NOTE 2 SIGNIFICANT ACCOUNTING
POLICIES
A. BASIS FOR ACCOUNTING AND
PREPARATION OF FINANCIAL
STATEMENTS
The financial statement 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 the Companies
Act, 2013, read with Rule 7 of the Companies
Accounting Rules, 2014 and the relevant
provisions of the Companies Act (""the 2013
Act""), 2013. The financial statements have been
prepared on accrual basis under the historical
cost convention. The accounting policies
adopted in the preparation of the financial
statements are consistent with those followed in
the previous year.
All assets and liabilities have been classified as
current and non-current as per normal operating
cycle of the Company and other criteria set out in
the Schedule III of the Companies Act, 2013.
The financial statements are presented in
Indian Rupees (INR) except share and per share
data, unless otherwise stated. Due to rounding
off, the numbers presented throughout the
document may not add up precisely to the totals
and percentages may not precisely reflect the
absolute figures.
B. USE OF ESTIMATES
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make
judgments, estimates and assumptions that
affect the reported amounts of revenues,
expenses, assets and liabilities and disclosure
of contingent liabilities at the date of financial
statements and the results of operations
during the reporting year end. Although these
estimates are based upon the management's
best knowledge of current events and actions,
uncertainty about these assumptions and
estimates could result in the outcomes requiring
a material adjustment to the carrying amount of
assets and liabilities in future periods.
i) Revenue Recognition
The Company recognises revenue
from contracts with customers when
it satisfies a performance obligation by
transferring promised good or service to
a customer. The revenue is recognised to
the extent of transaction price allocated
to the performance obligation satisfied.
Performance obligation is satisfied over
time when the transfer of control of asset
(good or service) to a customer is done
over time and in other cases, performance
obligation is satisfied at a point in time.
For performance obligation satisfied over
time, the revenue recognition is done by
measuring the progress towards complete
satisfaction of performance obligation.
The progress is measured in terms of a
proportion of actual cost incurred to-date, to
the total estimated cost attributable to the
performance obligation. Transaction price
is the amount of consideration to which the
Company expects to be entitled in exchange
for transferring good or service to a customer
excluding amounts collected on behalf of a
third party.
Significantjudgments are used in:
1. Determining the revenue to be recognised
in case of performance obligation satisfied
over a period of time; revenue recognition
is done by measuring the progress towards
complete satisfaction of performance
obligation. The progress is measured in terms
of a proportion of actual cost incurred to-
date, to the total estimated cost attributable
to the performance obligation.
2. Determining the expected losses, which are
recognised in the period in which such losses
become probable based on the expected
total contract cost as at the reporting date.
Services charges income has been
recognized as and when the services are
rendered to the customers and when there
is a reasonable certainty of its ultimate
realisation/collection.
ii) PROPERTY, PLANT & EQUIPMENT
Property, Plant and Equipment are stated
at cost less accumulated depreciation and
impairment losses, if any. Cost comprises
the purchase price and any attributable
cost of bringing the asset to its working
condition for its intended use and initial
estimate of decommissioning, restoring and
similar liabilities, if any. Any trade discount
and rebates are deducted in arriving at the
purchase price.
Such cost includes the cost of replacing
part of the plant and equipment. When
significant parts of plant and equipment
are required to be replaced at intervals,
the Company depreciates them separately
based on their specific useful lives. Likewise,
when a major inspection is performed, its
cost is recognised in the carrying amount of
the plant and equipment as a replacement if
the recognition criteria are satisfied. All other
repair and maintenance costs are recognised
in profit or loss as incurred.
Gains or losses arising from de-recognition
of Property, Plant and Equipment are
measured as the difference between the
net disposal proceeds and the carrying
amount of the asset and are recognized in
the Statement of Profit and Loss when the
asset is de-recognised.
The company identifies and determines
cost of each component/ part of the asset
separately, if the component/ part has a cost
which is significant to the total cost of the
asset and has useful life that is materially
different from that of the remaining asset.
iii) Intangible Assets
Intangible assets acquired separately are
measured on initial recognition at cost.
Following initial recognition, intangible
assets are carried at cost less accumulated
amortization and impairment losses, if any.
Gains or losses arising from derecognition
of an intangible asset are measured as the
difference between the net disposal proceeds
and the carrying amount of the asset and
are recognized in the statement of profit and
loss when the asset is derecognized.
iv) Depreciation on Property, Plant and
Equipment and Amortization on
intangible assets
Depreciation on Property, Plant and
Equipment is provided to the extent of
depreciable amount on the written down
value method. Depreciation is provided
based on useful life of the assets as
prescribed in Schedule II to the Companies
Act 2013,which is given below:
The Intangible assets are amortized using
straight line method over their estimated
useful lives of 5 Years. The estimated useful
life is reviewed annually by the management.
Depreciation is not recorded on capital
work-in progress until construction and
installation is completed and the asset is for
intended use.
v) Inventories
Materials, components and stores & spares
to be used in contracts are valued at lower
of cost, or net realizable value. Cost is
determined on weighted average basis. Net
Realizable Value is the estimated selling
price in the ordinary course of business,
less estimated costs of completion and
estimated cost necessary to make the sale.
Unbilled Revenue (WIP) is valued at net
realizable value.
NRV is the estimated selling price in the
ordinary course of business, less estimated
costs of completion and estimated costs
necessary to make the sale.
vi) Investments
Investments that are readily realizable and
are intended to be held for not more than
one year from the balance sheet date are
classified as current investments and are
stated at lower of cost and fair market value.
All other investments are classified as long
term investments.
vii) Taxes on Income
The accounting treatment for the Income
Tax in respect of the Company's income
is based on the Accounting Standard on
Accounting for Taxes on Income (AS-22). The
provision made for Income Tax in Accounts
comprises both, the current tax and deferred
tax. Provision for Current Tax is made on the
assessable Income Tax rate applicable to the
relevant assessment year after considering
various deductions available under the
Income Tax Act, 1961.
Deferred tax is recognized for all timing
differences; being the differences between
the taxable income and accounting income
that originate in one period and are capable
of reversal in one or more subsequent
periods. Such deferred tax is quantified
using the tax rates and laws enacted or
substantively enacted as on the Balance
Sheet date. The carrying amount of deferred
tax asset/liability is reviewed at each Balance
Sheet date and consequential adjustments
are carried out. Deferred tax assets are only
recognised to the extent that it is probable
that future taxable profits will be available
against which the temporary differences can
be utilised.
viii) Retirement and other employees
benefits
a) Retirement benefit in the form of
provident fund is a defined contribution
scheme. The company has no obligation,
other than the contribution payable
to the provident fund. The company
recognizes contribution payable to
the provident fund scheme as an
expenditure, when an employee renders
the related service. If the contribution
payable to the scheme for service
received before the balance sheet date
exceeds the contribution already paid,
the deficit payable to the scheme is
recognized as a liability after deducting
the contribution already paid. If the
contribution already paid exceeds the
contribution due for services received
before the balance sheet date, then
excess is recognized as an asset to the
extent that the pre-payment will lead
to a reduction in future payment or a
cash refund.
b) Gratuity liability being a defined benefit
obligation is provided for on the basis
of actuarial valuation on projected
unit credit method at the end of each
financial year. Actuarial gains / losses are
recognized in full in the period in which
they occur in the Statement of Profit and
Loss and as on the date no employee is
eligible for gratuity.
c) Short term compensated absences
are provided for based on estimates.
Accumulated leave, which is expected to
be utilized within the next 12 months, is
treated as short-term employee benefit.
The company measures the expected
cost of such absences as the additional
amount that it expects to pay as a result
of the unused entitlement that has
accumulated at the reporting date.
ix) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow
statement comprise of cash at bank and
Cash / Cheque on hand and short-term
investments made in fixed deposits of three
months or less.
x) Earnings Per Share
Basic Earnings per share is calculated by
dividing the net profit or loss for the year
attributable to equity shareholders by the
weighted average number of equity shares
outstanding during the year.
For the purpose of calculating diluted
earnings per share, the net profit or loss for
the year attributable to equity shareholders
and the weighted average number of shares
outstanding during the year are adjusted
for the effects of all dilutive potential
equity shares.
xi) Borrowing costs
Borrowing cost includes interest and
amortization of ancillary costs incurred
in connection with the arrangement
of borrowings.
Borrowing costs directly attributable to the
acquisition, construction or production of
an asset that necessarily takes a substantial
period of time to get ready for its intended
use or sale are capitalized as part of the cost
of the respective asset. All other borrowing
costs are expensed in the period they occur.
|