2.19 Provision, Contingencies and Commitments:
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and it is
probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the amount of
such obligation can be reliably estimated.
If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate,
the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as
a finance cost.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably
will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured
reliably When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying
economic benefits is remote, no provision or disclosure is made.
Commitments are future liabilities for the estimated amount of contracts remaining to be executed on capital account and not
provided for Property Plant and Equipment (net of advances).
2.20 Lease Accounting:
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 a consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company
assesses whether:
Ý the contract involves the use of an identified asset;
Ý the Company had the right to obtain substantially all the economic benefits from use of the asset throughout the period of
use; and
Ý the Company had the right to direct the use of the asset.
The Company’s significant leasing arrangements are mainly of land and buildings, plant and equipment and vehicles. The company
has applied the practical expedient in respect of short-term leases and low value assets.
As a lessee:
The Company’s lease arrangements are short term in nature. Accordingly, the Company has elected to recognise the lease
payments under short leases as an operating expense on a straight-line basis over the lease term.
As a lessor:
A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an
underlying asset. Lease income from operating leases where the Company is a lessor are recognised on either a straight-line basis
or another systematic basis. The Company shall apply another systematic basis if that basis is more representative of the pattern
in which benefit from the use of the underlying asset is diminished. The Company present underlying assets subject to operating
leases in its balance sheet according to the nature of the underlying asset.
2.21 Segment Reporting:
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision
Maker (CODM) of the Company. The CODM is responsible for allocating resources and assessing performance of the operating
segments of the Company The company’s chief operating decision maker is the Managing Director.
2.22 Earnings per share:
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
2.23 Cash Flow Statement:
Cash Flow statement is reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions
of a non- cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or
expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the
company are segregated.
2.24 Cash and Cash Equivalents:
Cash and Cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances, demand
deposits with banks where the maturity is three months or less and other short term highly liquid investments.
2.25 Recent new Accounting Pronouncements:
Ministry of Corporate Affairs (“MCA") notifies new standard or amendments to the existing standards under Companies (Indian
Accounting Standards) Rules as issued from time to time.
For the year ended March 31, 2025, MCA has notified Ind AS - 117 Insurance Contracts and amendments to Ind AS 116 - Leases,
relating to sale and leaseback transactions, applicable to the company w.e.f. April 1, 2024. The company has reviewed the new
pronouncements and based on its evaluation has determined that it does not have any significant impact in its financial statements.
Further MCA has notified amendments to Ind AS 21- the effects of Changes in Foreign Exchange Rates, with respect to lake of
exchangeability and this will be applicable to the Company for reporting period beginning on or after 1st April 2025.
2.26 Events after reporting date:
Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period,
the impact of such events is adjusted within the standalone financial statements. Otherwise, events after the Balance Sheet date of
material size or nature are only disclosed, there were no subsequent event to be reported.
(i) General payment terms include mobilisation advance, monthly progress payments with a credit period ranging from immediate
payment to 120 days and certain retention money to be released at the end of the project as per the relevant contract terms. In
certain contracts, short term advances are received before the performance obligation is satisfied. In some cases, retentions are
substituted with bank guarantees. There are no significant financing components in the payments terms with customers. Also, no
interest is payable by the customers for the delay in payments of the amounts over due. The Company evaluates, the financial health,
market reputation, credit rating of the customer, before entering into the contract. The company's customers comprise of public
sector undertakings as well as private entities.
Note:
(i) Borrowings are secured against Inventory, Book Debts, Plant and Machinery, land and Fixed Deposits held in the name of company.
(ii) All the above credit facilities are guaranteed by Mr. Prahaladbhai S. Patel, Mrs. Shilpaben P Patel, and Ms. Pooja P Patel, and secured
against collateral securities held in the name of company and Mr. Prahaladbhai S. Patel.
(iii) Funds raised on short term basis have not been utilised for long term purposes .
(iv) Borrowed funds were applied for the purpose for which the loans were obtained.
(v) Bank returns / stock statements filed by the Company with its bankers or financial institutions are in agreement with books of
account.
(vi) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government
authority
(vii) The Company do not have any charges or satisfaction, which is yet to be registered with ROC beyond the statutory period.
B. Defined benefit plan:
The Company has a defined benefit gratuity plan in India (partially funded) for employees,who have completed five years or more
of service is entitled to grautity on termination of their employement at 15 days last drawn salary for each completed year of service.
Further, the plan requires contributions to be made to a separately administered fund. The fund is managed by a trust which is
governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the
definition of the investment strategy.
Gratuity is a defined benefit plan and company is exposed to the Following Risks:
Investment risk:
The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market
yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit.
Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.
Interest risk:
A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A
fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.
Longevity risk:
Since the benefits under the plan is not payable for life time and payable till retirement age only plan does not have any longevity risk.
Salary risk:
The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase
in the salary of the members more than assumed level will increase the plan's liability
The following table sets out the status of the gratuity plan and the amounts recognised in the Company's financial statements as at
March 31, 2025
Fair value of financial assets and financial liabilities measured at amortised cost.
The carrying amounts of trade receivables, loans, advances, cash and other bank balances are considered to be the same as their fair
values due to their short term nature. The carrying amounts of long term loans given with fixed rate of interest are considered at fair value.
The carrying amount of trade and other payables are considered to be the same as their fair values due to their short term nature.The
carrying amonts of borrowings with floating rate of interest are considered to be close to fair value.
35. Capital Management:
The primary objective of capital management of the Company is to safeguard its ability to continue as a going concern and to
maximise Shareholder value. The Company monitors capital using Adjusted Debt-Equity ratio which is total debt reduced by cash &
cash equivalents divided by total equity. For the purposes of capital management, the Company considers the following components
of its Balance Sheet to manage capital:
Total equity includes General reserve, Retained earnings, Share capital and Security premium. Total debt includes current debt plus
non-current debt.
36. Financial risk management
Risk management framework
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management
framework. The Board oversee the management of these financial risks through its Risk Management Committee as per Company’s
existing policy
The Company’s risk management policies are established to identify and analyse the risks faced by the Company to set appropriate
risk limits and controls and to monitor risks. Risk management policies and systems are reviewed regularly to reflect changes in
market conditions and the Company’s activities.
The audit committee oversees how the management monitors compliance with the Company’s risk management policies and
procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company The audit
committee is assisted by internal audit. Internal audit undertakes both regular and ad hoc review of risk management controls and
procedures, the results of which are reported to the audit committee.
The Company has exposure to the following risks arising from financial instruments:
A) Credit risk;
B) Liquidity risk;
C) Market risk;
D) Currency risk; and
E) Interest rate risk
A. Credit risk
Trade Receivable
The Company’s customer profile include a mix of customers - government, government residential, industrial, institutional and
private sector residential. Credit risk arising from trade receivables is managed in accordance with the Company’s established
policy, procedures and control relating to customer credit risk management. General payment terms include mobilisation advance,
monthly progress payments with a credit period ranging from immediate payment to 120 days and certain retention money to be
released at the end of the project as per the relevant contract terms. In certain contracts, short term advances are received before
the performance obligation is satisfied. In some cases, retentions are substituted with bank guarantees.
Concentrations of Credit Risk form part of Credit Risk
During the year ended March 31, 2025, sales to a customer approximated Rs. 30,460.45 Lakhs (or 12.34% of net revenue) and during
the year ended March 31, 2024, sales to such customer approximated Rs. 19,596.45 Lakhs (or 7.96% of net revenue). Accounts
receivable from such customer approximated Rs. 9,847.63 Lakhs (or 17.92% of total receivables) at March 31, 2025 and Rs. NIL
Lakhs (or NIL % of total receivables) at March 31, 2024. A loss of this customer could significantly affect the operating result or cash
flow of the Company.
Other financial assets
Contract Assets
A contract asset is Company’s right to consideration for work completed but not billed at the reporting date and a right to consideration
that is conditioned on achievement of milestone specified in the contract excluding any amounts presented as a receivable. Apart
from the provision recognised, the Group does not perceive any credit risk pertaining to accrued value of work done and amount due
on account of construction contracts.
Other than Contract Assets
The Company maintains exposure in cash and cash equivalents, term deposits with banks and loans to subsidiary companies. The
Company has diversified portfolio of investment with various number of counterparties which have secure credit ratings hence the
risk is reduced. Cumulative allocation limits are set for each category of asset class. Credit limits and concentration of exposures are
actively monitored by the finance department of the Company.
C. Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and equity prices. It will affect the
Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.
D. Currency risk
The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales and
purchases are denominated. The functional currency for the Company is INR. The currencies in which these transactions are
primarily denominated is US dollars.
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:
Foreign currency sensitivity analysis
The Company is mainly exposed to the currency : USD, SGD & Euro
The following table details the Company’s sensitivity to a 5% increase and decrease in the Rupee against the relevant foreign
currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and
represents management’s assessment of the reasonably possible change in foreign exchange rates. This is mainly attributable to
the net exposure outstanding on receivables or payables in the Company at the end of the reporting period. The sensitivity analysis
includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5%
change in foreign currency rate. A positive number below indicates an increase in the profit or equity where the Rupee strengthens
by 5% against the relevant currency For a 5% weakening of the Rupee against the relevant currency there would be a comparable
impact on the profit or equity, and the balances below would be negative.
E. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Company seeks to mitigate such risk by maintaining an adequate proportion of floating and fixed interest rate
borrowings. Summary of financial assets and financial liabilities has been provided below:
Exposure to interest rate risk
The interest rate profile of the Company's interest - bearing financial instrument as reported to management is as follows:
Interest rate sensitivity
Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of change in interest rates. The following
table demonstrates the sensitivity of floating rate financial instruments to a reasonably possible change in interest rates. The risk
estimates provided assume a parallel shift of 100 basis points interest rate across all yield curves. This calculation also assumes
that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date. The
period end balances are not necessarily representative of the average debt outstanding during the period.
A contract asset is Company’s right to consideration for work completed but not billed at the reporting date and a right to
consideration that is conditioned on achievement of milestone specified in the contract excluding any amounts presented as a
receivable. The contract assets are transferred to receivables when the rights become unconditional. This usually occurs when
the Company issues an invoice to the customer or milestones are achieved as specified in the contract. The contract liabilities
primarily relate to the advance consideration received from customers for construction for which revenue is recognised over
time.
Amounts due from contract customers represents the gross unbilled amount expected to be collected from customers for
contract work performed till date. It is measured at cost plus profit recognised till date less progress billings and recognised
losses when incurred.
Amounts due to contract customers represents the excess of progressive billing over the revenue recognised (cost plus
attributable profits) for the contract work performed till date.
Note:
(i) Increase in Net Contract Balance is primilary due to higher revenue recognition as compared to progress bills raised in both
the years.
(c) Movement of Expected Credit Loss during the year :
During the FY 2024-25 Rs. 984.82 lakhs (PY 2023-24 Rs. 523.11 lakhs) and Rs. 358.98 (PY 2023-24 Rs. 26709 lakhs) was
recognised as provision for expected credit losses on Trade Receivables and Amount due from customers (Unbilled Revenue)
respectively.
(d) Performance obligation:
The Company recognises revenue from contracts with customers when it satisfies a performance obligation by transferring
promised good or service to a customer. The revenue is recognised to the extent of transaction price allocated to the performance
obligation satisfied. Performance obligation is satisfied over time when the transfer of control of asset (good or service) to a
customer is done over time and in other cases, performance obligation is satisfied at a point in time. For performance obligation
satisfied over time, the revenue recognition is done by measuring the progress towards complete satisfaction of performance
obligation.
For contracts where the aggregate of contract cost incurred to date plus recognised profits (or minus recognised losses as the
case may be) exceeds the progress billing, the surplus is shown as contract asset and termed as “Due from customers”. For
contracts where progress billing exceeds the aggregate of contract costs incurred to-date plus recognised profits (or minus
recognised losses, as the case may be), the surplus is shown as contract liability and termed as “Due to customers”. Amounts
received before the related work is performed are disclosed in the Balance Sheet as contract liability and termed as “Advances
from customer”. The amounts billed on customer for work performed and are unconditionally due for payment i.e. only passage
of time is required before payment falls due, are disclosed in the Balance Sheet as trade receivables. The amount of retention
money held by the customers pending completion of performance milestone is disclosed as part of contract asset and is
reclassified as trade receivables when it becomes due for payment.
The aggregate value of performance obligations that are completely or partially unsatisfied as at 31 March 2025 is Rs. 7,26,635
lakhs. The revenue recognition mainly depends on meeting the delivery schedules, contractual terms and conditions with
customers, availability of customer sites, changes in scope, variation in prices etc. In view of these, it is not practical to define
the accurate percentage of conversion to revenue on yearly basis. However, a tentative bifurcation of remaining performance
obligation for upcoming financial years are as follows :
39. Revenue from contracts with customers (Disclosure as per Ind AS 115) (Contd.)
(f) Out of the total revenue recognised under Ind AS 115 during the year, Rs. 2,44,689.55 lakhs (Year 2023-24: Rs. 2,44,121.94 lakhs) is
recognised over a period of time.
(g) During the year ended March 31,2025, in relation to the project “Construction of Residential Building of PAC Mahila Battalion, Badaun,
Uttar Pradesh,” the client invoked Mobilization Bank Guarantees aggregating H24.60 crores and Performance Bank Guarantees
amounting to H8.02 crores. The amount pertaining to the Performance Bank Guarantee has been expensed to the Statement
of Profit and Loss. Further, considering the uncertainty of recovery, the Company has made provision of H1.87 crores against the
retention receivable from the said project.
40. Disclosure of Creditors outstanding under MSMED Act, 2006:
Disclosure of sundry creditors under current liabilities is based on the information available with the Company regarding the status
of the suppliers as defined under the “Micro, Small and Medium Enterprises Development Act, 2006” (the Act). There is no overdue
amount outstanding as at the Balance sheet date.
(i) Amounts unpaid to micro and small enterprises on account of retention money has not been considered for the purpose of
interest calculations.
(ii) Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of
information collected by the Management.
41. Segment Information:
The company is engaged in construction project activities. Considering the nature of company's business and operations as well as
reviews of operating results by the Chief Operating Decision Makers to make decisions about resource allocation and performance
allocation and performance measurement the company has identified construciton project acvities as only responsibile segment in
accordance with the requirements of Ind AS 108 operating segment.
(i) Earning for Debt Service = Net Profit after tax Non-cash operating expenses (depreciation and amortisation, ECL, Provision for
Loss on Loan) Interest on Term Loan other adjustments like Loss on write off/sale of property, plant and equipment, Reversal
of Impairment of Loan, Provision for Loss on Impairment of Investment.
(ii) Debt Services = Interest on Term Loan Principal Repayment of Long Term Borrowings during the year.
45. Code on Social Security:
The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company
towards Provident Fund and Gratuity. The Ministry of Labour and Employment had released draft rules for the Code on Social
Security, 2020 on November 13, 2020. The Company will assess the impact and its evaluation once the subject rules are notified.
The Company will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the
related rules to determine the financial impact are published.
46. Events after the reporting period:
(i) The Company Evaluate events and transactions that occur subsequent to the balance sheet date but prior to the approval of
the financial statement to determine the necessity for recognition and reporting of any of these events and transactions in the
financial statements as of 23rd May, 2025 other than those disclosed and adjusted elsewhere in these financial statements,
there were no subsequent event to be reported.
47. Approval of Financial Statements:
The financial statements are approved for issue by the Audit Committee and Board of Directors at their meetings held on May 23,
2025. The shareholders' of the company have power to amend the financial statement at the ensuing AGM.
48. Transactions with Struck off companies:
The Company does not have any transactions with companies struck-off under section 248 of the Companies Act, 2013 or section
560 of Companies Act, 1956.
49. Statutory Information/compliance:
(i) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered
or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any
other relevant provisions of the Income Tax Act, 1961.)
(ii) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year
(iii) No proceedings have been initiated or are pending against the Company for holding any benami property under the Benami
Transactions (Prohibition) Act,1988 (45 of 1988) and rules made thereunder
(iv) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the
Companies (Restriction on number of Layers) Rules, 2017
(v) The Company has not entered with any Scheme(s) of arrangement in terms of sections 230 to 237 of the Companies Act, 2013.
(vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
company (ultimate beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
(vii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding party) with the
understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
funding party (ultimate beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(viii) The Company has been maintaining its books of accounts in the SAP which has feature of recording audit trail of each and
every transactions, creating an edit log of each change made in books of account along with the data when such changes were
made and ensuring that the audit trail cannot be disabled, throughout the year as required by proviso to sub rule (1) of rule 3
of The Companies (Accounts) Rules, 2014 known as the Companies (Accounts) Amendment Rules, 2021. The Company has
preserved Audit trail as per statutory requirements for record retention.
In terms of our report attached
For Kantilal Patel & Co For and on behalf of the Board of Directors
Chartered Accountants
ICAI Firm Reg. No. : 104744W
Jinal A. Patel Prahaladbhai S. Patel Sagar P. Patel
Partner Chairman, Managing Director & CEO Executive Director
Membership No. : 153599 (DIN: 00037633) (DIN: 07168126)
For Prakash B. Sheth & Co.
Chartered Accountants
ICAI Firm Reg. No. : 108069W
Prakash B. Sheth Hetal Patel Pooja Dhruve
Proprietor Chief Financial Officer Company Secretary
Membership No. : 036831 Membership No. : A48396
Place : Ahmedabad Place : Ahmedabad
Date : May 23, 2025 Date : May 23, 2025
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