Notes forming part of Accounts Note No.1 Significant Accounting Policies 1.1 Basis of Preparation The Company maintains its accounts on accrual basis following the historical cost convention in accordance with generally accepted accounting principles ["GAAP"]. Further, the guidance notes / announcements issued by the Institute of Chartered Accountants of India (ICAI) are also considered, wherever applicable except to the extent where compliance with other statutory promulgations viz. SEBI guidelines override the same requiring a different treatment. The financial statements are brpared in accordance with the requirements of the Companies Act, 2013, and comply with the Accounting Standards referred to in Section 133 of the said Act. The brparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, allowance for doubtful debts/advances, future obligations in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known. 1.2 Presentation of financial Statement The Balance Sheet and the Statement of Profit and Loss are brpared and brsented in the format brscribed in the Schedule III to the Companies Act, 2013 ("the Act"). The Cash Flow Statement has been brpared and brsented as per the requirements of Accounting Standard (AS) 3 "Cash Flow Statements". The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as brscribed in the Schedule III to the Act, are brsented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards and the Listing Agreement. Amounts in the financial statements are brsented in Indian Rupees in Crore rounded off to two decimal places in line with the requirements of Schedule III except where stated otherwise. Per share data are brsented in Indian Rupees to two decimals places. 1.3 Revenue Recognition A. Accounting of construction contracts The Company follows the (Accounting Standard 7) percentage completion method, based on the stage of completion as at the balance sheet date, taking into account the contractual price and revision there to by estimating total revenue and total cost till completion of the contract and the profit so determined has been accounted for proportionate to the percentage of the actual work done as on the date of the Balance Sheet. b. Income of Power Generation from Windmill was accounted in the period in which the right to receive of the same is established. c. Interest income is recognised on the time proportion basis. d. Other items of income are accounted as and when the right to receive arises. Extraordinary and exceptional Items Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the Company are classified as extraordinary items. Specific disclosure of such events/transactions is made in the financial statements. Similarly, any external event beyond the control of the Company, significantly impacting income or expense, is also treated as extraordinary item and disclosed as such. On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company, is such that its disclosure improves an understanding of the performance of the Company. Such income or expense is classified as an exceptional item and accordingly disclosed in the notes to accounts. Classification of Assets and Liabilities The Schedule III to the Companies Act, 2013 requires assets and liabilities to be classified as either Current or Non-current. a) An asset shall be classified as current when it satisfies any of the following criteria: I. it is expected to be realised in, or is intended for sale or consumption in, the Company's normal operating cycle, II. It is held primarily for the purpose of being traded, III. It is expected to be realized within twelve months after the reporting date; or IV. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date. b) All assets other than current assets shall be classified as non-current. c) A liability shall be classified as current when it satisfies any of the following criteria: I. It is expected to be settled in the company's normal operating cycle, II. It is held primarily for the purpose of being traded, III. It is due to be settled within twelve months after the reporting date; or IV. The company does not have an unconditional right to defer settlement of the liability for at least twelvemonths after the reporting date. d) All liabilities other than current liabilities shall be classified as non-current. a) Fixed assets are stated at their original cost of acquisition and installation, less accumulated debrciation, amortisation and impairment losses, if any. Cost comprises of the purchase price and any other directly attributable cost of bringing the asset to its working condition for its intended use. b) Administrative and other general overhead expenses that are specifically to construction or acquisition of Fixed Assets or bringing the Fixed Assets to working conditions are allocated and capitalised as a part of the cost of the Fixed Assets. c) Borrowing costs that are directly attributable to the acquisition of qualifying assets are capitalised for the period until the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the period in which they are incurred. d) Debrciation on fixed assets has been provided using straight line method, where hitherto Written Down Value method was adopted, in the manner and at the rates brscribed in Schedule II to the Companies Act, 2013. Effective 1 April 2014, the Company has changed the method of providing debrciation from written down value to straight line method. In management's view this change results in more appropriate brsentation and gives a systematic basis of debrciation charge, rebrsentative of pattern of usage and economic benefits of the assets and provide greater consistency with the debrciation method used by other companies in the infra industry. Accordingly, excess debrciation charged for earlier years upto 31st March, 2014 aggregating Rs.14,92,29,232/- has been written back and recognized as an exceptional item in the Statement of Profit and Loss for the year ended 31st March, 2015. The difference in the debrciation amounting to Rs.28,86,054/- due to changes to comply with schedule II of The Companies Act 2013 based on the useful lives of the assets has been debited to the Profit and Loss account. e) Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation / depletion. The costs comprises of all cost, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible asset. f) Purchase cost and user license fees for major software are amortised over a period of three years. g) Own fabricated assets are capitalized at cost including an appropriate share of overheads. h) Debrciation for additions to/deductions is calculated @ pro-rata from/to the date of additions/deductions during the year. i) Tangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as Capital Work-in-Progress. 1.7 Operating Cycle An operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. 1.8 Investments Long Term investments are valued at cost, less provision for diminution other than temporary, in value, if any. Current investments are stated at lower of cost and fair value, computed category-wise 1.9 Cash and equivalents Cash and cash equivalents comprise of cash at bank and cash in hand. The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase, to be cash equivalents. 1.10 Provisions and Contingent Liabilities A provision is recognised when an enterprise has a brsent obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their brsent values and are determined based on management estimate required to settle the obligation at the Balance Sheet date. These are reviewed as on the Balance Sheet date and adjusted to reflect the current best estimates. A disclosure for a Contingent liability is made when there is a possible obligation or a brsent obligation that may but probably will not, requires an outflow of resources. When there is a possible obligation or brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. 1.11 Foreign Exchange Translation of Projects and Accounting of Foreign Exchange Translations Transactions in Foreign currencies are recorded at the rate brvailing on date of transaction. Foreign Branch and Subsidiaries are classified as non-integral foreign operations. Assets and Liabilities (both monetary and non-monetary) are translated at the closing rate at the end of year. Income and Expenses are translated at the monthly average rate. All the resulting exchange differences are accumulated in a separate head "Foreign Currency Translation Reserve" and the same is shown in Balance Sheet under Reserves and Surplus. a) Assets and Liabilities are translated at the exchange rate brvailing on the last day of the year b) Income and Expenditure are translated at the monthly average exchange rate. Gains or losses arising out of remittance at the year-end are credited / debited to the statement of profit and loss for the year. Gains or losses arising out of translations at the year-end are credited / debited to the Foreign Currency Translation Reserve under Reserves and Surplus. 1.12 Accounting for Taxes on Income a) Current Income Tax: Provision for Current Tax is made based on taxable Income computed for the year under the Income Tax Act, 1961, after deducting the profit for which the company is likely to claim exemption u/s 80IA. b) Deferred Taxes : Deferred Tax is accounted for by computing the tax effect of timing differences which arise during the year and reverse in subsequent periods. Timing differences arising due to difference in debrciation as per accounting records and Income Tax Act has alone been considered. Deferred tax assets are recognized and carried forward only to the extent that there is a certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realised. 1.13 Employees Benefits a) Employer's contribution to the recognized provident fund which is a defined contribution scheme and ESI Contribution as per law are charged to the Profit and Loss account. b) Provision for Gratuity has been made for the year as per prudent management estimate as the company could not obtain an estimate from actuarial valuer for the provision. 1.14 Earnings per Share The Company reports basic and diluted earnings per share in accordance with Accounting Standard (AS20). Earnings per Share notified by the Companies (Accounting Standards) Rules, 2006. Basic earnings per equity shares are computed by dividing the net profit for the year attributable to the Equity Shareholders including the extraordinary profits arising out of the change in the method of debrciation from WDV method to straight line method by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit for the year adjusting for the effects of dilutive potential equity shares attributable to the Equity Shareholders by the weighted average number of the equity shares and dilutive potential equity shares outstanding during the year except where the results are anti dilutive. Previous year's figures have been regrouped/reclassifed wherever applicable P. Arulsundaram (Chairman and Managing Director) A. Nithya (Whole Time Director) K. Jayanthar Company Secretary As per our Report of even date M/s. Karthikeyan & Jayaram Chartered Accountants CA G.N. Jayaram F.C.A (Partner) Membeship No.200-027291 Firm Registration No.007570S Date : 29/05/2015 Place : Erode |
