Notes to Financial Statements Note 31 In respect of closed units (Domestic or Foreign), the reconciliation of balances of such units is in progress. The effect, if any of such balances on the Profit/ Loss of the Company is not asscertainable. Note 32 Balances of Trade Receivables/ Trade Payables and Loans & Advances are subject to reconciliation and confirmation. Note 33 The Company's significant leasing arrangement are in respect of operating leases relating to its leased office brmises. These lease arrangements which are cancelable, are generally renewable by mutual consent. The aggregate lease rentals paid is disclosed under rent in Note No.26. Note 34 Disclosure as per Accounting Standard - 17 on 'Segment Reporting' a) Business segments The Company's principal business is providing Project Management Consultancy, development of Real Estate and Engineering, Procurement & Construction services. b) Segment Revenue & Expenses Revenue & Expenses directly attributable to the segment is considered as 'Segment Revenue' & 'Segment Expenses'. Note 37 Previous year figures have been regrouped/ recast/ rearranged wherever deemed necessary to conform to current year's classification. Note 38 1. SIGNIFICANT ACCOUNTING POLICIES : (a) Corporate Information National Buildings Construction Corporation Limited (NBCC/the company) was incorporated in 1960 under the Companies Act, 1956. NBCC is a Public Sector Enterprise under the administrative control of Ministry of Urban Development, Government of India. NBCC is primarily engaged in the business of (i) Project Management Consultancy (PMC) (ii) Real Estate Development and (iii) Engineering, Procurement and Construction (EPC). The equity shares of NBCC are listed on National Stock Exchange of India Limited and BSE Limited. (b) BASIS OF brPARATION OF FINANCIAL STATEMENTS The financial statements have been brpared to comply in all material respects with the notified Accounting Standards by Companies Accounting Standards Rules, 2006 as amended from time to time (notified under Section 211(3C) of the Companies Act, 1956 which continues to be applicable in terms of Companies (Accounts) Rules, 2014 in respect of Section 133 of the Companies Act, 2013) and other relevant provisions of the Companies Act, 2013. Financial Statements have been brpared under historical cost convention on accrual basis in accordance with Generally Accepted Accounting Principles (GAAP) in India. The accounting policies have been consistently followed by Company. (c) USE OF ESTIMATES Financial Statements are brpared in accordance with GAAP in India which require management to make estimates and assumptions that affect the reported balances of assets, liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of income & expenses during the periods. Although these estimates and assumptions used in accompanying financial statements are based upon management's evaluation of relevant facts and circumstances as of date of financial statements which in management's opinion are prudent and reasonable, actual results may differ from estimates and assumptions used in brparing accompanying financial statements. Any revision to accounting estimates is recognized prospectively from the period in which results are known/ materialize in accordance with applicable Accounting Standards. 2. INCOME RECOGNITION (a) In case of PMC contracts which are in nature of Cost Plus Contracts, revenue is recognised on the basis of percentage completion method. The stage of completion is determined by the proportion that contract costs incurred for work performed upto the reporting date bear to the estimated total contract costs. (b) In respect of Real Estate Development, the company is following Revised Guidance Note, GN (A) 23 (revised 2012) on "Accounting for Real Estate Transactions" issued by The Institute of Chartered Accountants of India. Revenue from Real Estate projects is recognized on "Percentage of completion Method" (POC) of accounting. Revenue under POC method is recognized on basis of percentage of actual costs incurred including construction and development cost of projects under execution and proportionate cost of land provided following conditions have been fulfilled: i. atleast 25% of estimated construction and development costs (excluding land cost) has been incurred; ii. atleast 25% of saleable project area is secured by the Agreements to Sell/ Application Forms (containing salient terms of the agreement to sell); and iii. atleast 10% of total revenue as per Agreement to Sell are realized in respect of these agreements. (c) In case of EPC Contracts, the revenue is recognised on the basis of percentage completion method. The stage of completion is determined by the proportion that contract costs incurred for work performed upto the reporting date bear to the estimated total contract costs. (d) Revenue includes: (i) Work done for which only letters of intent have been received, however, formal contracts / agreements are in the process of execution. (ii) Work executed and measured by the Company pending certification by the client. (iii) Work executed but not measured / partly executed are accounted for at engineering estimated cost. (iv) Extra and substituted items to the extent considered realizable. (v) Claims lodged against clients to the extent considered realizable. (vi) Amount retained by the clients which is released after the commissioning of the project. (e) Income from interest is accounted for on time proportion basis taking into account amount outstanding and applicable rate of interest. Interest from customers under agreement to sell is accounted for on receipt basis. (f) Dividend income is recognised when right to receive is established. (g) Rent, Service Receipts are accounted for on accrual basis. 3. WORK-IN-PROGRESS Work-in-progress includes unsold portion of Real Estate Projects. Increase / decrease in Work-in-Progress is accounted for as income or expenditure for the year, as the case may be. Valuation of work-in-progress including unsold portion of reality project is being done on basis of actual cost and overheads incurred which are directly attributable to project, till completion. 4. FIXED ASSETS Tangible Assets: Fixed Assets are stated at historical cost less accumulated debrciation and impairment loss, if any. Cost comprises purchase price, duties, levies and any directly attributable cost of bringing the assets to their working condition for its intended use. It excludes refundable taxes. Borrowing costs, if any relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Intangible Assets: Intangible Assets are stated at their cost of acquisition less accumulated amortisation. 5. DEbrCIATION & AMORTISATION a) Debrciation on Fixed Assets is calculated on Straight line method in accordance with the provisions of Schedule II of the Companies Act, 2013 keeping 5% of cost as residual value. The useful life of fixed assets as defined in the Part C of Schedule II of the Companies Act, 2013 has been taken for all tangible assets. b) Fixed Assets costing upto X 10,000/- each are fully debrciated in the year of its acquisition. 6. FOREIGN CURRENCY TRANSACTIONS The financial statement of an integral operation is translated using following principles and procedures: a. A foreign currency transaction is recorded, on initial recognition in reporting currency (i.e. X), by applying to foreign currency exchange rate at the date of transaction. b. Monetary items denominated in a foreign currency are reported using exchange rate at reporting date. c. Non-monetary items carried in term of historical cost denominated in foreign currency, are reported using exchange rate at the date of transaction. d. Exchange differences arising on the settlement of monetary items or on reporting an enterprise's monetary items at rates different from those at which they were initially recorded during the period, or reported in brvious financial statements, are recognized as income or as expenses in the period in which they arise. e. Exchange differences arising on reporting of long term monetary assets at rates different from those at which they were initially reported during the period or brvious periods in so far they relate to the acquisition of debrciable capital asset is added to or deducted from the cost of assets. f. Non monetary foreign currency items are carried at cost. 7. VALUATION OF INVENTORIES a) Direct Materials, Stores and Spare Parts are valued at lower of cost or net realizable value. Cost is determined on weighted average cost method. b) Consumables including Cantering, Shuttering and Scaffolding, Loose Tools, Laboratory Equipment, empty containers & others are valued on the basis of realizable value, based on the engineering estimate. 8. INVESTMENTS - Current Investments are valued at Lower of Cost or Net Realizable Value. - Long Term Investment are stated at cost. Provision for diminution in the value of long term investments is made only if, such decline is other than temporary in the opinion of the management. 9. EMPLOYEE BENEFITS a) SHORT TERM BENEFITS These are recognised as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related services are rendered. These benefits include performance related pay and compensated absences. b) LONG TERM BENEFITS Defined Contribution Plan Company's contribution paid/payable during the year to Provident Fund, EPS 1995 of EPFO and Company's Pension Scheme is recognised in the statement of profit and loss for the year in which the related services are rendered. The same is paid to a fund administered through separate trusts. Defined Benefit Plan Company's liability towards gratuity, leave benefits (including compensated absences) and TA on Superannuation are determined by independent actuary, at the year end using the projected unit credit method. Actuarial gains or losses are recognised immediately in the statement of profit and loss. Liability for gratuity as per actuarial valuation is paid to a fund administered through a separate trust. c. EMPLOYEE SEPERATION COSTS Ex Gratia to employees who have opted for retirement under the voluntary retirement scheme of the Company is charged to the Statement of Profit and Loss in the year of acceptance of option by the management. 10. PRIOR PERIOD EXPENDITURE / INCOME Expenditure / Income upto X 1,00,000 in each case relating to prior period has been charged / accounted for to the respective head of accounts. 11. TAXES ON INCOME Tax expense comprises both current and deferred tax. Current tax is determined on the basis of taxable income in accordance with the provisions of the Income Tax Act, 1961. Deferred tax liability /asset resulting from 'timing difference' between accounting income and taxable income, that is capable of reversal in subsequent accounting period is accounted for considering the tax rate & tax laws that have been enacted or substantively enacted as on the reporting date. Deferred tax asset is recognized and carried forward only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are reviewed at each reporting date for their readability. 12. IMPAIRMENT OF ASSETS Carrying amount of cash generating units is reviewed at each reporting date where there is any indication of impairment based on internal/ external indicators. An impairment loss is recognised in the statement of profit and loss where carrying amount exceeds recoverable amount of cash generating units. Impairment loss is reversed, if, there is change in recoverable amount and such loss either no longer exists or has decreased or indication on which impairment was recognised no longer exists. 13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS A provision is recognised when the company has a brsent obligation as a result of a past event and it is probable that an outflow of resources will be required to settle obligation and in respect of which a reliable estimate can be made. Provisions are determined based on management estimate required to settle the obligation on reporting date. Contingent liabilities are disclosed on basis of judgment of management after a careful evaluation of facts and legal aspects of matter involved. Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized. 14. PROVISION FOR DOUBTFUL DEBTS / LOANS AND ADVANCES The amount of Trade Receivables / Loans and Advances in closed projects, pertaining to Government of India, its departments and Public Sector Enterprises are considered Good for realisation irrespective of the age of receivable / loans and advances. These debts are under constant persuasion for realisation till final settlement made with client or in case of dispute, verdict is passed by the arbitrator / court. Necessary provision against doubtful debts / loans and advances is made based on the brvious experience of Management. Receivables / Advances are written-off as and when considered unrealisable. 15. UNADJUSTED CREDIT BALANCES WRITTEN BACK Write back of unsettled credit balances is done on closure of the concerned project or earlier based on the brvious experience of Management and actual facts of each case. 16. ARBITRATION AWARDS Arbitration / Court's awards, to the extent not taken into accounts at the time of initiation, are accounted for after it becomes decree. Interest to / from in these cases are accounted for on actual payment /receipt basis. 17. LIQUIDATED DAMAGES Liquidated Damages / Compensation for delay in respect of clients/ contractors, if any, are accounted for when matter is considered settled by management. |