Bhagheeratha Engineering Ltd. कंपली की लेखा नीति

Mar 31, 2013

I) Basis of Preparation

The financial statements are prepared in accordance with the generally accepted accounting principles and on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of the previous years.

ii) Company has prepared the accounts on a going concern basis in spite of loss and negative net worth during the year, on the following grounds.

a) The company has completed all projects undertaken by its own and under joint venture. Before bidding for new projects a number of preparatory measures are to be done, and already started the action plans in this direction.

b) The Company has given a proposal to the consortium of banks for One Time Settlement of its dues to them and is hopeful of a favourable decision from them.

c) The Company has taken steps to dispose of the non-business assets, the market price of which is much more than the book value to create substantial liquidity for clearing off the liabilities. Accordingly company has realized Rs.506 lakhs during the year by disposing non-business assets and the proceeds were utilized for reducing the liabilities.

d) There are substantial claims receivable, from various clients, which are under different stages of arbitration/legal proceedings. These are not recognized as income in the financial statements except to the extent realized. Management is expecting a substantial inflow out of the above claims in the near future.

iii) Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions in the reported amounts of assets and liabilities as on the date of financial statements and the reported income & expenditure during the period. These estimates and assumptions are based on the management''s valuation of the relevant facts and circumstances as on the date of the financial statements. Management believe that the estimates used in preparation of financial statements are prudent and reasonable. Future results may vary from these estimates.

iv) Revenue Recognition

The Company recognizes revenue under percentage of completion method by determining stage of completion on the basis of survey of actual quantity of work completed inclusive of works remaining uncertified by the clients.

Claims are recognized as revenue to the extent the management is confident that the same will be accepted by the Clients and will be realized.

v) Inventories

Stock of materials and stores are valued at cost

vi) Fixed Assets

Fixed assets are stated at cost less accumulated depreciation.

vii) Depreciation

Depreciation on fixed assets is provided on straight line method at the rates and in the manner as prescribed in Schedule XIV to the Companies Act 1956.

viii) Employees Benefits

Short term employee benefits are recognized as expenses in the year in which the related services are rendered. The company''s liability towards gratuity and leave encashment has been provided on the basis of actual liability accrued as at the end of the year.

ix) Investments

Long-term investments are carried at cost. However, decline in value of a permanent nature is provided for.

x) Taxation

Provision for tax is made for both current and deferred tax. Current tax is provided on the basis of estimated taxable income for the period at the applicable tax rates.

Deferred tax assets and liabilities arising on account of timing difference and which are capable of reversed in subsequent periods are recognized using the tax rates and laws enacted as on the balance sheet date.

Deferred tax assets are recognized and carried forward only if there is virtual certainty that they will be realized and are received for the appropriates of their respective carrying values on each balance sheet date.

xi) Provision; Contingent Liabilities & Contingent Assets

Provisions requiring substantial degree of estimation in measurement and recognized when there is present obligation and it is probable that there will be outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2010

1. (a) The Company recognises revenue under percentage of completion method by determining stage of completion on the basis of survey of actual quantity of work completed inclusive of works remaining uncertified by the clients.

b) Claims are recognized as revenue to the extent the management is confident that the same will be accepted by the Clients and will be realized.

2. Depreciation is provided on fixed assets under straight-line method and in accordance with Schedule XIV of the Companies Act 1956.

3. Expenditure incurred for creation of infrastructure facilities at projects is charged to Profit and Loss Account in proportion to production attained in the projects for the respective years.

4. Work in progress is valued at cost.

5. The Companys liability towards gratuity and leave encashment has been provided on the basis of actual liability accrued as at the end of the year.

6. Long-term investments are carried at cost. However decline in value of a permanent nature is provided for.

7. Sales-tax liability has been provided to the extent ascertained.

8. Company has prepared the accounts on a going concern basis in spite of loss and negative net worth during the year, on the following grounds.

(a) Company is executing one project by itself and another project in joint venture with a Malasiyan company.

(b) The Company has given a proposal to the consortium of banks for One Time Settlement of its dues to them and is hopeful of a favourable decision from them.

(c) Company has taken steps to dispose off the non-business assets, the market price of which is much more than the book value to create substantial liquidity for clearing off the liabilities. Accordingly company has realized Rs. 68/- lakhs during the year by disposing non-business assets and the proceeds were utilized for reducing the liabilities.

(d) There are substantial claims receivable, from various clients, which are under different stages of arbitration/ legal proceedings. These are not recognized as income in the financial statements. Management is expecting a substantial inflow out of the above claims in the near future.