2009-10 Annual Report - SPML

SPML INFRA LIMITEDSPML INFRA LIMITED & ITS SUBSIDIARIES (formerly Subhash Projects and Marketing Limited)SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AND PROFIT & LOSS ACCOUNTWork-in-progress is valued at cost. However, in case of jobs where losses are likely to occur, the stock is considered at net realisable value. Costsinclude materials, labour and appropriate portion of construction overheads.10. Revenue recognition(a) Construction contractsRevenue on contracts is recognised on percentage completion method based on the stage of completion of the contract. The stage ofcompletion is determined as a proportion that contract costs incurred for work performed upto the reporting date bear to the estimated totalcosts. When it is probable that the total contract cost will exceed the total contract revenue, the expected loss is recognized immediately. Forthis purpose, total contract costs are ascertained on the basis of actual costs incurred and costs to be incurred for completion of contractsin progress, which is arrived at by the management based on current technical data, forecasts and estimate of expenditure to be incurred infuture including contingencies, which being technical matters have been relied on by the auditors. Revisions in projected profit or loss arisingfrom change in estimates are reflected in each accounting period which however cannot be disclosed separately in the financial statements asthe effect thereof cannot be accurately determined.Overhead expenses representing indirect costs that cannot be directly aligned with the jobs, are distributed over the various contracts on apro-rata basis.Disputed claims towards extra work, damages etc. are accounted for on settlement of the arbitration proceedings / legal cases.(b) Sale of GoodsRevenue from sale of goods is recognized on passage of title thereof to the customers, which generally coincides with delivery. Sales are netof returns, claims, trade discounts etc.(c) Income from ServicesRevenues from operation and maintenance contracts are recognised on rendering of services as per the terms of contract.(d) InterestInterest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.11. Liquidated damagesNo provision is made for liquidated damages deducted by the customers, wherever these have been refuted by the Company and it expects tosettle them without any loss. Pending settlement of these claims, the relative sundry debtors are shown in the accounts as fully recoverable andthe corresponding amounts are reflected as contingent liability in terms of the provisions contained in Accounting Standard – 29.12. Foreign currency translationsInitial RecognitionForeign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between thereporting currency and the foreign currency at the date of the transaction.ConversionForeign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominatedin 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 orother similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.Exchange DifferencesExchange differences arising on the settlement/conversion of monetary items are recognized as income or expenses in the year in which theyarise.Forward Exchange ContractsThe premium or discount arising at the inception of forward exchange contracts is amortized as expenses or income over the life of the respectivecontracts. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change.Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or expense for the year.88