ACCOUNTING POLICIES 1.    BASIS OF brPARATION OF FINANCIAL STATEMENTS The Financial Statements are brpared under the accrual basis and at historical cost unless otherwise stated and in accordance with the Generally Accepted Accounting Principles (GAAP) in India and the provisions of the Companies Act, 2013. 2.    FIXED ASSETS

2.1           Land is capitalized at cost to the Company. Development of land such as levelling, clearing and grading is capitalized along with the cost of Building in proportion to the land utilized for construction of Buildings and rest of the development expenditure is capitalized along with cost of land. Development expenditure incurred for the purpose of landscaping or for any other purpose not connected with construction of any building is treated as the cost of land.

2.2           Fixed Assets acquired with financial assistance/subsidy from outside agencies either wholly or partly are taken in the books at net cost to the Company. Assets transferred free of cost by Government are taken at nominal value.

2.3           Plant, Machinery & Equipment, Fixtures & Office Furniture and Equipment costing individually ` 5,000/- and below are debrciated fully in the year of purchase. Minor civil works including additions, alterations, etc., costing individually ` 50,000/- and below, not resulting in additional floor space and internal partitions costing individually ` 50,000/- and below are charged to Revenue. Where the cost of such partitions exceeds ` 50,000/-, they are debrciated within a period of 5 years or the lease period of the brmises, whichever is less.

2.4           Material items retired from active use are retained in the books at the lower of their net book value and net realizable value till they are disposed off. They are eliminated from the books on disposal. The entire excess of sale proceeds over the net book value of Fixed Assets is credited to the Statement of Profit and Loss.

2.5           Expenditure on re-conditioning, re-siting and re-layout of Machinery and Equipment is not capitalised.

2.6           Cost of the initial pack of spares obtained along with the procurement of Plant, Machinery and Equipment is capitalised and debrciated in the same manner as Plant & Machinery.

2.7       Premium paid on Leasehold Land is initially Capitalised and amortised over 10 years or the lease period whichever is less. 3.    INTANGIBLE ASSETS

3.1           The expenditure incurred on General Research and Development is charged to revenue in the year of incurrence. Development Expenditure financed by the Company and expenses incurred thereon on specific projects where the technical feasibility of the products has been demonstrated and the Company intends to produce and market the products are capitalised for amortisation over production in future years. In the event of the Company financed project(s) being foreclosed/ abandoned, the expenditure incurred up to the stage of foreclosure/ abandonment is charged off to revenue in the year of foreclosure/ abandonment.

3.2           Expenditure on training personnel/ foreign technicians’ fees and expenses and other br-production expenses, etc., specific to projects/products in the nature of Development Expenditure is amortised over production/ sales and to the extent not amortised, is carried forward.3.3           Software internally developed/ acquired from an outside source for internal use, costing individually ` 1.00 Lakh and above and which is not an integral part of the related hardware, is recognized as an intangible asset in the Books of Account and is amortised over a period of three years, on straight line method. Amortisation commences when the asset is available for use. 3.4           Licence fee paid is Capitalised and amortised over Production/Sales.     4.    TOOLS AND EQUIPMENT Expenditure on special purpose tools, jigs and fixtures including specific to projects/ products is initially capitalised for amortisation over production/ sales and to the extent not amortised is carried forward as an Asset. In-house Manufactured tools are capitalized at cost or realizable value whichever is less. Expenditure on maintenance, re-work, re-conditioning, periodical inspection, referencing of tooling, replenishing of cutting tools and work of similar nature is charged to revenue.

5.    IMPAIRMENT OF ASSETSThe carrying amount of assets on the date of Balance Sheet is assessed and if the estimated recoverable amount is found less than the carrying amount, the impairment loss is recognized and provided.

6.    INVESTMENTS

6.1           Current investments are carried in the financial statements at the lower of cost and fair value determined on an individual investment basis.6.2           Long-term investments are carried in the financial statements at cost. However, provision is made for diminution of permanent nature in the value of investment.   7.    DEFERRED DEBTS

Unpaid installment payments together with interest thereon under deferred payment terms for the cost of imported material and tooling content/ DRE of the equipment/products sold are accounted as Deferred Debts from the customer and are recovered as and when the installments and interest thereon are paid.8.    INVENTORIES

8.1           Inventories are valued at lower of cost and net realizable value. The cost of raw material, components and stores are assigned by using the actual weighted average cost formula and those in transit at cost to date. In the case of stock-in-trade and work-in-progress, cost includes material, labour and related production overheads.

8.2           Miscellaneous Stores is valued at estimated realizable value.

8.3           Stationery, uniforms, welfare consumables, medical and canteen stores are charged off to revenue at the time of receipt.

8.4           Raw-materials, Components, Construction Materials, Loose Tools and Stores and Spare Parts declared surplus/ unserviceable/ redundant are charged to revenue.

8.5           Materials issued from main stores and lying unused at the end of the year are not brought back to stores.8.6           Provision for redundancy is made in respect of closing inventory of Raw- materials and Components, Stores and Spare parts, Construction Materials and Loose Tools non-moving for more than 5 years. Besides, where necessary, adequate provision is made for redundancy of such inventory in respect of completed/ specific projects and other surplus/ redundant materials pending transfer to salvage stores. 9.     TRADE RECEIVABLES

Disputed/ time-barred debts from the Government departments are generally not treated as Doubtful Debts. 10.   CLAIMS ON SUPPLIERS/UNDERWRITERS/CARRIERS/OTHERS

Claims on Suppliers / Customers / Underwriters / Carriers / others towards loss/ damages are accounted when claims are brferred. Disputed/ time barred claims due from the Government Departments are not treated as doubtful claims.11.   CONVERSION OF FOREIGN CURRENCY

Liability for deferred payments including interest thereon, on supplies/ services from the USSR (erstwhile) is set up at the rate of exchange notified by the Reserve Bank of India, for deferred payments including interest thereon under the protocol arrangements between the Government of India and Government of Russia. In the case of other currencies, liability is set up at the ruling rate of exchange as on the date of Balance Sheet. The differences due to fluctuations in the rate of exchange are charged to revenue. ~In case of capital items, adjustments are made to the cost of the asset.

12.    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 recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

13.    PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

A provision is recognized when the company has 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, 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 current best estimates. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

14.    WARRANTY

Warranty on goods sold, wherever applicable, commences on setting up of sales and accordingly provision for such warranty is made. The period and terms conditions of warranty shall be as per the relevant contract.15.    SALES

15.1        In the case of products requiring proof tests, sale is accounted for, on the basis of quantity accepted after Proof Tests.

15.2        In the case of all other products, sale is accounted for, on the basis of acceptance/ actual despatch.

15.3        Where Sale Prices are not established, sales are set up on provisional basis at prices likely to be realized.

15.4        Sale value excludes Sales Tax/ VAT but includes Excise Duty and Service Tax.

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15.5   

a) Contract Revenue in respect of Construction Contracts undertaken for Customers is recognised by reference to the stage of completion of the contract activity at the reporting date of the financial statements on the basis of percentage of completion method.

b)    The stage of completion of contracts is measured by reference to the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract.

c)    Since the outcome of such a contract can be estimated reliably only on achieving certain progress, revenue is recognised only after a minimum of 25% work is completed.

d)    An expected loss on construction contract is recognised as an expense immediately when it is probable that the total contract costs will exceed the total contract revenue.

e)    As the Revenue is recognised on proportionate basis a provision for contingencies equal to 30% of the surplus of revenue over costs is made during the execution of contract, which is to be reversed on the completion of the contract.

15.6

a)   In case due date and actual date of supply of goods/ services fall in the same accounting period, Liquidated Damages (LD) is accounted for the period of delay, if any, as per the contractual terms.

b)   In case of slippage of delivery schedule, provision in respect of LD is recognised on such slippage for the period of delay between the due date of supply of goods/ services as per the contractual terms and the expected date of supply of the said goods/ services. 16.    EMPLOYEE BENEFITS             Short term Employee Benefits:

16.1    Short-term employee benefits such as salaries, wages and short-term compensated absences are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

Defined Contribution Plans:

16.2    The Company’s contribution paid/ payable to company approved Retired Employee Medical Scheme (REMI), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI), contribution towards Provident Fund under the PF Act and Pension Scheme are charged to revenue.

Defined Benefit Plans

16.3    The Company’s Gratuity, Leave Salary Schemes are Defined Benefit Plans. The brsent value of the obligation towards Gratuity is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each estimated future cash flows. Actuarial gains and losses are recognized in Statement of Profit and Loss. 

16.4    The brsent value of obligation towards Leave Salary is provided on Actuarial basis. Actuarial gains and losses are recognized in Statement of Profit and Loss.

16.5    Compensation paid to Employees under Voluntary Retirement Scheme (VRS) is charged to Statement of Profit and Loss in the year of retirement.17.       DEbrCIATION

17.1        Debrciation on Fixed Assets is charged on ‘Straight Line’ method. The rate of debrciation is derived by sbrading the cost of the asset over its useful life as given in Part C of Schedule II to the Companies Act, 2013.

17.2        In respect of Assets whose original cost is above `12.50 lakh and where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part is determined separately and the significant part debrciated on straight-line method over its estimated useful life.

18.       UNDER/OVER ABSORPTION OF COSTS

Adjustment is not made for under/ over absorption of labour and overhead costs on jobs, if the extent of under/ over recovery in a year does not exceed 0.5% of such costs.

Note 1 to 28 and Accounting Policies attached form part of accounts.  As per our report of even ~date.     

1.    EMPLOYEE BENEFITS             Short term Employee Benefits:

16.1    Short-term employee benefits such as salaries, wages and short-term compensated absences are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

Defined Contribution Plans:

16.2    The Company’s contribution paid/ payable to company approved Retired Employee Medical Scheme (REMI), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI), contribution towards Provident Fund under the PF Act and Pension Scheme are charged to revenue.

Defined Benefit Plans

16.3    The Company’s Gratuity, Leave Salary Schemes are Defined Benefit Plans. The brsent value of the obligation towards Gratuity is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each estimated future cash flows. Actuarial gains and losses are recognized in Statement of Profit and Loss. 

16.4    The brsent value of obligation towards Leave Salary is provided on Actuarial basis. Actuarial gains and losses are recognized in Statement of Profit and Loss.

16.5    Compensation paid to Employees under Voluntary Retirement Scheme (VRS) is charged to Statement of Profit and Loss in the year of retirement.