14 SIGNIFICANT ACCOUNTING POLICIES :
14.1 Basis of accounting and preparation of financial statements
The financial statements are prepared to comply in all material aspects under the Historical
Cost convention and in accordance with generally accepted accounting principles in India and
the mandatory Accounting Standards prescribed under Section 133 of the Companies Act
2013 (‘Act') read with Rule- 7 of the Companies (Accounts) Rules, 2014, the provisions of the
Act (to the extent notified) and current practices prevailing.
14.2 Use of Estimates
The preparation of financial statements requires estimates and assumptions that affect the
reported amount of assets and liabilities, and disclosure of contingent liabilities at that date of
the financial statements and the result of operations during the reporting period. Although
such estimates and assumptions are made on reasonable and prudent basis taking into
account all available information, actual results could differ from these estimates and
assumptions and such differences are recognised in the period in which results are
crystallised.
14.3 Fixed Assets
a) Tangible Assets
Fixed Assets are stated at historical cost less accumulated depreciation. Cost includes
acquisition cost and directly attributable cost of bringing the assets to its working condition for
its intended use
b) Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated
amortisation. The cost comprises purchase price, borrowing costs and directly attributable
costs of bringing the asset to its working condition for the intended use.
c) Capital Work in Progress comprises the cost of fixed assets that are not yet ready for their
intended use at the reporting date.
14.4 Depreciation and Amortization
a) Depreciation on all tangible assets is charged on “Straight Line Method” according to the
useful life mentioned in Schedule II Part C to the Companies Act, 2013 except for EDP
Equipments for which based on internal assessment and independent technical evaluation
carried out by external valuers the management believes that the useful life is 10 years which
best represents the period over which management expects to use these assets. Hence the
useful lives for these assets is different from the useful lives as prescribed under Part C of
Schedule II of the Companies Act 2013.
b) Intangible assets including software is amortised over the useful life not exceeding ten years.
c) Leasehold land is amortised over the period of lease.
14.5 Borrowing Cost
Borrowing costs attributable to the acquisition or construction of a qualifying asset are
capitalized as part of the cost of that asset. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. Other borrowing costs are
recognized as expense in the period in which these are incurred.
14.6 Inventories
Raw materials, stores, components and other consumables are valued at cost and net
realisable value whichever is lower. The work-in-progress is valued at cost on estimate.
Generally GST paid on purchases is consider for inventory valuation except where Input
credit of GST paid on purchase is available than Inventories have been valued excluding GST
paid on purchases.
14.7 Cash and cash equivalents
Cash and cash equivalents in the Cash Flow Statement comprise cash at bank and in hand
and short-term investments with an original maturity of three months or less.
14.8 Revenue Recognition
(a) Revenues from the sale of product are recognized upon delivery, which is when title passes to
the customer.
(b) Revenue from labour charges is recognized on completion of job. In case of divisible large
contracts the revenue is recognized on completion of each relevant part of the contract.
(c) Interest income is recognised on time proportion basis taking into account the amount
outstanding and rate applicable (accrual basis)
14.9 Employee benefits
Employee benefits such as salaries, allowances, non-monetary benefits which fall due for
payment within a period of twelve months after rendering service, are charged as expense to
the profit and loss account in the period in which the service is rendered.
Retirement benefit in the form of provident fund is a defined contribution scheme. The
contributions to the provident fund are charged to the Statement of Profit and Loss for the year
as an expenditure, when an employee renders the related service. The Company has no
obligation, other than the contribution payable to the provident fund.
The Company operates defined benefit plan for its employees, viz. gratuity. The costs of
providing benefits under the plan are determined on the basis of actuarial valuation at each
year-end. Actuarial valuation is carried out for the plan using the projected unit credit method.
Actuarial gains and losses for defined benefit plan are recognized in full in the period in which
they occur in the Statement of Profit and Loss.
14.10 Impairment Loss
The Company assesses at each Balance Sheet date whether there is any indication that any
asset may be impaired and if such indication exists, the carrying value of such asset is
reduced to its recoverable amount and a provision is made for such impairment loss in the
statement of profit and loss. If at the Balance Sheet date, there is an indication that a
previously assess impairment loss no longer exists, the recoverable amount is reassessed
and the asset is reflected at the recoverable amount subject to maximum of depreciated
historical costs.
14.11 Earning Per Share
Basic Earnings per share are calculated by dividing the net profit or loss for the period
attributable to equity shareholders by the weighted average number of equity shares
outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period
attributable to equity shareholders and ? the weighted average number of shares outstanding
during the period are adjusted for the effects of all dilutive potential equity shares.
14.12 Taxation
(a) Tax expense comprises of current tax and deferred tax.
(b) Current tax is measured at the amount expected to be paid to the tax authorities, using the
applicable tax rates.
(c ) Deferred tax expense or benefit is recognized on timing differences being the difference
between taxable income and accounting income that originate in one period and is likely to
reverse in one or more subsequent periods. 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.
In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are
recognized only to the extent that there is virtual certainty supported by convincing evidence
that sufficient future taxable income will be available to realize such assets. In other situations,
deferred tax assets are recognized only to the extent that there is reasonable certainty that
sufficient future taxable income will be available to realize these assets.
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