NOTE [11 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES I. METHOD OF ACCOUNTING a) The financial statements are brpared under the historical cost convention using accrual method of accounting, except as stated otherwise and for certain fixed assets which have been revalued. b) Revenue from construction and project related activities is recognized as under: In respect of construction business, the Company follows percentage completion method, stated on the basis of physical measurement of work actually completed at the balance sheet date, taking into account the contractual price and revision thereto. As per policy of the Company, in respect of running contracts, the revenue including escalation arrived on the basis of sales bills raised and/or unbilled work done is recognized as and when bills are raised and/or after inspection and the approval of the supplies by the customers as per the terms of respective contracts. c) Income and expenses are mainly accounted on accrual basis except scrap and certain other income /expenses with significant uncertainties. d) Amounts recoverable in respect of the price and other escalation, claims adjudication and variation in contract work required for performance of the contract are accounted to the extent that it is probable that they will result in revenue. e) Contractual liquidated damages, payable for delays in completion of contract work or for other causes, are accounted for as costs when such delays and causes are attributable to the Company or when deducted by the client. II. USE OF ESTIMATES The brparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported income and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which results are known/ materialized. III. FIXED ASSETS Fixed Assets are stated at cost, less accumulated debrciation and impairment, if any. Direct costs in relation to the fixed assets are capitalized until such assets are ready to us. Debrciation on tangible assets is provided on the straight-line method over the useful lives of assets estimated by the Management. Debrciation for assets purchased during a period is proportionately charged. The Management estimates the useful lives and residual values of the fixed assets as brscribed under Part C of Schedule II of the Companies Act 2013 as follows. Fixed Asset Useful Life Residual Value Factory Building 30 years 5% IV. IMPAIRMENT OF ASSETS An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount. V. DEbrCIATION a) Debrciation is provided on straight line method according to the rates specified in Schedule II of Companies Act, 2013. b) In respect of the assets purchased / sold during the year, pro rata debrciation based on number of days is provided. c) Debrciation on assets costing up to Rs. 5,000/- is provided at the rate of 100%. d) Debrciation on revalued assets has been provided on revalued amounts. Additional debrciation on revaluation is adjusted against transfer of equivalent amount from Revaluation Reserve. VI. VALUATION OF INVENTORIES a) Finished Goods (Prefabricated Goods) Finished Goods are valued at Cost or Market Value whichever is lower. b) Construction Materials Stock of materials lying at stores/sites has been valued at cost on first-in first-out basis, by the concerned store/site-in-charge. Loose tools are charged to Profit & Loss Account as and when purchased. c) Work in Progress Work in Progress is accounted on progressive basis. VII. CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE Adjustment to assets and liabilities are made for events occurring between balance sheet date and the date on which the financial statements are approved that provide additional information materially affecting the determination of the amounts relating to the conditions existing at the balance sheet date. VIII. PRIOR PERIOD ITEMS Prior period items are income and expenses that arises in the current period as a result of errors and omissions in the brparation of the financial statements of the one and more prior periods. Prior period does not include other adjustments necessitated by circumstances, which though related to prior periods, are determined in the current period. IX. BORROWING COST Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Statement of Profit and Loss. X. RETIREMENT BENEFITS a) Contributions to the provident fund, a defined contribution scheme, are charged to the Statement of Profit and Loss. b) Gratuity has been accounted on actuarial valuation. Any curtailment in the liability during the year is recognized as Income and credited to Statement of Profit & Loss. c) Presently, the Company does not have any other defined benefit for staff payable on retirement/ cessation of service. XI. EMPLOYEE BENEFITS a) Short term employee benefits are recognized as expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered. b) Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit and Loss of the year in which the employee has rendered services. The expense is recognized at the brsent value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss. XII. TAXATION Income tax comprises of Current Tax and Deferred Tax. Current Tax is the amount of tax payable as determined in accordance with the provisions of Income Tax Act, 1961. Deferred Tax charge or credit is recognized using the tax rates and tax laws that have been substantially enacted at the Balance Sheet date. Where there is unabsorbed debrciation or carry forward losses, Deferred Tax Assets are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized. Other Deferred Tax Assets are recognized only to the extent there is reasonable certainty of realization in future. Undisputed assessment dues if any, are accounted on cash basis and disputed matters under appeal are disclosed by way of contingent liabilities. XIII. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS A provision is recognized when there is a brsent obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to its brsent value and are determined based on 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 Liability is disclosed in case of: a. A brsent obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation. b. A possible obligation, unless the probability of outflow of resources is remote. Contingent Assets are neither recognized nor disclosed. NOTE [1] INVESTMENT IN JOINT VENTURE - ACCOUNTING STANDARD 27 The Company has entered into a Joint Venture named "Diviniti" for Construction of Low Cost Housing and related Infrastructure work under the Jawaharlal Nehru Scheme in which the partners are as under: a. Sumer Infrastructure Private Limited - 34% b. Vardhman Concrete Limited - 33% c. S V Inova Build Private limited - 33% As on 31 March 2015, the Company has overdrawn balance of Rs 7,010,519 in Diviniti. During the current year there was transaction of profit sharing from Diviniti. The closing credit balance of Rs 7,010,519 (which is inclusive of any share of Profit/ Loss in the Joint Venture) is shown in Note No 6. The accounts of Diviniti are not yet finalized and therefore disclosures as required by Accounting Standard - 27 "Financial Reporting of Interest in Joint ventures" are not given The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and relevant factors including supply and demand in the employment market. The above information is certified by the Actuary. The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan asset held, assessed risks, historical results of return and the Company's policy for plan assets Management. The Net Liability stated in the books at the end of the financial year Rs.136,935/- (PY Rs 96,902/-) is as per the Actuarial Valuation Report. 30. The Company is a Sick Company in terms of Sick Industrial Companies (Special Provision) Act, 1985. The Company has been legally advised by a firm of solicitors that it has an option to apply to the Board for Industrial and Financial Reconstruction; however the Company does not wish to apply. Though the Company's losses have exceed the net worth, the Company has received large orders and on the basis of positive future projection brpared, the Company is expecting turn around by itself. Therefore the Company believes that there will be turnaround and accordingly the accounts are brpared on a going concern basis. 2. The Management is in the process of updating the fixed assets register, considering the nature of the assets no major discrepancies are anticipated. Based on the same no impairment is required. 3. There are no earnings in Foreign exchange during the current year as well as in brvious year. 3. a) Confirmations are not available for Trade Receivables of Rs. 59,569,033. b) Short Term Loans and Advances include Rs. 18,051,441 in respect of which the confirmations are not available with the Company. These items are under close and constant recovery of the management. The Management is hopeful about the recovery of the same, hence no provision has been considered necessary by the management. 4. The Company does not have a Designated Chief Financial Officer and Chief Executive Officer though required as per the provisions of the Companies Act, 1956 and Listing Agreement and the accounts have been authenticated by the Directors only. As per our report even date. By Order of the Board For Amar Bafna & Associates Chartered Accountants Firm Regn No. 114854W Amar Bafna Partner Membership No. 048639 Mr. Ramesh Vardhan Managing Director DIN: 00207488 Mr. Rajesh Vardhan Managing Director DIN: 00199986 Date: 29th May, 2015 Place: Mumbai |