Afcon Book.indd - Afcons Infrastructure Ltd.

CONSOLIDATED FINANCIAL STATEMENT OF AFCONS INFRASTRUCTURE LIMITED AND ITS SUBSIDIARIES,ASSOCIATED AND JOINT VENTURES (AFCONS GROUP)Borrowing costsBorrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of the costof such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All otherborrowing costs are charged to revenue.Segment Reporting:The following accounting policies have been followed for segment reporting:i) Segment Revenue includes income directly identifiable with / allocable to the segment.ii)Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Results. The expenseswhich relate to the Group as a whole and not allocable to segments are included under Unallocable expenses.iii) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets andliabilities represent the assets and liabilities that relate to the Group as a whole and not allocable to any segment. Unallocated assetsmainly comprise certain fixed assets, interest accrued on bank deposits, Advance payment of taxes and tax deducted at source (net ofprovision for taxation). Unallocable liabilities include certain Loan funds, Interest accrued but not due on loans, Commission payable,Deferred tax and Provision for retirement benefits.Deferred revenue expenditureThe expenditure on voluntary retirement compensation is treated as ‘Deferred Revenue Expenditure’ and amortized over a period upto31 st March, 2010 on straight line basis.LeasesLease rentals in respect of assets acquired under operating lease are charged to Profit and Loss Account on a straight-line basis over the leaseterm.Doubtful debts and advancesProvision is made in the accounts for debts and advances which in the opinion of the management are considered doubtful of recovery.TaxationIncome taxes are accounted for in accordance with Accounting Standard (AS-22) “Accounting for taxes on income”, notified under theCompanies ( Accounting Standards) Rules, 2006. Income tax comprises both current and deferred tax.Current tax is measured on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the IncomeTax Act, 1961.The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or moresubsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using substantially enacted tax rates andtax regulations as of the Balance Sheet date.Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognized, onlyif there is virtual certainty of its realization, supported by convincing evidence. Deferred tax assets on account of other timing differences arerecognized only to the extent there is a reasonable certainty of its realisation.Accounting for joint venturesAccounting for joint ventures has been done as follows :-Type of Joint Ventures : Accounting TreatmentJointly controlled EntityInterests in jointly controlled entities comprise of the share of the Group’s interest in a company in which theGroup has acquired joint control over its economic activities by contractual agreement.Interest in jointly controlled entities are included in the consolidated financial statements of the Groupfrom the point in time at which the joint control is transferred to the group and are no longer included in thecon solidated financial statements from the point in time at which the joint control ceases. Interests in jointven tures are aggregated in the consolidated financial statements by using the proportionate consolidationmeth od, which means that the Group’s share in book values of like items of assets, liabilities, income andex penses are aggregated after eliminating the intra-Group balance and transactions to the extent of theproportionate share of the Group in the joint venture.Provisions, Contingent Liabilities and Contingent AssetsProvisions are recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable thatcash outflow will be required and a reliable estimate can be made of the amount of the obligation. Contingent liabilities are disclosed whenthe Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingentassets are neither recognized nor disclosed.III NOTES ON ACCOUNTS1. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 336.94 Lacs (As at 31 st March 2009Rs. 751.27 Lacs).Contingent liabilities2. Claims against the company not acknowledge as debts Previous yearSr. No. Particulars Rs in Lacs Rs. In Lacs1. Claims against the Company not acknowledged as debtsa) Liquidated damages against the company- 331.32b) Differences with sub-contractors in regard to rates and quantity of materials.686.66 713.92c) Proposed Recovery by the Government of Andhra Pradesh towards Sales Tax on B.T. escalation.- 218.19d) Labour and other matters.1.00 1.00The above claims are pending before various authorities. The Company is confident that the cases willbe successfully contested.2. a. Bank Guarantees given on behalf of Subsidiaries and Joint Ventures.70,791.39 20,480.60b. Corporate Guarantees given on behalf of Subsidiaries and Joint Ventures71,127.14 82,406.403. Sales Tax and Entry Tax1,937.02 1,658.23Represents demands raised by Sales Tax Authorities in matters of disallowance of labour and servicecharges, consumables etc. for which appeal is pending before various appellate authorities. The Companyis confident that the cases will be successfully contested4. Excise Duty1,403.18 307.69Represents demands raised by Central Excise Department for Excisability of girders. The Company isconfident that the cases will be successfully contested.5. Service Tax2.84 -Represents demand confirmed by the Asst. Commissioner of Service Tax for disallowance of CenvatCredit, since abatement claimed. The Company has appealed against the said order with Commissionerof Service Tax Mumbai and is confident that Cenvat Credit will be allowed as it is project specific andabatement has not been availed on the same.Note:- In respect of items mentioned under Paragraphs 1, 3, and 4 above, till the matters are finally decided, the financial effect cannot be ascertained.111