Note 2- Significant Accounting Polices
1. Basis of Preparation
The financial statements of the Company have been prepared to comply in all material respects with Indian
Accounting Standards (“Ind AS”) as notified under section 133 of the Companies Act, 2013, (the Act) read
together with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian
Accounting Standards) Amendment Rules, 2016 issued by the Ministry of Corporate Affairs(“MCA”) in addition,
the Guidance notes/announcements issued by the institute of Chartered Accountants of India (ICAI) are also
applied except where compliance with other statutory promulgations requires a different treatment.
Presentation of Financial Statements
The Balance Sheet and Statement of Profit & Loss are prepared and presented in the format set out in
Schedule III to the Companies Act, 2013(“the Act”).The Cash flow statement has been prepared and presented
as per the requirements of Indian Accounting Standards (INDAS-7)”Statement of Cash Flow”. The disclosure
requirements with respect to items in the Balance Sheet and Statement of Profit & Loss as prescribed in the
schedule III to the Act, are presented by way of notes forming parts of accounts along with the other notes
required to the disclosed under the notified Indian Accounting Standards and the equity listing agreement.
Amounts in the financial statement are presented in Indian rupees in Lakhs.
The financial Statements are authorized for issue by the Company’s Board of Directors at their meeting held
on 28th May, 2025.
The preparation of the said financial statements requires the use of certain critical accounting estimates
and judgements. It also requires the management to exercise judgment in the process of applying the
Company’s accounting policies.
2. Operating cycle for current and non-current classification:
All the assets and liabilities have been classified as current or non-current, wherever applicable, as per the
operating cycle of the Company as per the guidance set out in Schedule III to the Act. Operating cycle for the
business activities of the Company covers the duration of the project/ contract/ service including the defect
liability period, wherever applicable, and extends up to the realization of receivables (including retention
monies) within the credit period normally applicable to the respective project.
3. Going Concern
Financial Statement are prepared on a going concerned basis as intended by management based on material
certainty to related to going concern.
4. Accounting Estimates
The preparation of the financial statements, in conformity with the recognition and measurement principles
of Ind AS, requires the management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and the
results of operation during the reported period. Although these estimates are based upon management’s
best knowledge of current events and actions, actual results could differ from these estimates which are
recognised in the period in which they are determined.
5. Key accounting estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below. The Company based its assumptions and
estimates on parameters available when the financial statements were prepared. Existing circumstances
and assumptions about future developments, however, may change due to market changes or circumstances
arising that are beyond the control of the Company. Such changes are reflected in the financial statements
in the period in which changes are made and, if material, their effects are disclosed in the notes to the
financial statements.
a. Contract Estimates
The Company, being a part of construction industry, prepares budgets in respect of each project to
compute project profitability. The two major components of contract estimate are ‘claims arising
during construction period’ and ‘budgeted costs to complete the contract’. While estimating these
components various assumptions are considered by the management such as (i) Work will be executed
in the manner expected so that the project is completed timely (ii) consumption norms will remain
same (iii) Wastage will not exceed the normal % as determined etc. (iv) Estimates for contingencies (v)
There will be no change in design and the geological factors will be same as communicated; and (vi)
Price escalations etc. Due to such complexities involved in the budgeting process, contract estimates
are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting
date.
b. Recoverability of claims
The Company has claims in respect of cost over-run arising due to client caused delays, suspension
of projects, deviation in design and change in scope of work etc., which are at various stages of
negotiation/discussion with the clients or under arbitration. The realisability of these claims are
estimated based on contractual terms, historical experience with similar claims as well as legal opinion
obtained from internal and/or external experts, wherever necessary. Changes in facts of the case or
the legal framework may impact realisability of these claims.
c. Defined benefit plans
The cost and present value of the gratuity obligation and compensated absences are determined using
actuarial valuations. An actuarial valuation involves making various assumptions that may differ from
actual developments in the future. These include the determination of the discount rate, future salary
increases, attrition rate and mortality rates. Due to the complexities involved in the valuation and its
long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
Property, Plant and Equipment
All items of property, plant and equipment are stated at acquisition cost net of accumulated depreciation and
accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the
acquisition of the items. The Company follows cost model for subsequent measurement for all classes and items
of property, plant and equipment. Subsequent costs are included in the carrying amount of asset or recognized as
a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance
expenses are charged to the Statement of Profit and Loss during the period in which they are incurred. Gains
or losses arising on retirement or disposal of assets are recognized in the Profit or Loss. Spare parts, stand-by
equipment and servicing equipment are recognized as property, plant and equipment if they meet the definition
of property, plant and equipment.
Depreciation on Tangible Fixed Assets is provided on Straight Line Method on the basis of useful life of assets
specified in Part C of Schedule II of the Companies Act, 2013. Property, plant and equipment which are added /
disposed off during the year, depreciation is provided on pro-rata basis with reference to the month of addition
/ deletion. Gains and losses on disposals are determined by comparing the proceeds with the carrying method.
The residual values are not more than 5% of the original cost of the asset. The residual values, useful lives and
method of depreciation of property, plant and equipment are reviewed at each Financial year end and any
changes there-in are considered as change in estimate and accounted prospectively.
Impairment of Assets:
Testing of impairment by the Management is predominantly based on the earning realization from construction
equipment’s, machinery, rollers & Trucks etc. under corona Virus Lockdown. PPE and intangible assets with
definite lives are reviewed for impairment, whenever events or changes in circumstances indicate that their
carrying values may not be recoverable. For the purpose of impairment testing, the recoverable amount (that is,
higher of the fair value less costs to sell and the value-in-use) is determined on an individual asset basis, unless
the asset does not generate cash flows that are largely independent of those from other assets, in which case the
recoverable amount is determined at the cash-generating-unit (‘CGU’) level to which the said asset belongs. If
such individual assets or CGU are considered to be impaired, the impairment to be recognised in the statement of
profit and loss is measured by the amount by which the carrying value of the asset/CGU exceeds their estimated
recoverable amount and allocated on pro rata basis.
Useful lives of asset classes determined by management estimate, which are generally higher than those prescribed
under Schedule II to the Act and are supported by the internal technical assessment of useful lives.
The estimated useful life and residual values are reviewed at each financial year end and the effect of any change
in the estimates of useful life/residual value is accounted on prospective basis. An asset’s carrying amount is
written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount. Depreciation on additions is provided on a pro-rata basis, from the date on which asset is
ready to use. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These
are accounted in the Statement of Profit and Loss under Other income and other expenses.
Inventories
Inventories are carried in the balance sheet as follows:
(a) Raw materials, components, stores and spares
Raw materials, components, stores and spares are valued at lower of cost or net realisable value. Cost is
determined on a FIFO basis and comprises the purchase price including duties and taxes (other than those
subsequently recoverable by the Company from the taxing authorities). Net realisable value is the estimated
selling price in the ordinary course of business, less than estimated cost necessary to make the sale.
(b) Contract Work-in-progress
Costs incurred that relate to future activities on the contract are recognised as contract work-in-progress.
Contract work-in progress comprises of construction cost and other directly attributable overhead valued at
cost.
The cost of inventories including unawarded claims have been computed to include all cost of purchases,
cost of conversion and other related costs incurred in bringing the inventories to their present location and
condition. Goods and materials in transit are valued at actual cost incurred upto the date of Balance Sheet.
Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with
an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Statement of Cash Flows
Cash Flows are reported using the “indirect method”, whereby Loss for the period is adjusted for the effects of
transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments
and item of income or expenses associated with investing or Financing cash Flows. The cash Flows from operating,
investing and financing activities of the Company are segregated.
Sundry Debtors / Loans and Advances:
Sundry Debtors including awarded claims / Loans and Advances are stated net of provision for identified doubtful
debts/advances wherever necessary. Sundry Debtors and Loans and Advances has been taken at reconciled amount
for the parties from which the balance confirmation was received and for the rest Debtors and balances are taken
as per book balance and are subject to adjustment and reconciliation, if any which will be done on receipts of
confirmation from such parties. In the opinion of the management on which we have placed reliance, substantial
part of debtors are outstanding for a period exceeding six months and they are subject to arbitration and other
reconciliatory proceedings, the outcome and quantum of which is not ascertainable and determined; subject to
reconciliations referred to above, the debtors and Loans and advances to the extent as stated are considered good
in the Balance Sheet.
Investments:
The Investments that are readily realizable and intended to be held for not more than a year from the Balance
Sheet date are classified as current investments. All other investments are classified as non-current investments
On initial recognition, all investments are recognized at cost. The cost comprises purchase price and directly
attributable acquisition charges such as brokerage, fees and duties.
Current investments are carried at the lower of cost and quoted/fair value, computed category wise. Long term
investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such
a decline is other than temporary in the opinion of the management.
Revenue Recognition:
Contract Revenue
The Company follows the percentage completion method, based on the stage of completion at the Balance Sheet
date, taking into account the contractual price and revision thereto by estimating total revenue including claims/
variations, Construction Contracts, and total cost till completion of the contract and the profit so determined
proportionate to the percentage1.7d by Company and are based on technical and other estimates and experience
gain.
The Company’s claim for extra work and escalation in rates relating to execution of contracts are accounted as
income in the year of receipt of arbitration award or acceptance by client or evidence of acceptance received.
Contract Receipts - Sub-Contract Revenue
Proportionate Consolidation method of accounting and reporting is followed in respect of Joint venture entered
into by the Company. The Income from such joint venture is recognized proportionately, in the profit sharing ratio,
and on the basis of Bills submitted, certified and sanctioned by the appropriate authorities. The actual expenses
for such Project in Joint Venture are also accounted on the basis of the Profit sharing ratio for the consolidation
purposes.
Accounting for Claims
Amounts recoverable in respect of the price and other escalation, bonus claims adjudication and variation in
contract work required for performance of the contract to the extent that it is probable that they will result
in revenue. The same is unbilled and is accounted as work in progress and in debtors for which arbitration
proceedings are initiated.
Other Income
a. Interest income is recognized on a time proportion basis, by reference to the principal outstanding and the
applicable Effective Interest Rate (EIR).
Other items of income are accounted as and when right to receive such income arises and it is probable that the
economic benefits wil flow to the Company and the amount of income can be measured reliably.
Post-Employment Benefits
The company operates the following post-employment schemes:
(a) Defined benefit plans and
(b) Defined contribution plans
Defined benefit plans - Gratuity obligations
The liability or asset recognised in the balance sheet in respect of defined benefit pension and gratuity plans is
the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan
assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows by reference to market yields at the end of the reporting period on government bonds that have terms
approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets.
This cost is included in employee benefit expense in the statement of profit and loss. Measurement gains and
losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period
in which they occur, directly in other comprehensive income. They are included in retained earnings in the
statement of changes in equity and in the balance sheet.
Defined contribution plans - Provident fund
The company pays provident fund contributions to publicly administered provident funds as per local regulations.
The company has no further payment obligations once the contributions have been paid. The contributions are
accounted for as defined contribution plans and the contributions are recognised as employee benefit expense
when they are due.
Short-term Benefits
Short-term employee benefits such as salaries, wages, performance incentives etc. are recognised as expenses
at the undiscounted amounts in the Statement of Profit and Loss of the period in which the related service is
rendered.
Earnings 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 year. The weighted average
number of equity shares outstanding during the year is adjusted for events, such as bonus shares, other than the
conversion of potential equity shares, that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to
equity shareholders of the Company and the weighted average number of shares outstanding for deriving basic
earnings per equity share and also the weighted average number of equity shares that could have been issued
upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the
proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the
outstanding equity shares).
Income Taxes
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during
the period. Current and deferred taxes are recognised in the statement of profit and loss, except when they relate
to items that are recognised in other comprehensive income or directly in equity, in which case, the current and
deferred tax are also recognised in other comprehensive income or directly in equity, respectively.
Current tax
Current income tax is recognised based on the estimated tax liability computed after taking credit for allowances
and exemptions in accordance with the Income Tax Act, 1961. Current income tax assets and liabilities are
measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and
tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is determined by applying the balance sheet approach. Deferred tax assets and liabilities are
recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax
losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax
losses can be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised
to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be
recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.
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