NOTE 1. CORPORATE INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES A. CORPORATE INFORMATION The Company is in the business of Energetics (Formerly Industrial Explosives), Mining & Infrastructure Services (Formerly Consult) and Realty (Formerly Property Development) B. SIGNIFICANT ACCOUNTING POLICIES (a) BASIS OF ACCOUNTING AND brPARATION OF FINANCIAL STATEMENTS The Financial Statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act")/ Companies Act, 1956 ("the 1956 Act") as applicable. The Financial Statements have been brpared on accrual basis under the historical cost convention except for categories of fixed assets i.e., land which is carried at revalued amounts. The accounting policies adopted in the brparation of the Financial Statements are consistent with those followed in the brvious year. (b) USE OF ESTIMATES The brparation 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 year. The Management believes that the estimates used in brparation 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 recognized in the periods in which the results are known / materialize. (c) INVENTORIES Inventories are valued at lower of cost and the net realizable value, after providing obsolescence and other losses, which are considered necessary. The method of arriving at cost of various categories of inventories is as below: (i) Stores and Spares, Raw and Packing material Weighted Average method (ii) Finished Goods and Work-In-Progress Weighted average cost of production, which comprises direct material costs and appropriate overheads. (iii) Contracts Work-in-Progress Rebrsents expenses incurred on execution of contracts till balance sheet date. (d) CASH AND CASH EQUIVALENTS (FOR PURPOSES OF CASH FLOW STATEMENT) Cash comprises cash on hand and demand deposits 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. (e) CASH FLOW STATEMENT Cash flows are reported using the indirect method, where by profit / (loss) before extraordinary items and tax is adjusted for the effects of transaction of non-cash nature. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. (f) DEbrCIATION AND AMORTIZATION Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Debrciation on tangible fixed assets has been provided on the straight-line method as per the useful life brscribed in Schedule II to the Companies Act, 2013. Intangible assets are amortized over their estimated useful life on straight line method. Leasehold land is being amortized in equal installments over the lease period. Assets less than Rs. 5,000 each are fully debrciated in the year of capitalization. (g) REVENUE RECOGNITION i. Sale of goods is recognized, net of returns and trade discounts, at the point of dispatch of finished goods to customers. Sales include amount recovered towards excise duty but exclude sales tax and value added tax. ii. Income from services is recognized at the time of rendering the services. iii. Contract revenue is recognized on percentage completion method as required under revised Accounting Standard 7 -Construction Contracts. The stage of completion is determined as a proportion that contract costs bear to the estimated total costs. When it is probable that at any stage of the contract, the total cost will exceed the total contract revenue, the expected loss is recognized immediately. iv. Unbilled revenue rebrsents value of work executed, to be billed subsequent to the Balance Sheet date and is valued at contract price. v. Export incentives under the Duty Entitlement Pass Book scheme has been recognized on the basis of credits afforded in the passbook. (h) FIXED ASSETS Fixed assets are shown at cost / revalued amount less debrciation. Cost comprises the purchase price and other attributable expenses. (i) FOREIGN CURRENCY TRANSACTIONS i. Transactions in foreign currencies entered into by the Company are accounted at the exchange rate brvailing on the date of transaction. Foreign currency monetary assets and liabilities of the Company outstanding at the Balance Sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost. Exchange differences arising on settlement / restatement of foreign currency monetary assets / liabilities are recognized as income or expense in the Statement of Profit and Loss. ii. In respect of forward exchange contracts, the brmium or discount at the inception of such a forward exchange contract is amortized as expense over life of the contract. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized in the Statement of Profit and Loss. iii. Gain or loss on transaction of long-term monetary liabilities intended to acquire fixed assets is capitalized as part of the debrciable fixed assets to which the monetary items relates and debrciated over the remaining useful life of such assets. (j) INVESTMENTS Long term Investments are carried individually at cost less provision, other than temporary, in the value of such investments. Current Investments are carried individually at lower of cost and fair value. (k) EMPLOYEE BENEFITS Employee benefits include provident fund, superannuation fund, employee state insurance scheme, gratuity fund, compensated absences and long-service awards. Defined Contribution Plans The Company's contribution to provident fund, superannuation fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees. Defined Benefit Plans For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the Balance Sheet rebrsents the brsent value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to past service cost, plus the brsent value of available refunds and reductions in future contributions to the schemes. Short-term Employee Benefits The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of short-term compensated absences is accounted as under: (a) In case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and (b) In case of non-accumulating compensated absences, when the absences occur. Long-term Employee Benefits Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the brsent value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled. (l) SEGMENT REPORTING The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / (loss) amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market/ fair value factors. Revenue, expenses, assets and liabilities which relate to the Company as a whole and not allocable to segments on a reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities". (m) LEASES Lease arrangements where the risks and rewards incidental of ownership of an asset substantially vest with the lessor are recognized as operating leases. Lease rental under operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term. (n) EARNINGS PER SHARE Basic earnings per share is computed by dividing the profit / loss after tax by the weighted average number of equity shares outstanding during the year. (o) TAXES ON INCOME Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income tax Act, 1961 and other applicable tax laws. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company. Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability. (p) RESEARCH AND DEVELOPMENT EXPENSES Research and Development expenditure of revenue nature is written off in the year in which it is incurred and expenditure of a capital nature is added to fixed assets. (q) IMPAIRMENT OF ASSETS The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. (r) PROVISIONS AND CONTINGENCIES A provision is recognized when the Company has a brsent obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the Financial Statements. (s) OPERATING CYCLE Based on the nature of products / activities of the Company and normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current. 2. During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from 1st April 2014, the Company has revised the estimated useful life of its fixed assets to align the useful life with those specified in Schedule II. Pursuant to the transition provisions brscribed in Schedule II to the Companies Act, 2013, the Company has fully debrciated the carrying value of assets, net of residual value, where the remaining useful life was determined to be Nil as on 1st April 2014 and has adjusted Rs. 146.99 Lakhs (Net of deferred tax of Rs. 75.69 Lakhs) against the opening balance in the Statement of Profit and Loss under Reserves and Surplus. Consequent to the change in the useful life of fixed assets, the impact on the debrciation expense for the year is not material. 3. Realty (Formerly Property Development) i. Land meant for property development situated at Bengaluru and Hyderabad had been revalued as at 31st March 2008, based on a valuation by an approved valuer. The resultant surplus on such revaluation amounting to Rs. 183,896.69 Lakhs had been credited to Revaluation Reserve in the earlier years. In view of steep recession in the Realty Sector, management reassessed the valuation of the aforesaid properties as on 31st March 2009 and based on the guidelines issued by the Registration and Stamps Department of Karnataka and Andhra Pradesh, the value of the subject lands had been reassessed and the resultant surplus on revaluation amounted to Rs. 43,799.82 Lakhs. The resultant write down aggregating to Rs.140,096.87 Lakhs, in accordance with the requirement of Accounting Standard-10 “Accounting for Fixed Assets” had been debited to Revaluation Reserve. ii. In the financial year 2011-12, the Company surrendered certain portion of the land for road laying and widening purposes to Greater Hyderabad Municipal Corporation. Consequently Rs. 3,285.67 Lakhs had been withdrawn from Revaluation Reserve. iii. As at 31st March 2012, land meant for property development situated at Hyderabad, had been revalued based on valuation by an approved valuer. The resultant surplus on such revaluation amounting to Rs. 63,027.56 Lakhs had been credited to Revaluation Reserve. iv. In the financial year 2010-11, land at Bengaluru (cost of Rs. 3,610.66 Lakhs) meant for Property Development transferred to Inventory as approvals necessary for development of land were obtained. In terms of the Joint Development Agreement between the Company and Hinduja Realty Venture Limited (HRVL), the Company granted development rights to develop the property. In consideration, HRVL, at its own cost and expenses develop the said property. Further the built up area, amenities and facilities so constructed shall be shared by Company and HRVL in the ratio of 30:70 respectively according to the other terms and conditions mentioned in the agreement. The Company created equitable mortgage by way of deposit of title deeds in respect of the aforesaid Land towards loan of Rs. 85,000 Lakhs availed by Co-Developer (HRVL) from various lenders. 4. Fixed Assets: Buildings include: (i) Rs.7.09 Lakhs, which rebrsents the cost of ownership of the flats Rs. 7.08 Lakhs and Rs. 0.01 Lakh being the value of share money in Sett Minar Co-operative Housing Society Limited. (ii) Rs. 4.70 Lakhs, which rebrsents the cost of ownership of five flats Rs. 4.43 Lakhs and Rs. 0.27 Lakh being the value of 270 ordinary shares of Rs.100 each, fully paid up in Shree Nirmal Commercial Limited 5. Odisha Sales Tax The Honorable Subrme Court vide its order dated 16th November 2007, held that the stock transfers constituted inter-state sale in respect of assessment year viz., 1976-77 to 1983-84, 1989-90 & 1990-91 and also directed the authorities to examine the factual aspects and assess tax on supplies made by the Company to the subsidiaries of Coal India Limited (CIL) as inter-state sale. The Company filed writ petitions in the Honorable High Court of Odisha in August 2009 impleading other state Governments, CIL and its subsidiary companies seeking directions for issue of Form 'C' and pass over of local sales tax to the State of Odisha. The Honorable Subrme Court has permitted the Company to take the matter in appropriate Forum. The Company has been legally advised that as per the settled cases, the Company is entitled for concessional sales tax rates as per Central Sales Tax and Interest should be charged from re-computation order. However, necessary provision has been made and is included in Provision - Indirect Taxes under Note 6. 6. The Company has not received any intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure if any, relating to amounts unpaid as at the year-end together with interest paid/ payable as required under the said Act have not been given. 7. Previous year's figures have been regrouped / reclassified, wherever necessary to correspond with the current year's classification / disclosure. For and on behalf of the Board of Directors A. Satyanarayana Company Secretary Ravi Jain Chief Financial Officer S. Pramanik Managing Director Ajay P. Hinduja Chairman Place : Mumbai Date : May 28, 2015 |