2] SIGNIFICANT ACCOUNTING POLICIES.
A. ftASAS.QfLPREPARATION QF FINANCIAL S!AXEMEfjISl
I) These financial statements have been prepared to comply with the Accounting Standards referred to
in the Companies (Accounting Standards) Rules, 2006 notified by the Central Government In exercise of
the power conferred under sub-section (1) (a) of section 642 and the relevant provisions of the
Companies Act, 1956 read with the Rule 7 of Companies (Accounts) Rules, 2014 in respect of section 133
of the Companies Act, 2013 (the "Act").
h) The financial statements have been prepared on a going concern basis under the historical cost
convention on accrual bas>s. The accounting policies have been consistently applied by the Company
unless otherwise stated.
Ill) All the assets and liabilities hove been classified as current and non-current as per the
Company's normal operating cycle and other criteria set out in the Schedule 111 of the Companies Act
2013. Based on the time involved between the acquisition of assets for processing and their reallsabon in
cash and cash equivalents, the Company has determined twelve months as Its operating cycle for the
purpose of classification of its assets and liabilities as current and non-current in the balance sheet
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
USE QF ESTIMATES:
The preparation of financial statements requires estimates and assumptions to be made that affect the
reported amount of assets and liabilities on the date of the financial statements and reported amount of
revenues and expenses during the reporting period. Difference between the actual resuits and estimate
are recognised in the period in which the results are known / materialised.
RJVEtlUE j^ECQG NITION:
The Company operates In construction Industry and it earns revenue primarily from the Engineering,
Procurement and Construction ('EPC') business. The contracts with the customers arc of construction of
railways, construction of roads & highways, construction of commercial anti residential buildings,
electrification work and others.
The company provides these construction services on a fixed-sum turnkey basis as well as on cost plus
basis.
Revenue from contract with customers is recognised when control of the goods or services ("performance
obligation") are transferred to the customer at an amount that reflects the consideration to which the
Company expects to be entitled in exchange for those goods or services (“transaction price").
I) Revenue is recognized using the percentage of completion method (as per Accounting Standard 7),
based on contracted appraisal. For residential and commcrcia^bBitdwg contracts, revenue recognition is
deferred until the 20% completion milestone is reached, allowing for the issuance of the 1st Runninq
Account (RA) bill.
II) Revenue from the sale of goods is recognised upon passing of title to the customers, which generally
coincides with their delivery.
iii) Revenue from services is recognised upon rendering of services and billed to the customers.
iv) Interest income is recognised on a time proportion basis taking into account the amount outstanding
and the applicable interest rate.
Property, plant and equipment:
Property, plant and equipment (except freehold land) held for use in the production or supply of goods or
services, or for administrative purposes, are stated In the balance sheet at historical cost less
accumulated depreciation and accumulated Impairment losses, irany. Historical cost Includes expenditure
that is directly attributable to the acquisition of the Items. Subsequent costs are Included In the asset's
carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. Freehold land is not depreciated. Depreciation is recognised so as to write off the cost
of assets (other than freehold land and properties under construction) less their residual values over their
useful lives, using the straight-line method.Tangiblc Fixed Assets are stated at cost less accumulated
depreciation The cost of assets comprises the purchase price and any attributable cost or bringing the
assets to Its working condition for its intended use.
Depredation commences when the assets are ready for their intended use. Depreciation on Property,
Plant and Equipment has been provided on the straight-line method over their estimated useful life,
taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of
the asset, past history of replacement, anticipated technological changes, etc. Losses ansing from the
retirement of, and gams or losses arising from disposal of fixed assets which arc carried at cost are
recognised in the Statement of Profit and Loss.
INV.ESlM£MT.lNJ.Q.yiT.Y-lNSIRUMENTS QF SUBSIDIARIES AND JOINT VENTURES
The Company as a joint operator recognises In relation to its interest in a joint operation, Its share in the
assets/liabilitics held/ incurred jointly with the other parties of the joint arrangement. Revenue is
recognised for its share of revenue from the sale of output by the Joint operation. Expenses are
recognised for its share of expenses incurred jointly with other parties as part of the joint arrangement.
A jointly controlled operation is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement
Joint control Is the contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require unanimous consent of the parties shanng control.
When a Company undertakes its activities under Jointly controlled operations, the Company as a joint
operator recognises In relation to its Interest in a jointly controlled operation the assets, liabilities,
revenues, and expenses relating to Its interest in a Jointly controlled operation In accordance with the
applicable Ind AS.
When a Company transacts with a jointly controlled operation in which o Company is a joint operator
(such as a sale or contribution of assets), the Company is considered to be conducting the transaction
with the other parties to the jointly controlled operation, and gains and losses resulting from the
transactions arc recognised in the Company's financial statements only to the extent of other parties'
interests in the jointly controlled operation.
When a Company transacts with a jointly controlled operation In which a Company is a joint operator
(such as a purchase of assets), the Company does not recognise Its share of the gains and losses until it
resells those assets to a third party
TRAPS RECEIVABLES:
A receivable represents the Company's right to an amount of consideration that Is unconditional (i.e.,
only the passage-=flfcume is required before payment of the consideration is due). Trade receivables
are recognised initially at the transaction price as they do not contain significant financing
components. The Company hold the trade receivable with the objective of collecting the contractual
cash flows and therefore measure them subsequently at amortised cost using the effective Interest
rate method less loss allowance, if any.
CONTRACT LIABILITIES:
If a customer pays consideration before the Company transfers goods or services to the customer, a
contract liability is recognised when the payment is made, or the payment is due (whichever is
earlier). Contract liabilities are recognised as revenue when the Company performs under the
contract.
CASH AW_CASHJEQU1YALENTS
For the purpose of presentation in the statement of cosh flows, cash and cash equivalents includes
unrestricted cash and short-term deposits with original maturities of three months and less that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of
change in value.
DEPRECIATION:
I) Depreciation on Fixed Assets Is provided to the extent of depreciable amount on the straight-line
Method. Depredation is provided based on useful life of the assets as prescribed in Schedule II to the
Companies Act, 2013
ii) Depreciation m respect of addition to the fixed assets is provided on Pro-rata basis in which such assets
are acquired / installed.
ill) In case of assets costing less than Rs.5000/- deprecation® 100% is provided.
UN VEN TORIES:
Inventory of raw material are values at cost adopting FIFO Basis.
Work in progress is valued at actual raw material cost and overheads. Construction costs incurred for
future contract activities are recognised as assets If it is probable that they will be recovered during the
contract period and classified as construction work-in progress under inventories.
iMPAIBMi.NXQf. ASSETS;
At each balance sheet date, the company review whether there is any indication of Impairment of the
carrying amount of the company's fixed assets. If any indication exits, an asset's recoverable amount is
estimated. An Impairment loss is recognised whenever the carrying amount of assets exceeds its
recoverable amount and charged to profit & loss account in the year in which assets Is Identified as
impaired. The recoverable Is greater of the net selling price and value in use. In assessing value In use,
the estimate future cash flows are discounted to their present value based on an appropriate discount
factor. The impairment loss recognised In prior accounting periods is reversed if there has been changed
in the estimate of recoverable amount.
EMELQ.YEES.RETIREMENT 8ENPEFIT;
Short term benefit payable to employees wholly within twelve months of rendering services such as
salaries, wages etc. are recognised in the period in which the employee renders the related service.
Defined Contribution Plan: The Company's contribution to the state governed employees provident fund
scheme is a defined contribution plan. The contribution paid/ payable under the scheme is recognized
during the period in which the employee renders the related service.
Defined Benefit Plan: The Company's employee's gratuity is accounted on accrual basis based on
actuarial valuatlom^-rr^v
Tax expense for the period, comprising current tax and deferred tax, are included In the determination or
the net profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax
authorities in accordance with the taxation laws prevailing in the respective jurisdictions.
Deferred tax is recognised for all the timing differences, subject to the consideration of prudence In
respect of deferred tax assets. Deferred tax assets are recognised and carried forward only to the extent
that there is a reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realised. Deferred tax assets and liabilities are measured using the tax
rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each
Balance Sheet date, the company reassesses unrecognised deferred tax assets. If any.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off
the recognised amounts and there is an Intention to settle the asset and the liability on a net basis.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set
off assets against liabilities representing current tax and where the deferied tax assets and the deferred
tax liabilities relate to taxes on income levied by the same governing taxation laws.
CASH & CASH EQUIVALENTS (FOR PURPOSE OF CASH FLOW STATEMENT);
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents Includes cash
on hand, other short-term, highly liquid investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
In value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the
Balance Sheet.
Cash Rows are reported using the indirect method, whereby net profit before tax Is adjusted for the
effects of transactions of a non-cash nature, any deferrals or accruals of past or future cash receipts or
payments. The cash flows from operating, Investing and financing activities of the Company are
segregated based on the available information.
Short term borrowings, repayments and advances having maturity of three months or less, are shown as
net in cash flow statement.
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