Notes forming part of the Financial Statements

Note 1 : SIGNIFICANT ACCOUNTING POLICIES

1.1 Corporate Information :

J. Kumar Infraprojects Limted (the Company) is a public Limited Company domiciled in India and Incorporated under the provisions of the Companies Act, 1956. Its shares are listed on the two stock exchanges in India - BSE and NSE . The Company is engaged in execution of contracts of various infrastructure projects including Transportaion Engineering, Irrigation Projects, Civil Construction and Piling Work etc.

1.2 Basis of brparation of financial statements :

The financial statements of J. Kumar Infraprojects Limited (the Company) have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP) including the accounting standards notified under the relevant provisions of the Companies, Act 2013. Further, the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also considered, wherever applicable except to the extent where compliance with other statutory promulgations viz. SEBI guidelines override the same requiring a different treatment.

The financial statements have been brpared under the historical cost convention, on accrual basis, on the principles of going concern. The accounting policies have been consistently applied by the Company and are consistent with those used in the brvious year.

1.3 Financial Statements - Presentation and Disclosures :

The Balance Sheet and the Statement of Profit and Loss are brpared and brsented in the format brscribed in the Schedule III to the Companies Act, 2013 ("the Act"). The Cash Flow Statement has been brpared and brsented as per the requirements of Accounting Standard (AS) 3 "Cash Flow Statements". The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as brscribed in the Revised Schedule III to the Act, are brsented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards and the Listing Agreement.

1.4 Use of Estimates :

The brparation and brsentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosures of contingent liabilities as on date of the financial statements and reported amount of revenue and expenses during the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets and liabilities in future periods. Difference between the actual results and estimates is recognised in the period in which the results are known / materialized.

1.5 Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

The Company follows the percentage completion method as mentioned in Revised Accounting Standard (AS) 7 "Construction Contracts" on the basis of physical measurement of work actually completed at the balance sheet date, taking into account the contractual price and revision thereto by estimating total revenue and total cost till completion of the contract and profit so determined has been accounted for proportionate to the percentage of actual work done.

Claims are accounted as income in the year of receipt of arbitration award or acceptance by client or evidence of acceptance received.

Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend is recognized as and when the right to receive payment is established by the Balance Sheet date.

1.6 Fixed Assets:

(i) Tangible Assets

Cost comprises cost of acquisition or construction of assets (excluding revalued assets) less accumulated debrciation and impairment losses if any including borrowing costs attributable to bringing the assets to their intended use.

(ii) Capital Work in Progress

Tangible assets under installation or under construction as at balance sheet date are shown as Capital work-in-progress.

1.7 Debrciation:

Debrciation is provided based on useful life of the assets as brscribed in Schedule II of the Companies Act, 2013. Debrciation is provided prorata to the period of use on all additions during the year except addition below Rs. 5,000/- which are debrciated at the rate of 100% in the year of purchase.

Debrciation on assets sold, discarded or demolished during the year is being provided at their respective rates on pro-rata up to the date on which such assets are sold, discarded or demolished.

1.8 Impairment of Assets:

The Company assesses at each reporting date whether there is an indication that an asset may be impaired as per AS - 28 on "Impairment of Assets". If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their brsent value using a br-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. Impairment losses are recognised in statement of profit or loss.

During the year no assets were impaired.

1.9 Valuation of Inventories:

Inventories are valued as follows:

Raw materials and components : Raw materials, components, stores and spares are valued at lower of cost and net realisable value. Cost is determined on a FIFO basis and includes all applicable duties and taxes.

Work-in-progress: Costs incurred that relate to future activities on the contract are recognised as contract work-in-progress. Contract work-in-progress comprises of construction cost and other directly attributable overhead valued at cost.

1.10 Investments:

Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties etc. If an investment is acquired, or partly acquired, by the issue of shares or other securities, the acquisition cost is the fair value of the securities issued. If an investment is acquired in exchange for another asset, the acquisition is determined by reference to the fair value of the asset given up or by reference to the fair value of the investment acquired, whichever is more clearly evident. However, all the investments are aquired in exchange of monetary assets.

Long term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in nature in the value of the investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss. None of the investments were disposed off during the year.

1.11 Accounting for Taxes on Income :

Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to recovered from the tax authorities, using the applicable effective tax rates. Deferred tax assets and liabilities are recognised for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods and are measured using relevant enacted or substantively enacted effective tax rate as on the balance sheet date, to the extent the timing differences are expected to crystallise. Deferred tax assets are reviewed for the appropriateness of their respective carrying values at each balance sheet date. The company reassesses recognised deferred tax assets and liabilities to the extent they become reasonably certain or virtually certain of realisation , as the case may be.

1.12 Foreign Currency Translations :

i) Initial recognition : Foreign currency transaction are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transaction.

ii) Conversion : Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. Non -monetory assets are carried at fair value.

iii) Exchange differences : Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in brvious financial statements, are recognised as income or as expenses in the year in which they arise.

Exchange difference arising on long term foreign currency monetory items related to acquisition of fixed assets are added / deducted from the cost of asset.

1.13 Borrowing Cost :

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

1.14 Earnings Per Share :

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue; bonus element in a rights issue, share split; and reverse share split (consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss 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.

1.15 Provisions :

Provisions are recognised when the Company has a brsent obligation, as a result of past events, for which it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. Provisions are not discounted to their brsent values 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.

1.16 Contingent Liabilities and Contingent Assets :

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a brsent obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.

Contingent assets are neither recognized nor disclosed in the financial statements.

1.17 Segmental Reporting :

As the Management information system of the Company recognises and monitors "Construction" as the only business segment, the accounting standards "Segmental Reporting" does not arise.

1.18 Operating Lease :

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

1.19 Retirement and other employee benefits :

i) Retirement benefit in the form of Provident Fund is a defined contribution scheme. The contributions are charged to the statement of profit and loss of the year when the contributions are due. The company has no obligation other than its contribution payable.

ii) Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

iii) Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.

iv) Leave encashment is paid to employees on annual basis and recognized as expenses when it is due.

1.20 Accounting for interests in Joint Ventures :

Interests in j oint ventures are accounted as follows:

Form of joint venture

Jointly controlled entities:Unincorporated joint ventures: Company's share in profits or losses of unincorporated joint ventures is accounted for on determination of the profits or losses by the joint ventureres.

In respect of contracts executed in integrated joint venture under profit sharing arrangements, net investment in the joint venture is reflected as Current Assets.

1.21 Cash and Cash Equivalents :

Cash and cash equivalents for purpose of the cash flow statements comprise cash at bank and in hand and short term investments with an original maturity of three months or less.

1.22 Forward Exchange Contract

The company has used forward cover contracts to hedge its exposure to the movements in foreign currency exchange rates. Such forward covers are used to reduce the risk which may result from foreign rates fluctuations, and is not used by the company for trading or speculation purposes.

Buyers' Credit is not hedged by the Company as its exposure to the movements in foreign currency exchange rates is adjusted against inflows.

1.23 Cash Flow Statement :

Cash Flow Statement is brpared segregating the cash flows from operating, investing and financing activities. Cash flow from operating activities is reported using indirect method. Under the indirect method, the net profit is adjusted for the effects of :

i) Transactions of a non-cash nature

ii) Any deferrals or accruals of past or future operating cash receipts or payments and

iii) Items of income or expense associated with investing or financing cash flows

Cash and cash equivalents (including bank balances) are reflected as such in the Cash Flow Statement. Those cash and cash equivalents which are not available for general use as on the date of Balance Sheet are also included under this category with a specific disclosure.

2 Disclosure required pursuant to Accounting Standards – 28 “Impairment of Assets” brscribed by Companies (Indian Accounting Standards) Rules, 2015 is as follows:-

The Company has carried out impairment test on its fixed assets as on the date of Balance Sheet and the management is of the opinion that there is no asset for which provision for impairment is required to be made as per Accounting Standard - 28 on Impairment of Assets.

3 Figures of brvious year have been regrouped / rearranged wherever necessary. All figures have been given in Rupees in lacs.

4 In the opinion of the Management, the balance shown under Trade Receivables and Loans & Advances have approximately the same realizable value as shown in accounts.

5 During the year 2014 - 15, the company has transferred Rs. 943.86 Lacs @ 10% of the profit (P.Y. Rs. 840.50 Lacs) from Statement of Profit and Loss to General Reserve.

6 Micro & Small Enterprises:

There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding more than 45 days at the Balance Sheet date. The above information has been determined to the extent such parties have been identified on the basis of information available with the Company.

7 Disclosure required pursuant to Accounting Standards – 19 “Accounting for Leases” brscribed by Companies (Indian Accounting Standards) Rules, 2015 is as follows:-

The Company has taken various residential brmises under cancellable operating leases.

(a) Operating Lease Payment:

Lease rental expense in respect of operating leases: Rs. 452.45 Lacs (P.Y. Rs. 368.20 Lacs)

(b) Operating Lease Receivables:

Lease rental income in respect of operating lease: Rs. 28.30 Lacs (P.Y. Rs. 109.68 Lacs)

8  The company's operations brdominantly consist of construction activities. Hence there are no reportable segments under Accounting Standard-17 " Segment Reporting" during the year under report, the company has engaged in its business only within India and not in any other country. The condition brvailing in India being uniform, no separate geographical disclosures are considered necessary.

9  Expenditure related to Corporate Social Responsibility is in accordance with the provisions of section 135 of the Companies Act, 2013 read with Schedule VII, the Company has spent an amount of Rs. 100 Lakhs during the year as against Rs. 224.40 lacs.

10  Value ofImports calculated on CIF basis: Rs. 1,762.52 Lacs (P.Y. Rs. 13,949.35 lacs)

11 Forward Cover Contracts (Disclosure as required by AS - 11 The Effect of changes in Foreign Exchange Rates) :

The company has used forward cover contracts to hedge its exposure to the movements in foreign currency exchange rates. Such forward covers are used to reduce the risk which may result from exchange rates fluctuations, and is not used by the company for trading or speculation purposes.

Buyers' Credit is not hedged by the Company as its exposure to the movements in foreign currency exchange rates is adjusted against inflows.

12 During the financial year, the Company has revised the Debrciation rate on fixed assets as per the useful life specified in Schedule II of the Companies Act, 2013 or re-assessed by the Company. Based on current estimates, debrciation of Rs 44.87 Lacs on account of assets whoes useful life was over as on 01.04.2014 and deferred tax Rs 15.25 Lacs thereon have been adjusted against General Reserves.

As per our report of even date attached

For Gupta Saharia & Co.

Chartered Accountants

Firm Reg. No.103446W

Pawan Gupta

Partner

Membership No. : 071471

For and on behalf of the Board of Directors of

J. Kumar Infraprojects Limited

Jagdishkumar M. Gupta Executive Chairman DIN No. : 01112887

Kamal J. Gupta Managing Director DIN No. : 00628053

Poornima Reddy Company Secretary

Arvind Gupta Chief Financial Officer

Date : 29th May, 2015

Place : Mumbai