement of profit and loss on a straight line basis over the lease term.

f) The Patel Engineering Employee Welfare Trust, (“the Trust") holds 60,45,000 shares of the Company and administers Company''s Employee Stock Option Schemes 2007 on behalf of the Company. The Trust on May 23, 2014 have granted 22,400 options to 159 eligible employees of the Company and the subsidiaries. Out of the 22,400 options so granted, 16,100 options have been vested and exercised during the year at an exercise price of '' 1 per share.

g) The allotment committee at its meeting on March 21, 2014 allotted 69,79,131 optionally convertible preference shares(OCPS) to the promoters of the Company. On March 31, 2014, out of the said OCPS, 64,17,174 OCPS were converted into 64,17,174 Equity shares of Rs. 1 and allotted @ Rs. 57.5 (including premium of Rs. 56.5). On April 15, 2014, the balance 5,61,957 OCPS were converted into 5,61,957 Equity shares of Rs.1 and allotted @ Rs. 57.5 (including premium of Rs. 56.5) in terms of Chapter VII of SEBI (ICDR) Regulation 2009.

¹Debentures

a) 11.30% Secured Redeemable Non Convertible Debentures were allotted on September 17, 2012 for a period of 10 years. These debentures have a face value of Rs. 1.0 Million each aggregating to Rs. 1,500.00 Million (P.Y. Rs. 1,500.00 Million) and are to be redeemed on September 17, 2022. The same is secured against charge on land held as stock in trade of the Company and its subsidiaries.

b) 9.80% Secured Redeemable Non Convertible Debentures were allotted on July 20, 2009 for a period of 7 years. These debentures have a face value of Rs. 1.0 Million each aggregating to Rs. 550 Million (P.Y. Rs. 550 Million) repayable in a single installment, with a put / call option available and exercisable at par at the end of 5th year from the date of allotment. The same are secured against land held as stock in trade of the Company and its subsidiaries. Interest rate has been revised to 13.32% p.a. (P.Y.13.16% p.a.) for IDBI w.e.f 19th September 2014 and in case of others it is 13.16% p.a. (P.Y. 13.16% p.a.) w.e.f. July, 2014.

c) 11.40% Secured Redeemable Non Convertible Debentures were allotted on July 11, 2011 for a period of 5 years. These debentures have a face value of Rs. 0.10 Million each aggregating to Rs. 500 Million (P.Y. Rs. 1,000 Million). These debentures will be redeemed as follows: July 11, 2016 - Rs. 500 Million. The same is secured against land held as stock in trade of the Company and its subsidiaries. Interest rates on the same has been revised at 13% p.a. (P.Y. 13% p.a.)

d) 10.75% Secured Redeemable Non Convertible Debentures was allotted on 3 March, 2011 for a period of 5 years. These debentures have a face value of Rs. 0.10 Million each aggregating to Rs. 200 Million (P.Y. Rs. 350 Million). These debentures would be redeemed as follows - March 3, 2016- Rs. 100 Million having interest rate at 13% p.a. (P.Y. 13% p.a.) and Rs. 100 Million (P.Y. Rs. 100 Million) having interest rate at 10.75% p.a. (P.Y. 10.75% p.a.). The same is secured against land held as stock in trade and subservient charge on all the fixed asset of the Company. The same is disclosed under the head "Other Payable" in note no. 9 (b)

e) 9.55% Secured Redeemable Non Convertible Debentures were allotted on April 26, 2010 for a period of 5 years. These debentures have a face value of Rs. 1.0 Million each aggregating to Rs. Nil (P.Y. Rs. 400 Million). The same are secured against immovable property and subservient charge on all the fixed assets of the Company. Interest rate on the same has been at 9.55% p.a. (P.Y. 9.55% p.a.).

The above debentures are listed on The National Stock Exchange of India.

As per Section 71 of the Companies Act, 2013 the Company has created adequate debenture redemption reserve for the above series of Secured Redeemable Non Convertible Debenture issued during the year. Further, in terms section 71 read with Rule 18(7)(c) of Companies Share Capital and Debentures Rules, 2014, the Company has failed to deposit/invest a sum of Rs. 187.50 Millions before April 30, 2015 to secure the repayments of debentures maturing during the year 2015-16. The debentures due to mature during the financial year 2015-16 amounted to Rs. 1,250 million including debentures stated at point no. 1(d) above, out of which debenture aggregating to Rs. 1,050 Million were repaid. The interest on NCD due and outstanding within 0-30 days of Rs. 43.66 Million.

²Term loan from banks

a) Term loans also include the loans taken from Standard Chartered Bank in form of FCNR loan. Outstanding amount out of the same is Rs. 95.01 Million (P.Y. Rs.128.97 Million) which was due before 20th January 2016 and rate of interest on the same has been LIBOR 400 i.e. 4.23% p.a.

b) The Term loans are secured by first charge on the specific assets acquired out of the term loan along with specifically identified unencumbered assets & guarantees. The rates of Interest for these loans vary between 10%-13% (floating) linked to monitoring institution''s base rate, with a repayment period of 5-7 years respectively. Term loan includes Working Capital Term Loan (WCTL) secured by a First pari passu charge on the receivables more than 180 days, WIP, mortgage over certain lands owned by subsidiary companies, corporate guarantee and pledge of 30% shareholding of subsidiaries owning real estate lands. There is a negative lien on shareholding (up to 30% shares) of Patel Engineering Limited held by promoters. The promoters - Mr. Pravin Patel and Mr. Rupen Patel in their personal capacity and Ms. Sonal Patel,

Mr. Bhimsen Batra & Mr. Muthu Raj to the extent of the value of the property given as security, owned by them in trust for the company, has provided personal guarantees for WCTL. Also, there is a charge on escrow accounts of PRIL & PEL, wherein cash flows will be deposited from real estate projects to be developed by respective companies.

Term loan amounting to '' 117.52 Million were due and outstanding as on 31/03/2016 comprises of '' 22.50 Million due within 0-30 days, Rs. 12.39 Million due within 60-90 days and Rs. 82.62 Million due for more 90 days. Interest on the term loans outstanding of Rs. 82.13 Million as on 31/03/2016 comprises of Rs. 8.33 Million due within 0-30 days, Rs. 72.60 Million due within 30-60 days, Rs. 0.30 Million due within 60-90 days and Rs. 0.90 Million due for more than 90 days.

³ From Others

Includes funds from Financial Institutions on Equipments, secured against the said Equipments. These loans carry an interest rate of average between 13%-14% on an average, with a repayment period of 3-5 years respectively. This Term Loan also includes Inter Corporate Deposits with an average rate of interest of 14%-15% with maturity period of 1-3 yrs. Principle due and outstanding on equipment loan of Rs. 13.13 Million as on 31/03/2016 comprises of Rs. 4.42 Million due within 0-30 days, 4.38 Million due within 30-60 days and Rs. 4.34 Million due within 60-90 days. Interest due and outstanding on equipment loan of Rs. 3.20 Million as on 31/03/2016 comprises of Rs. 1.03 Million due within 0-30 days, Rs. 1.07 Million due within 30-60 days and Rs. 1.10 Million due within 60-90 days.

¹Short term loan

Includes loans by earmarking from bank guarantee limits and short term loans from various banks against various immovable properties of company at Interest rate of 12-13% p.a (PY 12-13% p.a) payable within a year. Principle amount due and outstanding of Rs. 685.77 Million as on 31/03/2016 comprises of Rs. 279.56 million due within 0-30 days and Rs. 406.21 Million due within 30-60 days. Interest outstanding on short term loans of Rs. 80.61 Million as on 31/03/2016 comprises of Rs. 12.09 Million due within 0-30 days, Rs. 68.40 Million due within 30-60 days and Rs. 0.11 Million due within 60-90 days.

²Loans repayable on demand

Includes cash credit and working capital demand loan from various banks. These loans have been given against hypothecation of stocks, spare parts, book debts, work in progress & guarantees;

Terms of repayment:

Cash credit- yearly renewal, Rate of interest ranges between 12.50%-15% p.a. (PY 12.50%-15% p.a.)

³Unsecured loan

It includes short term loans from banks of Rs. 98.40 Million as on 31/03/2016 comprises of Rs. 73.39 Million due within 0-30 days, Rs. 25 Million due within 30-60 days.

The Company has Rs. 4.66 Million (PY Rs. 5.15 Million) due to suppliers under the Micro Small and Medium Enterprise Development Act, 2006, as at March 31, 2016. Principal amount due to suppliers under the Act is Rs. 2.07 Million (P.Y. Rs 3.58 Million). Interest accrued and due to the suppliers on the above amount is Rs. 0.02 Million (P.Y. Rs. 0.28 Million). Payment made to the suppliers (other than interest) beyond appointed day during the year is Rs. 4.45 Million (P.Y. Rs. 5.41 Million). Interest paid to the suppliers under the Act is Rs. 0.57 Million (P.Y. Rs. Nil). interest due and payable to the suppliers under the Act towards payments already made is Rs. 2.57 Million (P.Y. Rs. 1.3 Million). Interest accrued and remaining unpaid at the end of the accounting year is Rs. 1.47 Million (P.Y. Rs. 1.58 Million). The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure u/s 23 of the MSMED Act, 2006 is Rs. 1.12 Million (P.Y. Nil).

The above information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act 2006 and has been determined to the extent such parties had been identified on the basis of information available with the Company and relied upon by the auditors.

I. Aggregated amount of unquoted investments as at 31st March, 2016 Rs. 5,927.82 Million (P.Y. Rs. 6,055.96 Million)

II. Aggregated amount of quoted investments as at 31st March, 2016 Rs. Nil, market value Rs. 0.09 Million ( P.Y. Rs. Nil, market value Rs. 0.11 Million)

III. Includes investment in National Saving Certificates, in the name of directors, lodged with project authorities

IV. A firm AHCL - PEL having fixed capital of Rs. 75,000 (P.Y. Rs. 75,000), profit sharing has been reconstituted as follows :- the company 20% (P.Y. 20%), Ace Housing & Const. Ltd. 1% (P.Y. 1%) & Pravin Patel 79% (P.Y. 79%).A firm Patel Advance JV having nil fixed capital, partnership sharing has been as follows : the Company 26% (P.Y.27%), Advance Const. Co. Pvt. Ltd. 25% ( P.Y. 26%), Patel Realty (India) Ltd. Nil ( P.Y. 26%), Apollo Build well Pvt. Ltd. 25% (P.Y. 21%) & Advance Equipment Finance Pvt. Ltd. 24% (P.Y. Nil).

V. The Company had invested in shares of subsidiary Patel Engineering Lanka Pvt. Ltd (PELPL) for which allotment was made by the Board of PELPL and accordingly share certificates were issued. But due to some technical reasons and to comply with the Law of Sri Lanka with respect to issue of shares, the said allotment was reversed by PELPL. Hence the investment made by the Company is shown as Share Application Money.

1. Land includes Rs. 7.71 Million (P.Y. Rs. 8.29 Million) held in the name of Directors, relatives of Directors and employees for and on behalf of the Company.

2. a) Building includes Building [Gross Block -Rs. 203.70 Million (P.Y. Rs. 212.44 Million), Accumulated Depreciation Rs. 19.81 Million (P.Y. Rs. 17.54 Million)] and

Factory Building [Gross Block - Rs. 156.01 Million (P.Y. Rs. 156.01 Million), Accumulated Depreciation Rs. 40.45 Million (P.Y. Rs. 34.88 Million)]

b) Includes Rs. 0.01 Million (P.Y. Rs. 0.02 Million) being the value of 180 shares and share deposits in Co - operative Societies

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Mar 31, 2015

A) Basis of Preparation

The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India, the Accounting Standards as notified under Companies (Accounting Standards) Rules, 2006, read with general circular 15/2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013, the Provisions of the Companies Act, 1956 and 2013 and on the accounting principle of going concern. Expenses and Income to the extent considered payable and receivable, respectively, are accounted for on accrual basis, except those with significant uncertainties.

b) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Differences, if any, between actual results and estimates are recognized in the period in which the results are known/ materialize.

c) Fixed Asset

Fixed Assets are stated at cost of acquisition or construction (including installation cost upto the date put to use, net of specific credits) less accumulated depreciation. Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated depreciations / amortization and impairment loss, if any.

d) Depreciation

As per the Schedule II of the Companies Act 2013, effective 1st April 2014, the management has internally reassessed the useful lives of assets to compute depreciation wherever necessary, to conform to the requirements of the Companies Act, 2013 which is:

Tangible Assets : Factory Building/ Building - 28/60years, Machinery- 8 ½ years, Motor Cars- 8 years, Motor Truck- 8 years, Furniture- 6 years, Office Equipments- 5 years, Electrical Equipments- 6 years, Cycle- 2 years, Motor cycle- 7 years, Rails and Trolley- 7 years and Ship 8½ years. Intangible Assets : Computer / Soft-ware- 3 years. Depreciation on additions and deletions to assets during the year is provided pro-rata.

Depreciation on Fixed Assets is provided:

a) For assets purchased on or before April 1, 2014.

i) Whose remaining useful life is completed as at 1st April 2014, the carrying value of fixed assets is reduced from the retained earnings as at the said date.

ii) For remaining assets the carrying value of Fixed assets is depreciated equally over the balance useful life of the assets.

b) For assets other than those covered under clause (a) above, on Straight Line Method at the rates specified above.

e) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized, if any, in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

f) Investments

Current Investments are carried at lower of cost or quoted/ fair value. Long term Investments are stated at cost. Permanent diminution, if any, is provided for.

g) Inventories

Stores, embedded goods and spare parts are valued at cost (weighted average method ) and Work in progress of construction contracts at contract rate as per AS-7. Work in Progress in respect of Project development and Buildings held as stock-in-trade are valued at cost or net realizable value, whichever is lower.

h) Recognition of Income and Expenditure

i) Accounting for Construction Contracts :

Revenue from contracts is recognised on the basis of percentage of completion method, based on the stage of completion at the balance sheet date, billing schedules agreed with the client on a progressive completion basis taking into account the contractual price and the revision thereto by estimating total revenue including claims / variations in terms of Accounting Standard 7 - Construction Contract and total cost till completion of the contract and the profit is recognised in proportion to the value of work done when the outcome of the contract can be estimated reliably. In case the estimated total cost of a contract based on technical and other estimate is expected to exceed the corresponding contract value, such excess is accounted for. Price/Quantity Escalation Claims and/or variations are recognized on acceptance of concerned authorities or on evidence of its final acceptability. Revenue in respect of other claims are accounted as income in the year of receipt of award. Revenue on Project Development is recognized on execution of sale agreement. Dividend income is recognized when the right to receive payment is established. Other revenues and expenses are accounted on accrual basis.

ii) Revenue from building development is recognized on the percentage completion method of accounting. Revenue is recognized, in relation to the sold areas only, on the basis of percentage of actual cost incurred thereon including cost of land as against the total estimated cost of project under execution subject to such actual cost being 30% or more of the total construction / development cost. The estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognized in the period such changes are determined. However, if and when the total project cost is estimated to exceed the total revenue from the project, the loss is recognized in the same financial year.

i) Accounting for Joint Venture Contracts

a) Where the Joint Venture Agreement provides for execution of contracts under work sharing pattern, the Company's share of revenue/expenses in the works executed by it is accounted on percentage completion method as per the accounting policies followed by it in respect of contracts.

b) Where the Integrated Joint Venture Agreement provides for execution of contracts under profit sharing arrangement, Company's share in the profit /loss is accounted for as and when determined. The services rendered to Joint Ventures are accounted as income, on accrual basis. The contribution to joint venture along with share of profit/ loss accumulated in the Joint Venture is reflected as investments or loans & advances or current liabilities as per the nature of the transaction.

j) Foreign Currency Transaction/Translations

Transactions in foreign currency including acquisition of fixed assets are recorded at the prevailing exchange rates on the date of the transaction. All monetary assets and monetary liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year-end. Exchange differences arising out of payment/restatement of long term liabilities relating to Fixed Assets are capitalized and in other cases amortised over the balance period of such long term monetary items. The unamortized balance is carried in the Balance Sheet as " Foreign Currency Monetary items Translation Difference Account" as a separate line item under " Reserve and Surplus Account".

Revenue transactions at the Foreign Branch/projects are translated at average rate. Fixed Assets are translated at rate prevailing on the date of purchase. Net exchange rate difference is recognized in the Profit and Loss Account. Depreciation is translated at rates used for respective assets.

k) Retirement and other Employee benefits

Contribution to Provident/Family Pension/Gratuity Funds are made to recognized funds and charged to the Profit and Loss account. Provision for incremental liability in respect of Gratuity and Leave encashment is made as per independent Actuarial valuation at the year-end.

l) Taxation

The tax expense comprises of current tax and deferred tax. Current tax is calculated in accordance with the tax laws applicable to the current financial year. Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and tax laws that have been enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is virtual certainty of realization in future.

m) Provisions, Contingent Liabilities and Contingent Assets

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote , no provision or disclosure is made. Contingent Assets are neither recognized nor disclosed in the financial statements.

n) Employees Stock Option Plan

Compensation expenses under "Employee Stock Option Plan" representing excess of market price of the shares on the date of grant of option over the exercise price of option is amortized on a straight-line basis over the vesting period.

o) Borrowing Cost

Borrowing costs directly attributable and identifiable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. Other Borrowing costs are charged to statement of profit and loss as incurred.

p) Leases

Lease rentals in respect of assets acquired under operating lease are charged to Statement of Profit and Loss.

q) Financial Derivative & Hedging transactions

In respect of Financial Derivative & Hedging Contracts, gain / loss are recognized on Mark-to-Market basis and charged to Profit and Loss Accounts along with underlying transactions.

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Mar 31, 2014

A) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Differences between actual results and estimates are recognized in the period in which the results are known/materialize.

b) Fixed Asset

Fixed Assets are stated at cost of acquisition or construction (including installation cost upto the date put to use, net of specific credits) less accumulated depreciation. Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated depreciations / amortization and impairment loss, if any.

c) Depreciation

Depreciation is provided using straight-line method based on useful lives as estimated by the management. The management estimate of useful lives for various assets is: Tangible Assets : Factory Building/ Building - 28/60 years, Machinery- 8 Vz years, Motor Cars - 10years, Motor Truck- 8 V years, Furniture- 6 years, Office Equipments- 6 years, Electrical Equipments- 6 years, Cycle- 2 years, Motor cycle- 7 years, Rails and Trolley- 7 years and Ship 8V years. Intangible Assets : Computer / Soft-ware- 3 years. Depreciation on additions and deletions to assets during the year is provided pro-rata.

d) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

e) Investments

Current Investments are carried at lower of cost or quoted/ fair value. Long term Investments are stated at cost. Permanent diminution, if any, is provided for.

f) Inventories

Stores, embedded goods and spare parts and Work in progress are valued at cost (weighted average method) and contract rates respectively. Work in Progress in respect of Project development and Buildings held as stock-in-trade are valued at cost or net realizable value, whichever is lower.

g) Recognition of Income and Expenditure

Revenue from contracts is recognized on the percentage completion method based on billing schedules agreed with the client on a progressive completion basis. In case the estimated total cost of a contract based on technical and other estimate is expected to exceed the corresponding contract value, such excess is accounted for. Claims and variations are recognized as revenue on acceptance of concerned authorities or on receipt of Award or on evidence of its final acceptability. Revenue on Project Development is recognized on execution of sale agreement. Dividend income is recognised when the right to receive payment is established . Other Revenues and expenses are accounted on accrual basis.

Revenue from building development is recognized on the percentage completion method of accounting. Revenue is recognized, in relation to the sold areas only, on the basis of percentage of actual cost incurred thereon including cost of land as against the total estimated cost of project under execution subject to such actual cost being 30% or more of the total construction / development cost. The estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognized in the period such changes are determined. However, if and when the total project cost is estimated to exceed the total revenue from the project, the loss is recognized in the same financial year.

h) Accounting for Joint Venture Contracts

a) Where the Joint Venture Agreement provides for execution of contracts under work sharing pattern, the Company''s share of revenue/expenses in the works executed by it is accounted on percentage completion method as per the accounting policies followed by it in respect of contracts.

b) Where the Integrated Joint Venture Agreement provides for execution of contracts under profit sharing arrangement, Company''s share in the profit /loss is accounted for as and when determined. The services rendered to Joint Ventures are accounted as income, on accrual basis.

i) Foreign Currency Transaction/Translations

Transactions in foreign currency including acquisition of fixed assets are recorded at the prevailing exchange rates on the date of the transaction. All monetary assets and monetary liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year-end. Exchange differences arising out of payment/ restatement of long term liabilities relating to Fixed Assets are capitalized and in other cases amortised over the balance period of such long term monetary items. The unamortized balance is carried in the Balance Sheet as "Foreign Currency Monetary items Translation Difference Account" as a separate line item under "Reserve and Surplus Account".

Revenue transactions at the Foreign Branch/projects are translated at average rate. Fixed Assets are translated at rate prevailing on the date of purchase. Net exchange rate difference is recognized in the Profit and Loss Account. Depreciation is translated at rates used for respective assets.

j) Retirement and other Employee benefits

Contribution to Provident/Family Pension/Gratuity Funds are made to recognized funds and charged to the Profit and Loss account. Provision for incremental liability in respect of Gratuity and Leave encashment is made as per independent Actuarial valuation at the year-end.

k) Taxation

The tax expense comprises of current tax and deferred tax. Current tax is calculated in accordance with the tax laws applicable to the current financial year. Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and tax laws that have been enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is virtual certainty of realization in future.

l) Provisions, Contingent Liabilities and Contingent Assets

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote , no provision or disclosure is made. Contingent Assets are neither recognized nor disclosed in the financial statements.

m) Employees Stock Option Plan

Compensation expenses under "Employee Stock Option Plan" representing excess of market price of the shares on the date of grant of option over the exercise price of option is amortized on a straight-line basis over the vesting period.

n) Borrowing Cost

Borrowing costs directly attributable and identifiable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use. Other Borrowing costs are charged to statement of profit and loss as incurred.

o) Leases

Lease rentals in respect of assets acquired under operating lease are charged to Statement of Profit and Loss.

p) Financial Derivative & Hedging transactions

In respect of Financial Derivative & Hedging Contracts, gain / loss on settlement are recognized and charged to Profit and Loss Accounts along with underlying transactions.

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Mar 31, 2013

A) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Differences between actual results and estimates are recognized in the periods in which the results are known/materialize.

b) Fixed Asset

Fixed Assets are stated at cost of acquisition or construction (including installation cost upto the date put to use, net of specific credits) less accumulated depreciation.

c) Depreciation

Depreciation is provided using straight-line method based on useful lives as estimated by the management. The management estimate of useful lives for various assets is: Factory Building/ Building - 28/60years, Machinery- 8 Vz years, Motor Cars- lOyears, Motor Truck- 8 Vz years, Furniture- 6 years, Office Equipments- 6 years, Computer/Soft-ware- 3 years, Electrical Equipments- 6 years, Cycle- 2 years, Motor cycle- 7 years, Rails and Trolley- 7 years and Ship 8V2 years. Depreciation on additions and deletions to assets during the year is provided pro-rata.

d) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

e) Investments

Investments are stated at cost. Permanent diminution, if any, is provided for.

f) Inventories

Stores, embedded goods and spare parts and Work in progress are valued at cost (weighted average method) and contract rates respectively. Work in Progress in respect of Project development and Buildings held as stock-in-trade are valued at cost or net realizable value, whichever is lower.

g) Recognition of Income and Expenditure

Revenue from contracts is recognized on the percentage completion method based on billing schedules agreed with the client on a progressive completion basis. In case the estimated total cost of a contract based on technical and other estimate is expected to exceed the corresponding contract value, such excess is accounted for. Claims and variations are recognized as revenue on acceptance of concerned authorities or on receipt of Award or on evidence of its final acceptability. Revenue on Project Development is recognized on execution of sale agreement. Other Revenues and expenses are accounted on accrual basis.

Revenue from building development is recognized on the percentage completion method of accounting. Revenue is recognized, in relation to the sold areas only, on the

basis of percentage of actual cost incurred thereon including cost of land as against the total estimated cost of project under execution subject to such actual cost being 30% or more of the total construction / development cost. The estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognized in the period such changes are determined. However, if and when the total project cost is estimated to exceed the total revenue from the project, the loss is recognized in the same financial year.

h) Accounting for Joint Venture Contracts

a) Where the Joint Venture Agreement provides for execution of contracts under work sharing pattern, the Company''s share of revenue/expenses in the works executed by it is accounted on percentage completion method as per the accounting policies followed by it in respect of contracts.

b) Where the Integrated Joint Venture Agreement provides for execution of contracts under profit sharing arrangement, Company''s share in the profit /loss is accounted for as and when determined. The services rendered to Joint Ventures are accounted as income, on accrual basis.

i) Foreign Currency Transaction Translations

Transactions in foreign currency including acquisition of fixed assets are recorded at the prevailing exchange rates on the date of the transaction. All monetary assets and monetary liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year-end. Exchange differences arising out of payment/restatement of long term liabilities relating to Fixed Assets are capitalized in accordance with "The Companies (Accounting Standards) Amendment Rules 2009, relating to AS-11 "The Effects of the changes in Foreign Exchange Rates", vide notification dated March 31, 2009 and further amended on May 13, 2011.

Revenue transactions at the Foreign Branch/ projects are translated at average rate. Fixed Assets are translated at rate prevailing on the date of purchase. Net exchange rate difference is recognized in the Profit and Loss Account. Depreciation is translated at rates used for respective assets.

j) Retirement and Other Employee Benefits

Contribution to Provident/Family Pension/ Gratuity Funds are made to recognized funds and charged to the Profit and Loss account. Provision for incremental liability in respect of Gratuity and Leave encashment is made as per independent Actuarial valuation at the year-end.

k) Taxation

The tax expense comprises of current tax and deferred tax. Current tax is calculated in accordance with the tax laws applicable to the current financial year. Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and tax laws that have been enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is virtual certainty of realization in future.

I) Provisions and Contingent Liabilities

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resources. Where there is a possible obligation or a present bligation that the likelihood of outflow of resources is remote , no provision or disclosure is made.

m) Employees Stock Option Plan

Compensation expenses under "Employee Stock Option Plan" representing excess of market price of the shares on the date of grant of option over the exercise price of option is amortized on a straight-line basis over the vesting period.

n) Borrowing Cost

Borrowing costs directly attributable and identifiable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use.

o) Derivative Contracts

In respect of Derivative Contracts, gain / loss on settlement are recognized and charged to Profit and Loss Accounts.

---

Mar 31, 2012

A) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the periods in which the results are known/materialize.

b) Fixed Asset

Fixed Assets are stated at cost of acquisition or construction (including installation cost upto the date put to use, net of specific credits) less accumulated depreciation.

c) Depreciation

Depreciation is provided using straight-line method based on useful lives as estimated by the management. The management estimate of useful lives for various assets is: Factory Building/ Building - 28/60 years, Machinery- 8 % years, Motor Cars- 10 years, Motor Truck- 8 % years, Furniture- 6 years, Office Equipments- 6 years, Computer / Soft-ware- 3 years, Electrical Equipments- 6 years, Cycle- 2 years, Motor cycle- 7 years, Rails and Trolley- 7 years and Ship 8 % years. Depreciation on additions and deletions to assets during the year is provided pro-rata.

d) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

e) Investments

Investments are stated at cost. Permanent diminution, if any, is provided for.

f) Inventories

Stores, embedded goods and spare parts and Work-in-progress are valued at cost (FIFO basis) and contract rates respectively. Work-in-Progress in respect of Project development and Buildings held as stock-in-trade are valued at cost or net realizable value, whichever is lower.

g) Recognition of Income and expenditure

Revenue from contracts is recognized on the percentage completion method based on billing schedules agreed with the client on a progressive completion basis. In case the estimated total cost of a contract based on technical and other estimate is expected to exceed the corresponding contract value, such excess is accounted for. Claims and variations are recognized as revenue on acceptance of concerned authorities or on receipt of award or on evidence of its final acceptability. Revenue on Project Development is recognized on execution of sale agreement. Other revenues and expenses are accounted on accrual basis.

h) Accounting for Joint Venture Contracts

a) Where the Joint Venture Agreement provides for execution of contracts under work sharing pattern, the Company's share of revenue/expenses in the works executed by it is accounted on percentage completion method as per the accounting policies followed by it in respect of contracts.

b) Where the Integrated Joint Venture Agreement provides for execution of contracts under profit sharing arrangement, Company's share in the profit /loss is accounted for as and when determined. The services rendered to Joint Ventures are accounted as income, on accrual basis.

i) Foreign Currency Transaction/Translations

Transactions in foreign currency including acquisition of fixed assets are recorded at the prevailing exchange rates on the date of the transaction. All monetary assets and monetary liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year-end. Exchange differences arising out of payment/restatement of long term liabilities relating to Fixed Assets are capitalized in accordance with "The Companies (Accounting Standards) Amendment Rules 2009", relating to AS-11 "The Effects of the changes in Foreign Exchange Rates", vide notification dated March 31, 2009 and further amended on May 13, 2011.

Revenue transactions at the Foreign Branch/Projects are translated at average rate. Fixed Assets are translated at rate prevailing on the date of purchase. Net exchange rate difference is recognized in the Profit and Loss Account. Depreciation is translated at rates used for respective assets.

j) Retirement and other Employee benefits

Contribution to Provident/Family Pension/Gratuity Funds are made to recognized funds and charged to the Profit and Loss account. Provision for incremental liability in respect of Gratuity and Leave encashment is made as per independent Actuarial valuation at the year-end.

k) Taxation

The tax expense comprises of current tax and deferred tax. Current tax is calculated in accordance with the tax laws applicable to the current financial year. Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and tax laws that have been enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is virtual certainty of realization in future.

l) Provisions and contingent Liabilities

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

m) Employees Stock Option Plan

Compensation expenses under "Employee Stock Option Plan" representing excess of market price of the shares on the date of grant of option over the exercise price of option is amortized on a straight-line basis over the vesting period.

n) Borrowing cost

Borrowing costs directly attributable and identifiable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use.

o) Derivative contracts

In respect of Derivative Contracts, gain / loss on settlement are recognized and charged to Profit and Loss Accounts.

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Mar 31, 2011

A. Basis of Preparation: The financial statements are prepared under historical cost convention, on accrual basis of accounting, to comply in all material aspects with all the applicable Accounting Principles in India, the applicable Accounting Standards notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

b. Use of Estimates: The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Differences between actual results and estimates are recognized in the periods in which the results are known/materialize.

c. Fixed Assets and Depreciation: Fixed Assets are stated at cost of acquisition or construction (including installation cost upto the date put to use, net of specific credits) less accumulated depreciation. Depreciation is provided using straight-line method based on useful lives as estimated by the management. The management estimate of useful lives for various assets is: Factory Building/Building- 28/60 years, Machinery - 8V2 years, Motor Cars - 10 years, Motor Truck - 8V2 years, Furniture - 6 years, Office equipments - 6 years, Computer/Software - 3 years, Electrical Equipments - 6 years, Cycle - 2 years, Motorcycle - 7 years, Rails and Trolley - 7 years and Ship - 8V2 years. Depreciation on additions and deletions to assets during the year is provided pro-rata.

d. Inventories: Stores, embedded goods and spare parts and Work in progress are valued at cost (FIFO basis) and contract rates respectively. Work in Progress in respect of Project development and Buildings held as stock-in-trade are valued at cost or net realizable value, whichever is lower.

e. Impairment of Assets: An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

f. Retirement Benefits: Contribution to Provident/Family Pension/Gratuity Funds are made to recognized funds and charged to the Profit and Loss account. Provision for incremental liability in respect of Gratuity and Leave encashment is made as per independent Actuarial valuation at the year-end.

g. Foreign Currency Transactions/Translations: Transactions in foreign currency including acquisition of fixed assets are recorded at the prevailing exchange rates on the date of the transaction. All monetary assets and monetary liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year-end. Exchange differences arising out of payment/restatement of long term liabilities relating to Fixed Assets are capitalized in accordance with "The Companies (Accounting Standards) Amendment Rules 2009, relating to AS-11 "The Effects of the changes in Foreign Exchange Rates", vide notification dated March 31, 2009 and further amended on May 13, 2011.

Revenue transactions at the Foreign Branch/projects are translated at average rate. Fixed Assets are translated at rate prevailing on the date of purchase. Net exchange rate difference is recognized in the Profit and Loss Account. Depreciation is translated at rates used for respective assets.

h. In respect of Derivative Contracts, gain/loss on settlement are recognized and charged to Profit and Loss Accounts.

i. Investments: are stated at cost. Permanent diminution, if any, is provided for.

j. Recognition of Income and Expenditure: Revenue from contracts is recognized on the percentage

completion method based on billing schedules agreed with the client on a progressive completion basis. In case the estimated total cost of a contract based on technical and other estimate is expected to exceed the corresponding contract value, such excess is accounted for. Claims and variations are recognized as revenue on acceptance of concerned authorities or on receipt of Award or on evidence of its final acceptability. Revenue on Project Development is recognized on execution of sale agreement. Other Revenues and expenses are accounted on accrual basis.

k. Borrowing Costs: Borrowing costs directly attributable and identifiable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use.

L. Taxation: The tax expense comprises of current tax and deferred tax. Current tax is calculated in accordance with the tax laws applicable to the current financial year. Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and tax laws that have been enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is virtual certainty of realization in future.

m. a. Where the Joint Venture Agreement provides for execution of contracts under work sharing pattern, the Company's share of revenue/expenses in the works executed by it is accounted on percentage completion method as per the accounting policies followed by it in respect of contracts.

b. Where the Integrated Joint Venture Agreement provides for execution of contracts under profit sharing arrangement, Company's share in the profit/loss is accounted for as and when determined. The services rendered to Joint Ventures are accounted as income, on accrual basis.

n. Employees Stock Option Plan: Compensation expenses under "Employee Stock Option Plan" representing excess of market price of the shares on the date of grant of option over the exercise price of option is amortized on a straight-line basis over the vesting period.

o. Provisions and Contingent Liabilities: The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

---

Mar 31, 2010

A) Basis of Preparation

The financial statements are prepared under historical cost convention, on accrual basis of accounting, to comply in all material aspects with all the applicable Accounting Principles in India, the applicable Accounting Standards notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

b) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the periods in which the results are known/materialize.

c) Fixed Assets and Depreciation

Fixed Assets are stated at cost of acquisition or construction (including installation cost upto the date put to use, net of specific credits) less accumulated depreciation. Depreciation is provided using straight-line method based on useful lives as estimated by the management. The management estimate of useful lives for various assets is: Factory Building/Building - 28/60 years, Machinery - 81/4 years, Motor Cars -10 years, Motor Truck - 81/4 years, Furniture - 6 years, Office equipments - 6 years, Computer/ Software - 3 years, Electrical Equipments - 6 years, Cycle - 2 years, Motorcycle - 7 years, Rails and Trolley - 7 years and Ship - 8Y2 years. Depreciation on additions and deletions to assets during the year is provided pro-rata.

d) Inventories

Stores, embedded goods and spare parts and Work in progress are valued at cost (FIFO basis) and contract rates respectively. Work in Progress in respect of Project development and Buildings held as stock-in-trade are valued at cost or net realizable va , whichever is lower.

e) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

f) Retirement Benefits

Contribution to Provident/Family Pension/Gratuity Funds are made to recognized funds and charged to the Profit and Loss Account. Provision for incremental liability in respect of Gratuity and Leave encashment is made as per independent Actuarial valuation at the year-end.

g) Foreign Currency Transactions/Translations

Transactions in foreign currency including acquisition of fixed assets are recorded at the prevailing exchange rates on the date of the transaction. All monetary assets and monetary liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year-end. Exchange differences arising out of payment/restatement of long term liabilities relating to Fixed Assets are capitalized in accordance with "The Companies (Accounting Standards) Amendment Rules 2009, relating to AS-11 "The Effects of the changes in Foreign Exchange Rates", vide notification dated March 31,2009.

Revenue transactions at the Foreign Branch/projects are translated at average rate. Fixed Assets are translated at rate prevailing on the date of purchase. Net exchange rate difference is recognized in the Profit and Loss Account. Depreciation is translated at rates used for respective assets.

h) In respect of Derivative Contracts, gain/loss on settlement are recognized and charged to Profit and Loss Account.

i) Investments are stated at cost. Permanent diminution, if any, is provided for.

j) Recognition of Income and Expenditure

Revenue from contracts is recognized on the percentage completion method based on billing schedules agreed with the client on a progressive completion basis. In case the estimated total cost of a contract based on technical and other estimate is expected to exceed the corresponding contract value, such excess is accounted for. Claims and variations are recognized as revenue on acceptance of concerned authorities or on receipt of Award or on evidence of its final acceptability. Revenue on Project Development is recognized on execution of sale agreement. Other Revenues and expenses are accounted on accrual basis.

k) Borrowing Costs

Borrowing costs directly attributable and identifiable to the acquisition or construction of qualifying assets are capitalized till the date such qualifying assets are ready to be put to use.

l) Taxation

The tax expense comprises of current tax and deferred tax. Current tax is calculated in accordance with the tax laws applicable to the current financial year. Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and tax laws that have been enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is virtual certainty of realization in future.

m)a) Where the Joint Venture Agreement provides for execution of contracts under work sharing pattern, the Companys share of revenue/ expenses in the works executed by it is accounted on percentage completion method as per the accounting policies followed by it with respect of contracts.

b) Where the Integrated Joint Venture Agreement provides for execution of contracts under profit sharing arrangement, Companys share in the profit/loss is accounted for as and when determined. The services rendered to Joint Ventures are accounted as income, on accrual basis.

n) Employees Stock Option Plan

Compensation expenses under "Employee Stock Option Plan" representing excess of market price of the shares on the date of grant of option over the exercise price of option is amortized on a straight-line basis over the vesting period.

o) Provisions and Contingent Liabilities

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.