2. Use of Estimates
The preparation of the Financial Statements in conformity with Indian GAAP requires the Management
to make estimates and assumptions considered in the reported amounts of assets and liabilities
(including contingent liabilities) and the reported income and expenses during the period/year. The
Management believes that the estimates used in preparation of the Financial Statements are prudent
and reasonable. Future results could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which the results are known /
materialize.
3. Revenue Recognition :-
Revenue is measured at the fair value of consideration received or receivable by the Company for
services provided, excluding trade discounts and other applicable taxes. Revenue is recognised upon
transfer of control of promised services under a contract.
Revenue is recognised when the amount can be measured reliably, it is probable that the economic
benefits associated with the transaction will flow to the Company, the costs incurred or to be incurred
can be measured reliably, and when the criteria for each of the Company's different activities has been
met.
The Company derives revenues from two types of activities:
a) Construction contracts - Customer contracts towards delivering aSewerage treatment plant,
WaterPipeline, Tube well, Water Tank, Water treatment facility, civil construction and Electrical
Distribution,Erection& Substation works that is fit for purpose as per the contract.
b) Operation and maintenance contracts - Customer contracts towards operation and maintenance
of sewerage waterPipeline, Tubewell, Water Tank & Water treatment facility.
The Company determines its performance obligations included in the contracts signed with
customers. When a customer contract includes both a construction and operation & maintenance, the
performance obligations are separately identified and revenue is recognised in accordance with the
principles of Accounting Standards
a) Construction Contracts:
Construction contracts generally involve design, supply, construction, installation and
commissioning of a Sewerage treatment plant, Water Pipeline, Tubewell, Water Tank, Water
treatment facility, Building construction and Electrical Distribution, Erection & Substation works.
The transaction price is usually a fixed consideration with a variable consideration on a case to case
basis. Variable consideration (penalties, damages, claims etc.) is included in the transaction price
to the extent it is highly probable that a significant reversal in the amount of revenue recognised will
not occur.
Construction contracts usually have a single performance obligation, wherein the control of goods
and services are transferred progressively over the period of the contract. The Company satisfies
its performance obligation upon completing the scope of the construction contract and achieving
customer acceptance.
b) Operation & Maintenance contracts
Operation and maintenance contracts involve operation and maintenance services for water
treatment facilities and the supply of spares. Revenue from operation and maintenance contracts
are recognized as the services are provided and invoiced to the customer, as per the terms of the
contract.
4. Other Income :-
Interest income is accounted on accrual basis. Income other than interest income is accounted for
when right to receive such income is established.
5. Property, Plant &Equipment's:-
Tangible Assets
Property, Plants & Equipment are stated at their original cost of acquisition including taxes, freight
and other incidental expenses related to acquisition and installation of the concerned assets less
depreciation till date.
Subsequent expenditure incurred on an item of property, plant and equipment is added to the book
value of that asset only if this increases the future benefits from the existing asset beyond its
previously assessed standard of performance.
Depreciation methods, estimated useful lives and residual value
Depreciation on assets is provided on written down method at the rates and in the manner
prescribed in Schedule II to the Companies Act, 2013.Schedule II to the companies Act 2013
prescribes the useful lives for various class of assets. For certain class of assets, based on technical
evaluation and assessment, Management believes that the useful lives adopted by it reflect the
period over which these assets are expected to be used.
Accordingly for those assets, the useful lives estimated by the management are different from
those prescribed in the Schedule. Management's estimates of the useful lives for various classes of
fixed assets are as given below:-
Intangible Assets
The cost of intangible asset comprises its purchase cost including any taxes and directly
attributable expenditure on making the asset ready for its intended use. It is accounted as purchase
price less amortization, if any.
6. Depreciation :-
Depreciation on Property, Plant & Equipment's is provided to the extent of depreciable amount on
the Written down Value (WDV) Method. Depreciation is provided based on useful life of the assets
as prescribed in Schedule II to the Companies Act, 2013.
7. Impairment of Assets :-
An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value.
Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is
the present value of estimated future cash flows expected to arise from the continuing use of the
asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable
from sale of the asset in an arm's length transaction between knowledgeable, willing parties, less
the costs of disposal. As told by the management of the company, no impairment loss is recognized
during the year as there are no indicators of impairment found in the company.
8. Cash and Cash Equivalents :-
Cash and cash equivalents comprises Cash-in-Hand, Short-term Deposits and Balance in Current
Accounts with Banks. Cash equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments that are readily convertible
into known amounts of cash and which are subject to insignificant risk of changes in value.
9. Investments :-
In Subsidiary company-
Investments are stated at cost.
In Partnership Firms-
Investments are stated at cost price /- profit/ Loss of the Firm.
10. Inventories :-
Inventories i.e. closing work in progress and material at site are valued at cost price; The
Inventories are valued, verified and certified by the management of the company.
11. Employee Benefits:-
I .Defined Contribution Plan
The company's monthly contribution towards Employee Provident Fund and Employee State
Insurance are accounted on accrual basis.
II. Defined Benefit Plan
Liabilities on account of Gratuity and Leave Encashment are accounted on the basis of Actuarial
Valuation report and the same was charged to the statement of profit & Loss and provision has been
made based on the certified actuarial report. Actuarial gain and losses in respect of post
employment benefits are charged to the statement of profit & Loss.
12. Earning Per Share :-
Basic earning per share is computed by dividing the profit/ (loss) after tax (including the post tax
effect of extraordinary items, if any) by the weighted average number of equity share outstanding
during the period. Diluted earning per share is computed by dividing the profit/ (loss) after tax
(including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and
other charges to expense or income (net of any attributable taxes) relating to the dilutive potential
equity shares, by the weighted average number of equity shares which could have been issued on
the conversion of all dilutive potential equity shares. However the basic and dilutive EPS of the
company are same as there are no options, warrants or any dilutive potential equity shares during
the year. Refer Note No 26 of Standalone Financial Statement for calculation of EPS.
13. Taxation & Deferred Tax:-
Income taxes are accounted for in accordance with Accounting Standard (AS-22) - "Accounting for
taxes on income", notified under Companies (Accounting Standard) Rules, 2014. Income tax
comprises of both current and deferred tax. Current tax is measured on the basis of estimated
taxable income and tax credits computed in accordance with the provisions of the Income Tax Act,
1961. The tax effect of the timing differences that result between taxable income and accounting
income and are capable of reversal in one or more subsequent periods are recorded as a deferred
tax asset or deferred tax liability. They are measured using substantially enacted tax rates and tax
regulations as of the Balance Sheet date. Deferred tax assets arising mainly on account of brought
forward losses and unabsorbed depreciation under tax laws, are recognized, only if there is virtual
certainty of its realization, supported by convincing evidence. Deferred tax assets on account of
other timing differences are recognized only to the extent there is a reasonable certainty of its
realization.
14. Foreign Exchange Transaction
Foreign Currency transactions are booked at the rate prevailing at the time of transaction and any
Gain/loss arising out of fluctuations in exchange rate is accounted for at the year end as per AS-11
issued by the Institute of Chartered Accountants of India. There are no Foreign transactions in the
company during the year.
15. Segment Reporting :-
The Company is engaged in the business of construction of Infrastructure Projects, primarily,
Sewer, Sewer Treatment plants, Water Tanks, Water treatment plants, Road sector development,
Electrification Development and its Transmission and Distribution Infrastructure and Civil
Construction Work. Based on similarity of activities, risk and reward structure, organisation
structure and internal reporting system, the company has structured its operations into single
operating segment and hence there is no reportable segment as per AS-17 "Segment Reporting".
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