Note: 1 Significant Accounting Policies

A Basis for brparation of financial statements:

The financial statements have been brpared under the Historical Cost convention and on a Going Concern basis to comply, in all material aspects, with the Accounting Principles Generally Accepted in India (GAAP) including the Accounting Standards specified under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions of the Act.

B Use of Estimates:

The brparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosure relating to contingent liabilities as of the date of the financial statements. Examples of such estimates and assumptions include the useful lives of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligations in respect of retirement benefit plans, warranties, etc. Differences between the actual results and estimates are recognised in the period in which the results are known.

C Tangible Assets and Debrciation:

1. Tangible Assets are stated at original cost, net of recoverable taxes and duties, less cumulative debrciation and impairment. Administrative and other general overheads including borrowing costs that are specifically attributable to acquisition of Assets or bringing Fixed Assets into their working condition are allocated / apportioned and capitalised as part of cost of the Asset. Premium paid for acquiring Leasehold Lands along with directly related expenditure is considered as tangible asset.

2. Debrciation on Tangible Assets including those on leasehold brmises is provided under straight line method over the useful life of assets specified in Part 'C' of Schedule II to the Companies Act, 2013 and in the manner specified there in, except in respect of Dies and Moulds used and 'Secured Land Filling' (used for disposal of Lead slag) which are debrciated over their estimated useful lives of 5 years and 10 years respectively on Straight Line Method. Assets costing less than Rs.5,000/- are fully debrciated in the year of purchase. Cost of acquisition of Leasehold Land is amortised over the lease period.

D Intangible Assets and Amortisation:

1. Intangible Asset is recognised when it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Expenditure incurred for creating infrastructure facilities where the ownership does not rest with the company and where the benefits from it accrue over a future period is also considered as Intangible Asset.

2. New product development expenditure, software licences, technical know-how fee, infrastructure and logistic facilities, etc. are recognised as Intangible Assets upon completion of development and commencement of commercial production.

3. Expenditure capitalised under 'Intangible Assets' is amortised over a period of 60 months from the month of commencement of commercial production/utilisation of facility.

4. Amortisation on impaired intangible assets is adjusted in the future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.

E Capital Work in Progress (CWIP) and Assets under Development

1. Tangible CWIP includes Plant and Equipment under erection, Civil works in progress and broperative expenses pending allocation to the related assets.

2. Intangible Assets Under Development include

a) New Product Expenditure where development is in progress

b) Payments made towards fees for software licences, technical know-how, Infrastructure/logistic facilities etc., and also include all related expenditure incurred up to absorption of technology and completion of Development.

F Impairment of Assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is recognised when an asset is identified as impaired. Conversely, the impairment loss, recognised in prior accounting period, is reversed if there is an upward revision in the estimate of recoverable amount.

G Foreign Currency Transactions:

Transactions relating to non-monetary items and Purchase and Sale of goods/services denominated in foreign currency are recorded at the exchange rate brvailing or a rate that approximates the actual rate on the date of transaction. Assets & Liabilities in the nature of monetary items denominated in foreign currencies are translated and restated at brvailing exchange rates at the Balance sheet date. Income or expense arising on account of exchange rate difference either on settlement or on translation is recognised in the Statement of Profit & Loss. H Investments:

a) Investments classified as "Long Term Investments(Non-Current)" are carried at cost and provision for diminution, if any, is made to recognise the decline, other than temporary, in the value of the Investments. Such reduction is determined and made for each investment individually.

b) Investment classified as 'Current Investments' are carried at the lower of cost and fair value determined on individual investment basis.

a) Sales Revenue is recognised on despatch to customers as per the terms of the order. Sales are disclosed at net of returns/trade discounts and inclusive of Excise duty billed to customers. Inter Divisional Transfers are not recognised as Revenue.

Service Income is recognised on the basis of bills submitted as per the terms of the order.

Revenue from Short Term contracts involving Supply and Service, where price breakup is available, is recognised -

i) In respect of Supplies when goods are delivered to customers unconditionally; and

ii) In respect of Service on completion of Service and bills submitted as per terms of the order.

In case of contracts (Long Term) for complex equipment/systems/development orders where the normal cycle time for completion is sbrad over two or more accounting periods, revenue is recognized, subject to provision for anticipated losses, based on percentage of completion as certified by technical committee/customers' acceptance wherever applicable. Dividends are recognised as income when the right to receive the dividend is established. Income from interest bearing deposits with Banks and others is recognised on accrual basis. Interest on Income tax refunds is recognised on determination or on receipt whichever is earlier. Subsidies from Government are recognised when received

K Provisions, Contingent Liabilities and Contingent Assets:

a) Provision for liabilities is recognised if :

i) the Company has a brsent obligation as a result of a past event

ii) a probable outflow of resources is expected to settle the obligation and

iii) the amount of obligation can be reliably estimated

b) Reimbursement of expenditure is recognised only upon virtual certainty of receipt.

c) Contingent liability is disclosed but is not provided for, in respect of a brsent obligation or a possible obligation which do not require an out flow of resources or where the likelihood of such out flow is remote.

d) Contingent assets are neither recognised nor disclosed.

e) Provisions and contingent liabilities are reviewed at each Balance sheet date and are adjusted to reflect the current best estimate.

L Taxes on Income/Deferred Tax:

a) Current Tax on Income is determined and provided on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961. In the year in which 'Minimum Alternative Tax ' (MAT) on book profits is applicable and paid, eligible MAT credit equal to the excess of MAT paid over and above the normally computed tax, is recognised as an asset to be carried forward for set off against regular tax liability when it is probable that future economic benefit will flow to the Company within the MAT credit Entitlement period as specified under the provisions of Income Tax Act, 1961. The carrying amount of MAT Credit entitlement is reviewed and adjusted wherever required at each Balance Sheet date.

b) Deferred tax resulting from timing differences between accounting Income and taxable Income is recognised and accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The Deferred tax Asset is recognised and carried forward only to the extent that there is reasonable certainty that the Asset will be realised in future. The carrying amount of 'Deferred Tax Asset' is reviewed and adjusted at each Balance Sheet date

M Assets taken under leases:

a) In respect of Equipment taken under finance leases, the fair value of the leased asset is recognised as an asset and corresponding liability is created. The finance charges are allocated to the period over the lease term and are charged off.

b) In respect of Equipment taken under operating lease, lease payments are recognised as expense over the period of lease term.

N Employee Benefits:

a) Short term Benefits:

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The cost of the benefits like salaries, wages, medical, leave travel assistance, short term compensated absences, bonus, exgratia, etc. is recognised as an expense in the period in which the employee renders the related service.

Note : 1. Income tax and Sales Tax Assessments: 30.1 Income Tax:

The Company's Income Tax assessments were completed upto Financial Year 2010-11 and the tax dues as per orders were paid and charged to revenue except for disputed issues under Appeal. Tax assessments for the years 2011-12, 2012-13 and 2013-14 are pending and the tax dues as per returns filed have been fully paid. The liability, if any, in respect of such pending assessments, that may arise upon completion is not ascertainable at this stage.

2.Sales Tax:

The Company has paid/provided for VAT/CST as per the records and returns filed upto 31.03.2015 after considering the Input VAT on purchases and also on the basis of concessional Forms expected to be received from customers. The liability, if any, in respect of pending assessments including those relating to non-submission of concessional Forms ('C' Forms etc.) is not ascertainable at this stage. The company is in the process of collecting concessional Forms from customers for submission before the assessments are completed/finalised.

Note : 3 Confirmation of Balances

The Company has sent letters seeking confirmation of balances to various parties under Trade payables, Trade Receivables, Advance to suppliers and others, advance from customers. Based on the confirmations received and upon proper review, corrective actions have been initiated and accounting adjustments have been made wherever found necessary. Such confirmations are awaited from some parties most of whom are Government Departments and Public Sector Undertakings.

Note : 4 In the opinion of the Board, assets other than fixed assets and non-current investments have a value, on realisation in the ordinary course of business, which is at least equal to the amount at which they are stated in the financial statements.

Note : 5.

The Board of Directors in its meeting held on 14th November 2014 approved a Scheme of Amalgamation to merge a wholly owned subsidiary, SCIL Infracon Private Limited (SIPL), with the Company in terms of the provisions of Sections 391 to 394 of the Companies Act, 1956 read with other applicable provisions of the Companies Act, 1956 and the Companies Act, 2013. The Scheme is subject to requisite regulatory and other approvals, inter-alia from the Shareholders and Creditors of the Company and sanction of the Scheme by the Honourable High Court of Judicature at Hyderabad for AP and Telangana. The Scheme, upon approval, will be effective from 1-4-2014.

Note : 6. Disclosures required to be made as per Accounting Standard (AS)

34.1 Disclosure as per AS-7 "Construction Contract"(for contracts in progress at the reporting date)

7. The Company recognised revenue based on Percentage completion method whereby stage of completion of a contract is determined with reference to the proportion that contract costs incurred (for work performed up to the reporting date) bear to the estimated total contract cost and wherever applicable after completion of inspection/certification of the work performed by the customers as stipulated in the contract.

Note : 8. Previous years figures have been regrouped wherever necessary.

As per our Report of even date annexed

for M/s Satyanarayana & Co.  

Chartered Accountants

FRN No. 03680 S  

Ch Seshagiri Rao

Partner

M.No: 18523

On Behalf of the Board

Chartered Accountants

FRN No. 03089 S

S S Bharadwaj

Partner

M.No: 26113  

for M/s Rao & Kumar

Dr A J Prasad  

Chairman & Managing Director

M S S Srinath

Director

K Mahidhar

Vice President - Finance

M V S S Kumar

Company Secretary

Place : Hyderabad

Date : 29th May 2015