STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES a BASIS OF brPARATION OF FINANCIAL STATEMENTS: The financial statements are brpared under the historical cost convention in accordance with the generally accepted accounting principles in India (Indian GAAP) and the provisions of the Companies Act, 2013 (to the extent notified) b USE OF ESTIMATES: The brparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known/materialised. c FIXEDASSETS: i. Fixed Assets are stated at cost net of cenvat / value added tax less accumulated debrciation and impairment loss, if any. All costs, including finance costs till commencement of commercial production attributable to the fixed assets are capitalised. ii. Expenses incurred relating to project, net of income earned during project development stage prior to commencement of commercial operation, are considered as br - operative expenses and disclosed under Capital Work-in-Progress. d INTANGIBLE ASSETS: Intangible Assets are stated at cost of acquisition less accumulated amortization. Software, which is not an integral part of the related hardware, is classified as an intangible asset and is amortized over the useful life of 3 - 5 years. Amortization is done on straight line basis. e DEbrCIATION: i. Debrciation on Tangible Fixed Assets is provided to the extent of debrciable amount on the Straight Line Method over the useful life of assets as brscribed in Part C of Schedule II to the Companies Act, 2013 except in respect of following assets ii. Debrciation on mobiles phones are provided considiring the useful life of two years at Straight Line Method iii. Debrciation on Leasehold land and Developments is provided over the period of Lease. iv. In respect of additions/extensions forming an integral part of existing assets debrciation has been provided over residual life of the respective fixed assets. f INVESTMENTS: Current investments are carried at the lower of cost or quoted / fair value, computed category wise. Non Current Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary. g BORROWINGCOSTS: Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset (net of income earned on temporary deployment of funds) are capitalised as a 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 the Statement of Profit and Loss. h INVENTORY: The inventories i.e. Raw Materials, Stores and Spares, Work in progress and Finished Goods etc. have been valued at lower of cost or net realisable value. Cost of Inventories comprise of all costs of purchase, cost of conversion and other costs incurred in bringing them to their respective brsent location and condition. The cost of steel plates, profiles & equipments is determined on Specific Identification Method and other raw materials & stores & spares at Weighted Average Method. The cost of Work-in-progress and Finished Stock is determined on absorption costing method. Scrap is valued at net realisable value. i REVENUE RECOGNITION: i Revenue from sale of goods and services is recognised when it is earned and no significant uncertainty exist as to its ultimate collection. Revenue from operation include income from sale of goods, services & service tax and is net of value added tax and sales tax recovered. ii. Revenue for shipbuilding contracts are recognized using the percentage of completion method as under: a. In respect of commercial vessels, including bulk carriers, tankers, container vessels, etc. and floating platforms, revenue is recognized on the basis of percentage of actual cost incurred thereon as against the total estimated cost of the shipbuilding contract under execution. b. In respect of other vessels, including offshore support vessels, revenue is recognized in proportion to the stage of com- pletion. The stage of completion is measured by reference to the percentage of proportion of the contract work completed as determined by technical experts performing survey of work. As soon as the outcome of the construction contract can be estimated reliably, contract revenue and expenses are recognized in the Statement of Profit and Loss in proportion to the degree of completion of the contract. The estimates of cost are revised periodically by the management. The effect of such changes to estimates is recognized in the period in which such changes are determined. The estimated cost of each contract is determined based on the management's estimate of the cost to be incurred till the final completion of the vessel and includes cost of materials, services, finance cost and other related overheads. Any projected losses on contracts under execution are recognized in full when identified. Recognition of revenue relating to agreements entered in to with the buyers, which are subject to fulfillment of obligations/conditions imposed by statutory authorities is postponed till such obligations are discharged. iii. Revenue from repairs, fabrication and job work is recognized on the basis of job completion or client/Independent experts certification. iv. Interest income is recognised on a time proportion basis. Dividend is considered when the right to receive is established. Insurance and other claims are recognised as revenue on certainty of receipt on prudent basis. j GOVERNMENT SUBSIDY: Government subsidy related to shipbuilding contracts are recognized, on the basis of percentage completion of the respective ships, on compliance with the relevant conditions and such grants are recognized in the Statement of Profit and Loss and brsented under revenue from operations. k FOREIGN CURRENCYTRANSACTIONS: i. Revenue Transactions denominated in foreign currencies are normally recorded at the exchange rate brvailing on the date of the transaction. ii. Monetary items denominated in foreign currencies at the year end are restated at the year end rates. In case of items, which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the brmium paid on forward contracts is recognised over the life of the contract. iii. Non monetary foreign currency items are carried at cost. iv. Any income or expense on account of exchange difference either on settlement or on restatement is recognized in the State- ment of Profit and Loss. I FINANCIAL DERIVATIVES: In respect of Derivative Contracts, brmium paid and losses/gain on settlement and losses on restatement are recognised in the Statement of Profit and Loss. m EMPLOYEE BENEFITS: i. Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss / Pre - Operative Expenses of the year in which the related service is rendered. ii. Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit and Loss / Pre - Operative Expenses for the year in which the employee has rendered services. The expense is recognized at the brsent value of the amount 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/ Pre-operative Expenses. n PROVISION FOR CURRENT AND DEFERRED TAX: Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "timing differences" between taxable and accounting income is 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 a virtual certainty that the asset will be realized in future. o 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 period is reversed if there has been a change in the estimate of recoverable amount. p PROVISION,CONTINGENT LIABILITIES AND CONTINGENTASSETS: Provisions involving substantial degree of estimation in measurement are recognised when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements. q brLIMINARY AND ISSUE EXPENSES: Preliminary Expenses related to issue of equity and equity related instruments are adjusted against the securities brmium account. Note - 1 The Company has issued a Bond cum legal undertaking for Rs. 44,400 lacs (Previous Year: Rs. 44,400 lacs) in favour of President of India acting through Development Commissioner of Kandla Special Economic Zone for setting up an SEZ unitfor availing exemption from payment of duties, taxes or cess or drawback and concession etc, a General Bond in favour of the President of India for a sum of Rs. 15,300 lacs (Previous Year: Rs. 15,300 lacs) as Security for compliance of applicable provisions of the Customs Act, 1962 and the Excise Act, 1944 for EOU unit, a bond cum legal undertaking for Rs. 1350.00 lacs (Previous Year: 1,350.00 lacs) in favour of President of India acting through D.R.I. Ahmedabad, Zonal Unit as security of compliance under Central Excise Actig44. Note - 2 The Company has received Sixteen show cause notices in its 100% EOU unit from the Office of the Commissioner of Central Excise, Bhavnagar and Directorate of Revenue Intelligence which mainly relates to wrong availment of Cenvat/Customs Duty/Service Tax Credit on inputs/services used for Construction of Dry Dock and Goliath Cranes and non-submission of original evidences/documents and some procedural non-compliances. The Company does not forsee any losses on this account. Note - 3 In the opinion of the management, Current Assets, Loans and Advances are of the value stated, if realized in the ordinary course of business. Note - 4 Cenvat / Vat recoverable rebrsents the Cenvat / Vat / Central Sales Tax paid on the purchase of goods and services for the project and operations. Management is ofthe opinion that such amounts are recoverable. Any unrealised amounts will be added back to the cost of the project or charged off to the statement of profit and loss, as the case may be in the year of settlement. Note - 5 Previous year figures have been reworked, regrouped, rearranged and reclassified, wherever necessary to make them comparable with those of the current year. As per our report of even date for GPS and Associates Chartered Accountants Firm Reg. No. 121344W for and on behalf of the Board of Directors H.Y. Gurjar Partner Membership No 32485 Nikhil P. Gandhi Chairman Bhavesh P. Gandhi Executive Vice Chairman Praveen Mohnot Chief Financial Officer Rajiv Shukla Chief Executive Officer Ajit Dabholkar Corporate Counsel & Company Secretary Place Mumbai Date May 30, 2015 |