1 SIGNIFICANT ACCOUNTING POLICIES 1.1 Basis of accounting The financial statements have been brpared and brsented under the historical cost convention, on the accrual basis of accounting in accordance with the accounting principles generally accepted in In dia ('Indian GAAP') and comply with the Accounting standards brscribed in the Companies (Accounting Standards) Rules, 2006 which continue to apply under Section 133 of the Companies Act, 2013, ('the Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions of the Companies Act, 1956, to the extent applicable. Further, the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also considered, wherever applicable. 1.2 Presentation & disclosure of financial statements The company has brpared & brsented the financial statements as on 31st March, 2015 as per the Schedule III notified under the Companies Act, 2 01 3. The Cash Flow Statement has been brpared and brsented as per the requirements of Accounting Standard (AS) 3 "C ash Flow Statements". 1.3 Use of Estimates The brparation of the financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and reported amounts of revenue and expenses during the reported period. Such estimates are on a reasonable and prudent basis taking into account all available information; actual results could differ from estimates. Differences on account of revision of estimates actual outcome and existing estimates are recognised prospectively once such results are known / materialised in accordance with the requirements of the respective accounting standard, as may be applicable. 1.4 Revenue Recognition a) Revenue from the sale of goods is recognised when significant risks and rewards in respect of ownership of the goods are transferred to the customer, as per the terms of the order. The Company collects Service Tax, Excise Duty and value added taxes (VAT) on behalf of the Government and, therefore, these are not economic benefits flowing to the Company and hence not included in revenue. b) Revenue from the Construction contracts is recognised on the basis of percentage of completion method as specified under AS 7 issued by the Institute of the C hartered Accountants of India. Accordingly the revenue is recognised after assessing the stage of completion as at the Balance Sheet date. c) Interest Income is recognised on time proportion basis. 1.5 Fixed Assets Tangible a) The fixed assets are stated at cost less accumulated debrciation and impairment, if any. Cost comprises of all expenses incurred in bringing the assets to its brsent location, including installation and commissioning expenses. The indirect expenditure incurred during the br-commencement period is allocated proportionately over the cost of the relevant assets. b) Capital Work in progress comprises of advances paid to acquire fixed assets and cost of fixed assets that are not yet ready for their intended use as at the Balance Sheet date . 1.6 Impairment The Company assesses at each balance sheet whether there is any indication that assets may be impaired. If any such indications exist, the Company estimates the recoverable amount of the assets or the cash-generating unit and if the same is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that if a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the assets are reflected at the recoverable amount. 1.7 Debrciation Debrciation on tangible fixed assets is provided using the Straight Line Method based on the useful life of the assets as estimated by the management and is charged to the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 201 3 . In case of additions or deletions during the year, debrciation is computed from the month in which such assets are put to use and up to brvious month of sale or disposal, as the case may be. 1.8 Inventories Items of inventories are measured at lower of cost and net realisable value after providing for obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective brsent location and condition. Cost of raw materials, process, stores and spares, packing materials, trading and other products are determined on weighted average basis. 1.9 Investments Noncurrent Investments are carried at cost. Provision for diminution in the value of long-term investment is made only if such a decline is other than temporary. 1.10 Employee Benefit D efined Contribution Plans A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions for provident fund and pension as per the provisions of the Provident Fund Act, 1952 to the government. The Company's contribution is recognised as an expense in the Profit and Loss Statement during the period in which the employee renders the related service. The company's obligation is limited to the amounts contributed by it. 1 .11 Borrowing Costs Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to profit & Loss Account. 1.12 Tax Expense a) Tax expense comprises of current tax and deferred tax. b) Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates as per the Income Tax Act, 1961. c) Deferred income tax reflect the current period timing differences between taxable income and accounting income for the period and reversal of timing differences of earlier years/period. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future income will be available. d) Deferred tax assets and liabilities are measured using the tax rates and tax law that have been enacted or substantively enacted by the Balance Sheet date. e) Minimum Alternate Tax (MAT) credit is recognised as an asset when and to the extent there is a convincing evidence that the company will pay income tax higher than that computed under MAT, during the period that MAT is permitted to be set off under the Income Tax Act, 1961 (specified period). In the year, in which the MAT credit becomes eligible to be recognised as asset in accordance with recommendations contained in the Guidance Note issued by Institute of Chartered Accountants of India (ICAI), the said asset is created by way of credit to the profit and loss account and shown as MAT credit entitlement. The company review the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that company will pay Income Tax higher than MAT during the specified period. 1 .13 Earnings Per Share a) Basic earnings per share are calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. b) For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares, if any. 1. 14 Segment Reporting The company has only one primary reportable segment i.e. Construction and Development of Infrastructure Projects (including provision of RMC and RCC Pipes) hence there is no separate reportable segment as required in Accounting Standard -1 7 issued by the ICAI are not applicable to the Company. 1 .1 5 Provisions, Contingent Liabilities and Contingent Assets: a) A provision is recognised 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 are not discounted to their 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. b) Contingent liabilities, if any, are disclosed separately by way of note to financial statements after careful evaluation by the management of the facts and legal aspects of the matter involved in case of: • a brsent obligation arising from the past event, when it is not probable that an outflow of resources will be required to settle the obligation. • a possible obligation, unless the probability of outflow of resources is remote. c) Contingent assets are not recognized. 1. 16 Foreign currency Transactions Foreign currency transactions are recorded at the exchange rate brvailing at the date of transactions. Exchange difference arising on settlement of transactions is recognised as income or expense in the year in which they arise. Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are restated at the year-end rate and difference in translations and unrealised gains / (losses) on foreign currency transactions are recognised in the statement of profit & loss. The brmium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year. 2. a) In opinion of the directors, contingent liability not provided is Rs. Nil. (Nil) b) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs. Nil (Nil). 3. Figures have been rounded off to the nearest rupee and brvious year's figure s have been regrouped, rearranged and reclassified wherever necessary to confirm with current year's figures. As per our report of even date For, J. B. Shah & Co. Chartered Accountants Firm Reg. No: 121333W Sd/- Jasmin B. Shah Proprietor M.No. 46238 For and on behalf of the Board of Directors of Navkar Builders Limited Sd/- Samir Patel Joint Managing Director DIN No. 01852150 Sd/- Shailesh Shah Director DIN No. 02231177 Sd/- Rameshchandra Dahyabhai Patel Director DIN No. 02423697 Place :- Ahmedabad Date :- 23/05/2015 |