1) General Information

Artson Engineering Limited (“the Company’’) is a Company limited by shares incorporated under the erstwhile Companies Act, 1956. The Company’s Registered Office is situated at Mumbai. The Company’s shares are listed on the Bombay Stock Exchange (BSE) and the Scrip Code is 522134.

The Company was incorporated in the year 1978 and since inception, the Company has commissioned, on turn-key basis, several fuel storage and handling facility systems. The Company is operating in one segment viz. Supply of fabricated steel structure and site services of mechanical works.

The Company was referred to the BIFR as a sick Company under the provisions of Section 3 (1) (O) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company’s reference as a sick Company was registered under Case No. 152/ 2004 with the BIFR. Meanwhile, with effect from December 1, 2016, the Ministry of Finance, Government of India notified the SICA Repeal Act, 2003 (“Repeal Act, 2003”) by virtue of which BIFR stood dissolved and all the appeals, references, inquiries and proceedings pending before the BIFR stand abated except for the Schemes already sanctioned. The Management is of the opinion that considering the current financial performance and order booking, the Company does not require to refer the case to the NCLT for approval of the above.

1.1 Applicability of new and revised Ind AS:

- Ind AS 115, Revenue from Contracts with Customers

Effective 01 April 2018, the Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognized. The Company has adopted Ind AS 115 using the modified retrospective approach. The effect of initially applying this standard is recognized at the date of initial application (i.e. 01 April 2018). The standard is applied only to contracts that are not completed as at the date of initial application and the comparative information in the Financial statements is not restated — i.e. the comparative information continues to be reported under Ind AS 18 and Ind AS 11. The Company had to change its accounting policy and make certain adjustments following the adoption of Ind AS 115. This has been disclosed in Note 31 of the Financial Statements.

- Appendix C, Uncertainty over Income Tax Treatments, to Ind AS 12, ‘Income Taxes’

The appendix explains how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. In particular, it discusses:

- how to determine the appropriate unit of account, and that each uncertain tax treatment should be considered separately or together as a group, depending on which approach better predicts the resolution of the uncertainty;

- that the entity should assume a tax authority will examine the uncertain tax treatments and have full knowledge of all related information, i.e. that detection risk should be ignored;

- that the entity should reflect the effect of the uncertainty in its income tax accounting when it is not probable that the tax authorities will accept the treatment;

- that the impact of the uncertainty should be measured using either the most likely amount or the expected value method, depending on which method better predicts the resolution of the uncertainty; and

- that the judgements and estimates made must be reassessed whenever circumstances have changed or there is new information that affects the judgements.

The Company operates in limited countries and tax jurisdictions and has substantially completed assessing its existing models and processes which it has developed to account for tax uncertainties against the specific guidance in the appendix C to Ind AS 12 to consider the impact on income tax accounting in respect of its material tax jurisdictions. Basis such assessment, the application of this guidance is not expected to have material impact on its financial statements.

- Amendment to Ind AS 12, Income Taxes

The amendments clarify that the income tax consequences of dividends on financial instruments classified as equity should be recognised according to where the past transactions or events that generated distributable profits were recognised. These requirements apply to all income tax consequences of dividends. Previously, it was unclear whether the income tax consequences of dividends should be recognised in profit or loss, or in equity, and the scope of the existing guidance was ambiguous.

These amendments do not have any impact on the financial statements of the Company.

- Ind AS 103, ‘Business Combinations’

The amendments clarify that obtaining control of a business that is a joint operation, is a business combination achieved in stages. The acquirer should re-measure its previously held interest in the joint operation at fair value at the acquisition date.

These amendments will apply to future business combinations of the Company for which acquisition date is on or after 1 April 2019. These amendments do not have any impact on the financial statements of the Company.

- Ind AS 111, ‘Joint Arrangements’

The amendments clarify that the party obtaining joint control of a business that is a joint operation should not remeasure its previously held interest in the joint operation.

These amendments will apply to future transactions of the Company in which it obtains joint control of a business on or after 1 April 2019. These amendments do not have any impact on the financial statements of the Company.

- Ind AS 23, ‘Borrowing Costs’

The amendments clarify that if a specific borrowing remains outstanding after the related qualifying asset is ready for its intended use or sale, it becomes part of general borrowings.

Since the Company does not have qualifying assets, these amendments do not have any impact on the financial statements of the Company.

- Long-term Interests in Associates and Joint Ventures - Amendments to Ind AS 28, ‘Investment in Associates and Joint Ventures’

The amendments clarify the accounting for long-term interests in an associate or joint venture, which in substance form part of the net investment in the associate or joint venture, but to which equity accounting is not applied. Entities must account for such interests under Ind AS 109 ‘Financial Instruments’ before applying the loss allocation and impairment requirements in Ind AS 28.

Since the Company does not have associates or joint ventures, the amendments will not have any impact on its financial statements.

- Prepayment Features with Negative Compensation - Amendments to Ind AS 109, ‘Financial Instruments’

The narrow-scope amendments made to Ind AS 109 enable entities to measure certain prepayable financial assets with negative compensation at amortised cost. These assets, which include some loan and debt securities, would otherwise have to be measured at fair value through profit or loss. To qualify for amortised cost measurement, the negative compensation must be ‘reasonable compensation for early termination of the contract’ and the asset must be held within a ‘held to collect’ business model.

These amendments are not expected to have any impact on the financial statements of the Company.

- Plan Amendment, Curtailment or Settlement — Amendments to Ind AS 19, ‘Employee Benefits’

The amendments to Ind AS 19 clarify the accounting for defined benefit plan amendments, curtailments and settlements. They confirm that entities must:

- calculate the current service cost and net interest for the remainder of the reporting period after a plan amendment, curtailment or settlement by using the updated assumptions from the date of the change;

- any reduction in a surplus should be recognised immediately in profit or loss either as part of past service cost, or as a gain or loss on settlement. In other words, a reduction in a surplus must be recognised in profit or loss even if that surplus was not previously recognised because of the impact of the asset ceiling; and

- separately recognise any changes in the asset ceiling through other comprehensive income.

These amendments will apply to any future plan amendments, curtailments, or settlements of the Company on or after 1 April 2019. The amendment does not have any impact on the Company.

- Ind AS 116, ‘Leases’

Ind AS 116 was notified by Ministry of Corporate Affairs on 30 March 2019 and it is applicable for annual reporting periods beginning on or after 1 April 2019.

Ind AS 116 will affect primarily the accounting by lessees and will result in the recognition of almost all leases on balance sheet. The standard removes the current distinction between operating and finance leases and requires recognition of an asset (the right-of-use the leased item) and a financial liability to pay rentals for virtually all lease contracts. An optional exemption exists for short-term and low-value leases.

The statement of profit and loss will also be affected because the total expense is typically higher in the earlier years of a lease and lower in later years. Additionally, operating expense will be replaced with interest and depreciation, so key metrics like EBITDA will change.

Operating cash flows will be higher as repayments of the lease liability and related interest are classified within financing activities.

The accounting by lessors will not significantly change. Some differences may arise as a result of the new guidance on the definition of a lease. Under Ind AS 116, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company in the process of reviewing all of its leasing arrangements in light of the new lease accounting rules in Ind AS 116. The standard will affect primarily the accounting for the Company’s operating leases. The Company intends to apply simplified transition approach and will not restate comparative information in the financial statements for the year ending 31 March 2020 to show the impact of adopting Ind AS 116.

The Company is in the process of assessing the detailed impact of Ind AS 116 which will become effective from 01 April 2019.

2.1 Property, plant and equipment pledged as security

Refer to Note 14 for information on property, plant and equipment pledged as security by the Company.

2.2 Self Constructed Asset

Additions to Plant and Equipment include an amount of Rs. 11.54 Lakhs (31^st March 2018 - Rs. 125.02 Lakhs) representing working support structure constructed for machinery at Nashik factory capitalised from the inventory of raw materials.

2.3 Buildings

Buildings are constructed on leasehold land not owned by the Company.

2.4 Contractual Obligations

Refer to Note 44 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

2.5 Capital work-in-progress

Capital work-in-progress comprises of De-dusting machine to be installed at the Nashik factory.

3.1 Expected Credit Loss Allowance on receivables

The Company applies the simplified approach for providing for expected credit losses prescribed by Ind AS 109, which permits the use of the lifetime expected loss provision for all the trade receivables (including unbilled revenue disclosed under other financial assets). The loss allowance provision is determined as follows after incorporating forward looking information.

(i) At the end of each reporting period, the Company reviews every receivable balance and in case an issue is identified with regard to the recovery of the balance, a specific provision is made for the same.

(ii) The Company also computes the Expected Credit Loss Allowance (ECLA) by applying the average percentage of bad debts writeoffs on turnover determined on a historical basis over the past 4 years. Expected Credit Loss Allowance is determined on the closing balance of all receivables (including unbilled revenue disclosed under other financial assets) from external customers at each reporting date.

No Expected Credit loss provision has been created for receivables from the Holding Company since the Company considers the life time credit risk of these financial assets to be very low.

3.2 Expected Credit Loss Allowance on other financial assets

No Expected Credit Loss provision, other than specific provisions, has been created for Cash and Cash equivalents and Other financial assets (other than unbilled revenue), since the Company considers the life time credit risk of these financial assets to be very low.

Note: The Company during the current year entered into a settlement agreement with M/s Aegis Logistics Ltd on January 27, 2019. As per the settlement agreement, the Company received an amount of Rs. 92.73 Lakhs (including Interest of Rs. 20.91 Lakhs) towards its outstanding dues of Rs. 235.10 Lakhs (Non Current Trade receivables of Rs. 116.02 Lakhs and Non Current Security Deposits of Rs. 119.08 Lakhs). Accordingly, the Company has considered an amount of Rs. 71.82 Lakhs as ‘Provision for doubtful debts no longer required written back’ under Other Income and has written off the balance receivable of Rs. 163.28 Lakhs from the Opening Provision.

Note: Effective 01^st April 2018 the Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether how much and when revenue has to be recognised. One of the effects of applying the standard was reclassification of certain costs lying in Contracts-in-progress under Inventories (Note 9) as Unbilled Revenue under Note 6 - Other Financial Assets. As at 01^st April 2018, an amount of Rs. 1,328.75 Lakhs has been reclassified as Unbilled Revenue. Refer Note 31 for the detailed disclosure in this regard.

Significant estimates - Deferred tax assets on unabsorbed business losses and unabsorbed depreciation

The Company has recognised deferred tax assets on unabsorbed business losses and unabsorbed depreciation. The Company has incurred losses in the earlier years and it has started to make profits over the past couple of years. The management has concluded that the deferred tax assets will be recoverable using the estimated future taxable income based on the approved business plans and budgets. The losses can be carried forward for a period of 8 years as per the requirements of the Income Tax Act, 1961 upto the Financial Year 2021-22. After set off of losses, the Company is expected to generate taxable income in the Financial Year 2021-22.

Note (a) - Represents amount paid towards land lease for a period of 95 years which is amortised on straight line basis over the term of the lease. The amortisation expenses is recognised in the Statement of Profit and Loss under Note 27 - “Other Expenses”. For the year ended 31^st March 2019, the charge is Rs. 0.05 Lakh (Previous Year Rs. 0.04 Lakh).

(a) Contracts-in-progress disclosed under Inventories as at 31^st March 2018 included an amount of Rs. 1,221.96 Lakhs incurred on completed/ongoing contracts claimable from and billable to customers, including costs on account of delays/change in scope/design by them, etc., which were at various stages of discussion/negotiations. Effective 01^st April 2018 the Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether how much and when revenue has to be recognised. One of the effects of applying the standard was classification of these costs as Unbilled Revenue under Note 6 - Other Financial Assets.

(b) Contracts-in-progress disclosed under Inventories as at 31^st March 2019 represents costs of construction materials lying at project sites which would be consumed in the next year.

(ii) Terms/rights attached to equity shares

The Company’s issued, subscribed and paid-up capital comprises of equity shares only and no preference shares have been issued. The Company’s paid-up capital comprises only one class, i.e. equity shares having par value of Rs. 1 per share. They entitle the holder to participate in dividends, and to share in the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held.

Every holder of equity shares present at a Meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

The liability of the members is limited.

(iii) Restriction on distribution of dividend:

Pursuant to the revised terms of the loan given by the Holding Company, the Company is not permitted to declare any dividend to the equity shareholders without the payment of loan amount to the Holding Company in full.

(iv) No bonus shares have been issued during the last five years.

(v) No shares have been issued for consideration other than cash during the last five years.

⁽vi) No shares have been bought back during the last five years.

(vii) Shares of the Company held by holding Company

(i) Term loan from bank disclosed under Note 18 and Loans repayable on demand from banks disclosed under Note 16 include amounts that have been granted by the banks at a concessional interest rate based on a corporate guarantee provided by the Holding Company. As per the requirements of Ind AS 109, the Company has computed the deemed financial benefit on the borrowings availed at concessional rate and the said benefit has been taken to Other Equity. The financial benefit accounted is being amortised in the Statement of Profit and Loss over the period of the loans. The amount of financial benefit taken to Other Equity as at 31^st March 2019 is Rs. 679.18 Lakhs (31^st March 2018 - Rs. 610.78 Lakhs). Additionally, during the year, the Company has recognised an amount of Rs. 144.43 Lakhs (31^st March 2018 - Rs. 140.56 Lakhs) as guarantee commission charge in the Statement of Profit and Loss under Note 25 - Finance costs.

(i) The amount represents Term Loan of Rs. 1,500 Lakhs availed from IndusInd Bank by first pari passu charge on fixed and current assets of the Company, both present and future. The loan is repayable in single installment at the end of 3 years from the date of first disbursement of the facility i.e. 28^th September 2016 and carries an interest rate of 1 year MCLR plus 0.10% per annum i.e. 10% per annum, currently. Additionally, the term loan from bank is guaranteed unconditionally with irrevocable corporate guarantee from the Holding Company. As the loan amount is repayable within the next 12 months (i.e. by 27^th September, 2019), the same has been regrouped to Other financial liabilities as Current maturities of long term debt under Note 18 as at 31^st March 2019.

(ii) During the year 2016-17, the Company revised the terms of the term loan received from the Holding Company of Rs. 1,930.39 Lakhs and inter- corporate deposit received from the Holding Company of Rs. 2,100 Lakhs. As per the revised terms, the total loan from the Holding Company is repayable in a single installment at the end of 20 years and does not bear any interest. As per the requirements of Ind AS 109, the loan from Holding Company was recorded at its fair value of Rs. 207.10 Lakhs as at 31^st March 2017 and the difference of Rs. 3,823.29 Lakhs between the loan received from the Holding Company of Rs. 4,030.39 lakhs and the fair value of the loan was taken to Other Equity. The loan is secured by mortgage of leasehold land at Nashik. The leasehold land has been disclosed as prepayments under Other Non Current Assets (Note 8). Also refer the table below for the movement in the loan from related party:

(i) Working Capital loans from banks of Rs. 1,471.42 Lakhs (31^st March 2018 Rs. 863.86 Lakhs) are secured by pari passu charge on the inventories, trade receivables and other current assets of the Company. The current interest rates charged by banks range from 9% to 10.30% per annum. Additionally, the working capital loans amounting to Rs. 476.41 Lakhs (31^st March 2018 Rs. 863.86 Lakhs) from banks is guaranteed unconditionally with irrevocable corporate guarantee from the Holding Company.

# As permitted under the transitional provisions in Ind AS 115, the transaction price allocated to (partially) unsatisfied performance obligations as of 31 March 2018 is not disclosed.

Management expects that 100% of the transaction price allocated to the unsatisfied contracts as of 31 March 2019 will be recognised as revenue during the next reporting period.

The sale contracts for sale of goods are for periods of one year or less. As permitted under Ind AS 115, the transaction price allocated to these unsatisfied contracts is not disclosed.

Critical judgements in recognising revenue

The following are the critical estimates while determining the Revenue from construction activities:

Estimated Total Costs — Management determines the Estimated Total Costs for the project, which is used to determine the stage of completion of the contract.

These estimates may depend on the outcome of future events and may need to be reassessed at the end of each reporting period. Refer Note 2.3 for the accounting policy on Revenue from Construction activities.

Note: As gratuity and compensated absences are computed for all the employees on an aggregate basis in the actuarial valuation report, the amounts relating to the Key Managerial Personnel cannot be individually identified.

4. Changes in accounting policies

This note explains the impact of the adoption of Ind AS 115 Revenue from Contracts with Customers on the Company’s financial statements.

Impact on the financial statements

The Company applied Ind AS 115 for the first time by using the modified retrospective method of adoption with the date of initial application of 1^st April 2018. Under this method, the Company recognised the cumulative effect of initially applying Ind AS 115 as an adjustment to the opening balance of retained earnings as at 1^st April 2018. Comparative prior period has not been adjusted.

Entities applying the modified retrospective method can elect to apply the revenue standard only to contracts that are not completed as at the date of initial application (that is, they would ignore the effects of applying the revenue standard to contracts that were completed prior to the date of initial application). By taking that practical expedient the Company applies Ind AS 115 for all the contracts that are not completed on 1^st April 2018.

(i) Change in the Percentage of Completion method under Ind AS 115

The Company as at 1^st April 2018 has changed its Percentage of Completion method under Ind AS 115 to Input Method i.e, Cost incurred vis-a-vis the Budgeted cost for the project. The Company had been determining the Percentage of Completion under the erstwhile Ind AS 115 using Output method i.e., Survey method. The effect of applying this change as at 1^st April 2018 resulted in an increase of Rs. 94.47 lakhs (Net of taxes Rs. 36.41 lakhs) in the opening retained earnings as on April 01, 2018 with corresponding increase in Unbilled Revenue of Rs. 1,106.66 lakhs, decrease in inventories of Rs. 999.81 lakhs, decrease in Provision for Contractual expenses of Rs. 14.86 lakhs and increase in non current trade receivables of Rs. 9.17 lakhs.

5. EMPLOYEE BENEFITS PLANS

5.1 Defined Contribution plan

In respect of defined contribution plans, contributions are made to provident fund for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the Government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan is Rs. 33.69 Lakhs (31^st March 2018 - Rs. 27.91 Lakhs).

5.2

The Company provides for gratuity for employees in India as per the payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employee’s last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to Life Insurance Corporation of India (LIC). The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

The current service cost for the year is included in Note 24 - ‘Employee benefit expense’ in the Statement of Profit and Loss

The remeasurement of the net defined liability is included in Other Comprehensive Income.

The weighted average duration of the payment of these cash flows for the year ended 31^st March 2019 is 6.35 years.

Expected contribution to be made to plan assets in the Financial Year 2019-20 is Rs. 1.91 Lakhs (31^st March 2018: Rs. 6.28 lakhs)

5.3 Other long-term employee benefits - Compensated Absences

The Compensated absences cover the Company’s liability for earned leave and sick leave

6. FAIR VALUES

The management assessed that trade receivables, cash and cash equivalents, other bank balances, other financial assets, short term borrowings, trade payables and other financial liabilities approximate their carrying amounts largely due to the short-term maturities or interest bearing nature of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

(ii) Fair value hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

7. FINANCIAL RISK MANAGEMENT

A. Credit risk

Credit risk is the risk arising from credit exposure to customers, cash and cash equivalents held with banks and current and non-current held-to maturity financial assets.

(i) Credit risk management

The credit risk to the Company arises from two sources:

(a) Customers, who default on their contractual obligations, thus resulting in financial loss to the Company

(b) Non certification by the customers, either in part or in full, the works billed as per the contract,being non claimable cost as per the terms of the contract with the customer

(a) Customers

The Company evaluates the credentials of a customer at a very early stage of the bid. The Company has adopted a policy of 3 tier verification before participating for any bid. The first step of such verification includes verification of customer credentials. The Company, as part of verification of the customer credentials,ensures the compliance with the following criterion,

(i) Customer’s financial health by examining the audited financial statements

(ii) Whether the Customer has achieved the financial closure for the work for which the Company is bidding

(iii) Brand and market reputation of the customer

(iv) Details of other contractors working with the customer

(v) Where the customer is Public Sector Undertaking, sanction and availability of adequate financial resources for the proposed work

The Company makes provision on it’s financial assets, on every reporting period, as per Expected Credit Loss Method. The provision is made separately for each financial assets of each business line. The percentage at which the provision is made, is determined on the basis of historical experience of such provisions,modified to the current and prospective business and customer profile.”

Trade receivables consist of large number of customers, spread across diverse industries and geographical areas. Majority of the customers of the Company comprise of Public Sector Undertakings, with whom the Company does not perceive any default risk, however there would be a credit risk on account of delays in the payments. Additionally the Company has significant revenue contracts with Holding Company, Tata Projects Limited, the credit risk for these transactions has been considered minimal. As regards the customers from private sector, the Company carries out financial evaluation on regular basis and provides for any amount perceived as non realisable, in the books of accounts.

(b) Non certification of works billed

The costs incurred on projects are regularly monitored through the Project budgets. Costs which are incurred beyond the agreed terms and conditions of the contract, would be claimed from the customer, based on the actual works performed. The realisability of such claims is reviewed by the management on a periodic basis and the costs, which are identified as non tenable or costs beyond the collectible amounts would be provided in the books of accounts.

(ii) Provision for Expected Credit Loss

Refer Note 5.1 of the Financial Statements

B. Liquidity risk

The Company being an EPC contractor, has a constant liquidity pressures to meet the project requirements. These requirements are met by a balanced mix of borrowings and project cash flows. Cash flow forecast is made for all projects on monthly basis and the same are tracked for actual performance on daily basis. Shortfall in cash flows are

matched through short term borrowings and other strategic financing means. The daily project requirements are met by allocating the daily aggregated cash flows among the projects. The Company has established practice of prioritising the site level payments and regulatory payments above other payment requirements.

C. Market risk

(i) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, Primarily with respect to AED (United Arab Emirates Dirham) and KWD (Kuwaiti Dinar).

Since the Company ‘s net exposure in foreign exchange is not significant, the Company has not opted for derivative financial instruments to mitigate foreign exchange related risk exposures

(a) Foreign currency risk exposure

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

8. CAPITAL MANAGEMENT

The Company’s business model is working capital centric. The Company manages its working capital needs and long-term capital expenditure, through a balanced mix of capital (including retained earnings) and short-term debt.

The capital structure of the Company comprises of net debt (borrowings reduced by cash and bank balances) and equity.

The Company is not subject to any externally imposed capital requirements.

The Company reviews its capital requirements on an annual basis, in the form of Annual Operating Plan (AOP). The AOP of the Company aggregates the capital required for execution of projects identified and the financing mechanism of such requirements is determined as part of AOP.

(ii) Non-cancellable operating leases

The Company leases various offices under non-cancellable operating leases expiring within one to five years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

9. SEGMENT INFORMATION

The Company operates in only one business segment viz. Supply of steel structure and site services for mechanical works. Therefore, segment-wise reporting under Ind AS 108 is not applicable.

Significant clients

Three customers individually accounted for more than 10% of the revenues in the year ended 31^st March 2019 (31^st March 2018: Two clients individually accounted for more than 10% of the revenues).

10. Provision for current tax is not made in lieu of carry forward losses. The Company has been advised that since it continues to have negative net worth for computation of income tax in line with the erstwhile BIFR order dt 20.06.2013,the provision in respect of MAT u/s 115JB of Income Tax Act, 1961 is not applicable and hence the same is not provided.

11. DISCLOSURE IN ACCORDANCE WITH SECTION 22 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:

According to information available with the Management, on the basis of intimation received from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), the Company has the following amounts due to micro and small enterprises under the said Act:

Disclosure under Section of Micro, Small and Medium Enterprises Development Act, 2006

Dues to the Micro and small enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management.

12. The Company was registered with the Board for Industrial and Financial Reconstruction (BIFR) as a sick Company and BIFR, vide its order dated December 18, 2017, had sanctioned the rehabilitation scheme. With effect from 1^st December, 2016 the Ministry of Finance, Government of India notified the SICA Repeal Act, 2003 by virtue of which BIFR stood dissolved and all appeals, references, inquiries and proceedings pending before BIFR stand abated except for the Schemes already sanctioned. Whereas, the Company had an option to refer the case to National Company Law Tribunal (NCLT), the management, considering the current financial performance and order booking, had decided not to pursue the matter with NCLT.

13. Capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is - Rs. 8.60 Lakhs (31^st March 2018 - Rs. 16.78 Lakhs).

14 (a) The Company is in the process of evaluating the impact of the recent Supreme Court Judgment in case of “Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal” and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employees’ Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of “basic wages” of the relevant employees for the purposes of determining contribution to provident fund under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952. In the assessment of the management which is supported by legal advice, the aforesaid matter is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements.

15. The Company has appointed Mr. Saket Mathur as Manager w.e.f. 1^st January, 2018 in compliance with the provisions of Section 203 of the Companies Act, 2013.

16. Previous year’s figures have been regrouped and restated wherever necessary to make their classification comparable with that of the current year.