Notes To The Financial Statements For Year Ended March 31, 2016 (XV) The company has registered under Employees Provident Fund Act for employees of the company as well as employees of certain group companies. (XVI) Balance of Debtors, Creditors, Advances, Deposits, Unsecured Loan etc. are subject to confirmation and reconciliation, if any. (XVII) The company was subject to a search under Section 132 of The Income Tax Act, 1961 in the month of April 2016. The Income Tax Department is in the process of assessing the final amount of tax payable by the Company, if any, and has not raised any demand on the company till date. Consequently, no impact for the same has been given in the financial statements for the F. Y. 2015-16. (XVIII) Corresponding figures of brvious year have been regrouped / rearranged wherever necessary 28 SIGNIFICANT ACCOUNTING POLOCIES COMPANY OVERVIEW: The Company was incorporated in 1993. It is brsently in the business construction of infrastructure facilities on Engineering, Procurement and Construction Basis (EPC) and Built, Operate and Transfer (BOT) Basis and Sale of Ready Mix Concrete and Bitumen. The Company has promoted Special Purpose Vehicles (SPVs) for some of its projects, wherein 'Toll Collection Rights' are received in exchange of the Construction Cost. For this, the SPVs significantly engage the services of the Company for contract related activities due to inherent execution capabilities / expertise and experience of the Company. (I) Basis & Method of Accounting The Company follows mercantile system of accounting and recognizes income and expenditure on an accrual basis. Financial Statements are brpared under historical cost convention, in accordance with the Generally Accepted Accounting Principles in India (GAAP) and comply in all material aspects, with mandatory accounting standards specified in section 133 of companies Act,2013 read with Rule 7 of the companies (Accounts) Rules 2014, relevant provisions of the Companies Act and statements issued by the Institute of Chartered Accountants of India. The significant accounting policies followed by the Company are set out below. Management has made certain estimates and assumptions in conformity with the GAAP in the brparation of these financial statements, which are reflected in the brparation of these financial statements. Difference between the actual results and estimates are recognised in the year in which the results are known. (II) Fixed Assets, Debrciation & Capital Work in Progress (a) Fixed assets are stated at cost less accumulated debrciation. Cost comprises cost of acquisition and expenditure directly attributable for commissioning of the asset. In respect of assets acquired on merger, fixed assets are stated at their fair market value on the effective date of merger less debrciation. (b) Debrciation has been provided on Written Down Value method at the rates specified in Schedule II Companies Act of 2013. (c) Capital work in progress comprises of expenditure, direct or indirect, incurred on assets which are yet to be brought into working condition for its intended use against capital expenditure. (III) Intangible assets & Amortization (a) Intangible assets are carried at cost of acquisition less any subsidies or grants. These assets include all duties, non-refundable taxes, levies and costs incurred (which are directly attributable) for bringing assets into working conditions for its intended use. Intangible assets include assets that are incidental for the purpose of Toll Collection and which will be handed over at the end of the concession period. Fees incurred in order to arrange long-term financing are capitalized and amortized over the life of the asset. (b) Intangible Asset, i.e. Right to Collect Toll, is amortised based on the actual toll collection in proportion to the projected toll revenue over the toll period as specified by Schedule II of 2013. Projections are reviewed at periodic intervals for consistency and appropriateness. Amortisation is revised in case there is a material change in the Projected Traffic Revenue. Amortisation of these Intangible Assets commence from the date of toll collection. (IV) Investments Non-current Investments are stated at acquisition cost. Investments acquired on merger are stated at their fair market value on the effective date of merger. Current Investment are Valued at lower of cost or market value. Purchases/Sales of investment are accounted on the the trade date i.e. date on which the transaction is completed. (V) Revenue Recognition (a) Construction Contracts (i) Revenue from long term contracts / Turnkey Projects is recognized on percentage completion basis as brscribed by AS-7 'Construction Contracts'. Materials sold under Turnkey Projects are treated as Construction Work in Progress till the activity is certified by the client. Provisions for future foreseeable losses are fully provided for. (ii) Claims and variations for escalations/damages are recognized only when accepted by the client. Claims under arbitration/disputes are accounted as income based on final award. Expenses on arbitration are accounted as incurred. (iii) In case of fixed price maintenance contract the revenue is recognized as per contractual terms. Expenses pertaining to fixed maintenance projects are booked on accrual method based on actual expenditure done at that site. (b) Sales Sale of goods is recognised on dispatch to customers. Sales are stated net of taxes, duties and discounts. (c) Toll Collection - BOT & Contracts (i) Income from toll collection is recognised on the basis of actual collections. (ii) Sale of discounted toll coupons/swipe cards is recognized as income at the time of sale. (d) Income from Joint Venture project is recognised only when the profit / income is ascertained and there is certainty as to amount of income. (e) Dividend Income on investment is accounted when the right to receive is established. (VI) Inventory (a) Inventory of construction / raw material is valued at cost or net realizable value whichever is less. Cost includes all taxes and expenses incurred to bringing inventory to their brsent location and condition. Cost is arrived at using FIFO basis. (b) Work in Progress in respect of construction contracts is valued on the basis of technical estimates and percentage completion basis. (c) Stores and spares are expensed as and when purchased. (VII) Employee Benefits (a) Provision for liabilities in respect of leave encashment is estimated on the basis of an actuarial valuation. (b) Provision for gratuity liability is made on the basis of Actuarial Valuation in respect of the Group Gratuity Policy with an insurance company. (c) Provident Fund benefit to employees is provided for on accrual basis and charged to Profit and Loss Account. (d) Compensation Cost of ESOP to employees is accounted on Intrinsic Value Method. Intrinsic value is the amount by which the quoted market price of the underlying shares on the grant date exceeds the exercise price of the options. Accordingly, the compensation cost is amortized over the vesting period. (VIII)Borrowing Cost Borrowing costs attributable to acquisition and construction of capital assets are capitalized till the asset is put to use/ ready for use. Borrowing costs attributable to construction contract project are charged to profit & loss account and are included for computation of work in progress. All other borrowing costs are recognised as expenditure in the year when they were incurred. (IX) Foreign Exchange Transactions, Forward Contracts and Derivatives (a) Transactions in foreign currency are recorded at exchange rates brvailing on the dates of respective transactions. The difference in translation and realized gains and losses on foreign exchange transactions are recognized in the Profit and Loss Account. (b) The Company enters into derivative contracts to hedge against the risk of adverse movements in interest rates, foreign currencies or value of the hedged items. All outstanding derivative instruments at close are marked to market by type of risk and the resultant losses relating to the year, if any, are recognised in the Profit & Loss Account. Gains are accounted on realisation. (X) Impairment of Fixed Assets Wherever events or changes in circumstances indicate that the carrying value of fixed assets may be impaired, such assets are subject to a test of recoverability, based on discounted cash flows expected from use or disposal thereof. If the assets are impaired, loss is recognised. (XI) Taxes on income (a) Tax expense comprises both current and deferred tax at the applicable enacted/substantively enacted rates. Current tax rebrsents the amount of income tax payable in respect of the taxable income for the reporting year. (b) Deferred tax rebrsents the effect of timing differences between taxable income and accounting income for the reporting year that originate in one year and are capable of reversal in one or more subsequent years. Deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Such assets are reviewed as at each Balance Sheet date to reassess realization. (XII) Provisions and contingencies Provisions are recognised when the company has a legal and constructive brsent obligation as a result of a past event, for which it is probable that outflow of resources will be required and a reliable estimate can be made of the amount of the obligation. Provisions (excluding retirement benefits) are not discounted to their brsent value and are determined to the best estimates required to settle the obligation at the Balance Sheet date. Contingent liabilities are disclosed in the Notes on Accounts when there is a possible obligation that may result in an outflow of resources. Contingent assets are neither recognised nor disclosed. (XIII)Provision for Defect liability period/Resurfacing obligations The Company provides for contractual obligations to periodically service, repair or rectify any defective work during the defect liability period as well as towards contractual obligations to restore the infrastructure at periodic intervals. Such amount is recognised at the best estimate of the expenditure required to settle the brsent obligation at the balance sheet date. The same is reviewed at each balance sheet date and adjustments if any to the carrying amount is provided for accordingly. As per our report of even date attached For & on behalf of the Board of Directors For M.P. CHITALE & Co. Chartered Accountants (Ashutosh Pednekar) Partner (M.A. Kulkarni) Company Secretary (P.C. Mehta) Chief Financial Officer (S.D. Parakh) Managing Director DIN : 00112324 (A.M. Katariya) Chairman DIN : 00112240 Place: Mumbai Date: May 20, 2016 |