2: Significant Accounting Policies
a. Basis of preparation
The financial statements of the Company have been prepared in accordance with the
Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the
Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule
7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act,
2013 ("the 2013 Act"), as applicable. The financial statements have been prepared on accrual
basis and under the historical cost convention.
b. Use of estimates
In preparing the Company's financial statements in conformity with the accounting principles
generally accepted in India, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities
at the date of the financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in the current and future periods.
c. Property, Plant and Equipment & Depreciation
Property Plant & Equipment
Property, Plant and Equipment are stated at cost of acquisition (net of CENVAT, wherever
applicable) as reduced by accumulated depreciation. The cost of assets includes other
direct/indirect and incidental cost incurred to bring them into their working condition.
When assets are disposed or retired, their cost is removed from the financial statements. The
gain or loss arising on the disposal or retirement of an asset is determined as the difference
between sales proceeds and the carrying amount of the asset and is recognized in Statement
of Profit and Loss for the relevant financial year.
Depreciation
The depreciation on assets for own use is provided on “Straight Line Method (SLM)” on the
basis of useful life of assets as specified in Schedule II to the Companies Act, 2013 on Pro¬
rata Basis.
When assets are disposed or retired, their accumulated depreciation is removed from the
financial statements. The gain or loss arising on the disposal or retirement of an asset is
determined as the difference between sales proceeds and the carrying amount of the asset
and is recognized in Statement of Profit and Loss for the relevant financial year.
d. Intangible Assets & Amortizations
Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated
mortization. All costs, including financing costs in respect of qualifying assets till
commencement of commercial production, net charges on foreign exchange contracts and
adjustments arising from exchange rate variations attributable to the intangible assets are
capitalized.
Intangible assets are amortized on a straight - line basis over their estimated useful lives. A
rebuttable presumption that the useful life of an intangible asset will not exceed ten years
from the date when the asset is available for use is considered by the management. The
amortization period and the amortization method are reviewed at least at each reporting date.
If the expected useful life of the asset is significantly different from previous estimates, the
amortization period is changed accordingly.
The gain or loss arising on the disposal or retirement of an intangible asset is determined as
the difference between net disposal proceeds and the carrying amount of the asset and is
recognized as income or expenses in the Statement of Profit and Loss in the year or disposal.
Amortization
Intangible assets are amortized on a straight - line basis over their estimated useful lives of
5 years. A rebuttable presumption that the useful life of an intangible asset will not exceed
ten years from the date when the asset is available for use is considered by the management.
The amortization period and the amortization method are reviewed at least each reporting
date. If the expected useful life of the asset is significantly different from previous estimates,
the amortization period is changed accordingly.
e. Provision for Current and Deferred Tax
Provision for current tax is made after taking into consideration benefits admissible under
the provision of the Income Tax Act, 1961.
Deferred Tax resulting from “timing difference” between taxable and accounting income is
occounted for using the tax rates and laws that are enacted or subsequently enacted as on
the balance sheet date. Deferred tax asset is recognised and carried forward only to the
extent that there is virtual certainty that the assets will be realized in future.
f. Revenue Recognition:
(i) Revenue
Revenue is recognized to the extent that it is probable that the economic benefits
will flow to the Company and revenue can be reliably measured.
(ii) Interest Income
Revenue is recognized on a time proportion basis taking into account the
amount outstanding and the rate applicable except interest on income tax
refund is recognized in the year of receipt.
(iii) Dividend
Dividend income is recognized when right to receive the same is established.
g. Foreign Currency Transactions
i) Transactions in foreign currencies are recorded in Indian rupees using the rates of
exchange prevailing on the date of the transactions. At each balance sheet date,
monetary balances are reported in Indian Rupees at the rates of exchange prevailing
at the Balance Sheet date. All realized or unrealized exchange adjustment gains or
losses are dealt with in the Statement of Profit and Loss.
ii) In order to hedge exposure to foreign exchange risks arising from export or import
foreign currency, bank borrowings and trade receivables, the company enters into
forward contracts. In case of forward exchange contract, the cost of the contracts is
amortised over the period of the contract, any profit or loss arising on the cancellation
or renewal of a forward exchange contract is recognised as income or expenses for
the year.
iii) Exchange difference is calculated as the difference between the foreign currency
amount of the contract translated at the exchange rate at the reporting date, or the
settlement date where the transaction is settled during the report period and the
corresponding foreign currency amount translated at the later of the dates of inception
of the forward exchange contract and the last reporting date. Such exchange
difference rate recognised in the Statement of profit and loss in the reporting period
in which the exchange rates change.
iv) Non-monetary items which are carried in terms of historical cost denominated in a
foreign currency are reported using the exchange rate at the date of the transaction.
h. Borrowing cost:
Borrowing costs that are attributable to the acquisition or construction of qualifying
assets are capitalized as part of the cost of such assets, whenever applicable, till the
assets are ready for their intended use. A qualifying asset is one which necessary
takes substantial period to get ready for intended use. All other borrowing costs are
charged to revenue accounts. Capitalization of borrowing cost is suspended when
active development is interrupted.
i. Inventories:
The basis of valuation of inventories is "lower of cost and net realizable value". Work in
Progress is valued on weighted average method. Cost in respect of inventories is computed
on FIFO basis and Net realizable value is the estimated selling price in the ordinary course of
business, reduced by the estimated costs of completion and costs to effect the sale.
j. Investments:
Long Term Investments are stated at cost. Provision is only made to recognize a
decline other than temporary, in the value of investments.
k. Employees' Benefits:
a. The Employee and Company make monthly fixed Contribution to Government of India
Employee's Provident Fund equal to a specified percentage of the covered
employee's salary. Provision for the same is made in the year in which services are
rendered by the employee.
b. The Liability for Gratuity to employees, which is a defined benefit plan is determined
by Projected Unit Credit method on the basis of actuarial valuation. Actuarial gain /
loss in respect of the same are charged to the Statement of profit and loss.
c. The Company does not allow carry forward of un-availed leaves and hence un¬
availed leaves are encashed in the current year itself.
l. Segment Information:
Based on the principles for determination of segments given in Accounting Standard 17
“Segment Reporting” issued by accounting standard notified by Companies
(Accounting Standard) Rules, 2008, the Company is carrying out business geographically only
in India and mainly engaged in three business segments i.e. Providing Infrastructural & Utility
Services, Trading in Coal and Manufacturing & Trading in Electrical Goods and all other
activities surrounded with these segments.
m. Impairment:
The management periodically assesses, using external and internal sources whether there
is an indication that an asset may be impaired. If an asset is impaired, the company
recognizes an impairment loss as the excess of the carrying amount of the asset over the
recoverable amount. The impairment loss recognised in prior accounting periods is reversed
if there has been a change in the estimate of recoverable amounts.
n. Earnings per Share:
Basic earnings per share is calculated by dividing net profit after tax for the year attributable
to Equity Shareholders of the company by the weighted average number of Equity Shares
outstanding during the year. Diluted earnings per share is calculated by dividing net profit
attributable to equity Shareholders (after adjustment for diluted earnings) by average
number of weighted equity shares outstanding during the year.
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