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Notes to Accounts of Ashoka Buildcon Ltd.

Mar 31, 2016

COMPANY OVERVIEW:

The Company was incorporated in 1993. It is presently in the business construction of infrastructure facilities on Engineering, Procurement and Construction Basis (EPC) and Built, Operate and Transfer (BOT) Basis and Sale of Ready Mix Concrete and Bitumen. The Company has promoted Special Purpose Vehicles (SPVs) for some of its projects, wherein ''Toll Collection Rights'' are received in exchange of the Construction Cost. For this, the SPVs significantly engage the services of the Company for contract related activities due to inherent execution capabilities / expertise and experience of the Company.

(I) AS - 17 - Segment Reporting

The Company has identified three reportable segments i.e. Construction & Contract related activities, BOT Projects and Sales of Goods. Segments have been identified taking in to account the nature of activities of the Company, differing risks and returns and internal reporting systems.

(II) AS - 18 Related Party Transactions

(A) List of Related Parties

(a) Parties where control exists

(i) Ashoka-DSC Katni Bypass Road Ltd.

(ii) Ashoka Highways (Bhandara) Ltd.

(iii) Ashoka Highways (Durg) Ltd.

(iv) Ashoka Infrastructure Ltd.

(v) Ashoka Infraways Ltd.

(vi) Viva Highways Ltd.

(vii) Ashoka Pre - Con Pvt Ltd.

(viii) Ashoka Technologies Pvt. Ltd.

(ix) Ashoka Sambalpur Bargarh Tollway Ltd.

(x) Ashoka Belgaum Dharwad Tollway Ltd.

(xi) Ashoka Dhankuni Kharagpur Tollway Ltd.

(xii) Ashoka Concessions Ltd.

(xiii) Ashoka Cuttak Angul Tollway Ltd

(xiv) Viva Infrastructure Ltd.

(xv) Ashoka GVR Mudhol Nipani Roads Ltd.

Enterprises in which Key Management Personnel / Directors have significant influence (Only with whom there have been transaction during the year / there was balance outstanding at the year end)

(i) Ashoka Education Foundation

(ii) Ashoka Township (AOP)

(iii) Hotel Evening Inn Pvt. Ltd.

(iv) Ashoka Institute of Medical Sciences & Research

(v) Ashoka Highways Reseach Centre Pvt Ltd.

(vi) Ashoka Bagewadi Saundatti Road Ltd.

(vii) Ashoka Hungund Talikot Road Ltd.

(viii) Ashoka Path Nirman (Nasik) Pvt.Ltd.

(ix) Unison Enviro Pvt. Ltd.

(c) Key Management Personnel

(i) Ashok M Katariya

(ii) Satish D Parakh

(iii) Sanjay P Londhe

(iv) Milapraj Bhansali

(v) Paresh C Mehta

(vi) Manoj A Kulkarni

(d) Directors and their relatives

(i) Asha A. Katariya

(ii) Ashish A. Katariya

(iii) Astha A. Katariya

(iv) Satish D Parakh (HUF)

(v) Aditya S. Parakh

(vi) Shewta A Katariya

(e) Associates & Joint Ventures

(i) Ashoka Bridgeways

(ii) Ashoka Highway AD.

(iii) Ashoka Infrastructures

(iv) Jaora Nayagaon Toll Road Co. PvtLtd.

(v) Ashoka Valecha JV

(vi) Abhijeet Ashoka Infrastructures Pvt. Ltd.

(vii) Cube Ashoka Joint Venture

(viii) PNG Tollway Ltd.

(ix) GVR Ashoka Chennai ORR Limited

(x) Mohan Mutha Ashoka Buildcon LLP

(xi) ABL BIPL Joint Venture

(III) AS - 19 - Accounting for Operating Leases

The Company has various operating leases for equipments and premises, the leases are renewable on periodic basis and cancellable in nature.

(IV) PNG Tollways Limited (''PNG''), an associate of the Company, had entered into a service concession agreement with National Highways Authority of India (''NHAI'') for construction, operation and maintenance of six laning of Pimpalgaon – Nashik – Gonde on built operate and transfer model basis. PNG has terminated the said service concession agreement after giving notice to NHAI in accordance with the termination clauses of the service concession agreement and claimed compensation from NHAI. The company has also been involved in executing the said project.

The Company based on its legal and commercial evaluation has assessed the probable amount of claims to be received from NHAI by PNG and PNG''s obligation towards its lenders and other creditors. On the basis of the said evaluation, the management has also assessed the recoverability of its exposure to PNG in the form of, project receivables, interest receivable and construction work in progress. Accordingly, the management has recognised following provisions/write off in the statement of profit and loss and disclosed as an "Exceptional Items".

(V) The company has registered under Employees Provident Fund Act for employees of the company as well as employees of certain group companies.

(VI) Balance of Debtors, Creditors, Advances, Deposits, Unsecured Loan etc. are subject to confirmation and reconciliation if any.

(VII) The company was subject to a search under Section 132 of The Income Tax Act, 1961 in the month of April 2016. The Income Tax Department is in the process of assessing the final amount of tax payable by the Company, if any, and has not raised any demand on the company till date. Consequently, no impact for the same has been given in the financial statements for the F.Y. 2015-16.

(VIII) Corresponding figures of previous year have been regrouped / rearranged wherever necessary


Mar 31, 2015

Note 1.

(i) Controlled special purpose entities are subsidiary companies incroporated to execute the specific project on Build Operate Transfer / Design Build Finance Operate Transfer

(ii) In one of the subsidiary companies, viz. Ashoka Infrastructure Limited toll collection has been discontinued at the directive of the Employer, The subsidiary Company has initiated arbitration proceeding towards such discontinuance. The subsidiary is confident of receiving additional compensation from the employer. Consequently the value of investment of the Company in the subsidiary continues to be at its full value.

(iii) The Company has entered into Joint Venture in the nature of Jointly Controlled Operations, wherein there is no capital contribution with Valecha Engineering Ltd for execution of the construction of Chittorgarh Bypass. The work is to be executed separately as per agreed terms and conditions and the obligations and fortunes of the respective works is being accounted individually of the Venturers.

(iv) The Company has also entered into a Joint Venture with Ashoka Buildwell & Developers Pvt. Ltd. by the name of Ashoka Infrastructures, to implement the Dhule Project on BOT basis with a sharing of 99.99% and 0.01% in favour of the company and Ashoka Buildwell & Developers Pvt. Ltd. respectively. The said AOP has applied to PWD Maharashtra for a further increase in toll period. However, approval for the same has not been received till the date of adoption of the financial statements resulting in a material uncertainty of future toll collections and operations of the enterprise. Proportionate interest of the company in the said Joint venture.

Note 2. * Advance recoverable in cash or kind or for value to be received includes Rs. 1,433 Lacs against a contract awarded by Kalyan Dombivili Municipal Corporation (KDMC) for Commercial Development on a PPP basis. The cost includes upfront fees paid to KDMC. The management have initiated arbitration proceedings with KDMC. Pending this provision for doubtful advance has been considered.

Note 3.

Contingent Liabilities (Rs. in Lacs)

Sr. Particulars As at 31-Mar-15 Asat31-Mar-14 No.

(a) Bank Guarantees issued by bankers in favour of third parties 85,066.79 70,856,94

(b) Corporate Guarantee issued by the Company infavour of Banks/Financial 111,142.20 117,000.00 Institutions for finance raised by Companies under the same management and against mobilisation advance.

(c) Claims against the Company not acknowledged as debts 350.65 23.90

(d) Liability against capital commitments outstanding (Net of Advances) 13.18 40.86

(e) Liability of Duty against Export Obligations 39.18 39.18

(f) Disputed Duties / Tax Demands (net of taxes paid) 4,538.50 1,259.14

(g) Resurfacing obligation as per concession agreement 237.06 709.77

Note 4.

The company has registered under Employees Provident Fund Act for employees of the company as well as employees of certain group companies.

Note 5.

Balance of Debtors, Creditors, Advances, Deposits, Unsecured Loan etc. are subject to confirmation and reconciliation if any.

Note 6.

Corresponding figures of previous period have been regrouped / rearranged wherever necessary

Note 7.

AS - 18 Related Party Transactions

(A) List of Related Parties

(a) Parties where control exists

(i) Ashoka-DSC Katni Bypass Road Ltd.

(ii) Ashoka Highways (Bhandara) Ltd.

(iii) Ashoka Highways (Durg)Ltd.

(iv) Ashoka Infrastructure Ltd.

(v) Ashoka Infraways Ltd.

(vi) Viva Highways Ltd.

(vii) Ashoka Precon P. Ltd.

(ix) Ashoka Sambalpur Bargarh Tollway Ltd.

(x) Ashoka Belgaum Dharwad Tollway Ltd.

(xi) Ashoka Dhankuni Kharagpur Tollway Ltd.

(xii) Ashoka Concessions Ltd

(xiii) Ashoka Cuttak Angul Tollway Limited

(xiv) Viva Infrastructure Ltd.

(b) Enterprises in which Key Management Personnel / Directors have significant influence

(i) Ashoka Buildwell & Developers P. Ltd.

(ii) Ashoka Builders (Nasik) P. Ltd.

(iii) Ashoka Engineering Co.

(iv) Ashoka Vastuvaibhav

(v) Ashoka E-Tech

(vi) Shweta Agro Farm

(vii) Ashoka Construwell P. Ltd.

(ix) Ashoka Biogreen Pvt Ltd

(x) Ashoka City Tower construction

(xi) Ashoka Shilp Akruti Pvt Ltd

(xii) Ashoka Vastukala Nirman Pvt Ltd

(xiii) Ashoka Housing Construction Pvt Ltd

(xiv) Ashoka Township (AOP)

Hotel Evening Inn Pvt Ltd

(c) Key Management Personnel

(i) Ashok M Katariya

(ii) Satish D Parakh

(iii) Sanjay P Londhe

(iv) Milapraj Bhansali

(d) Directors and their relatives

(i) Asha A. Katariya

(ii) Ashish A. Katariya

(iii) Astha A. Katariya

(iv) S D Parakh HUF

(v) Aditya Parakh

(vi) Shewta A Katariya

(e) Associates & Joint Ventures

(i) Ashoka Bridgeways

(ii) Ashoka Highway AD.

(iii) Ashoka Infrastructures

(iv) Jaora Nayagaon Toll Road Co. P.Ltd.

(v) Ashoka Valecha JV

(vi) Abhijeet Ashoka Infrastructures Pvt. Ltd.

(vii) Cube Ashoka Joint Venture

(viii) PNG Tollways Ltd.

(ix) GVR Ashoka Chennai ORR Limited


Mar 31, 2014

Not Available


Mar 31, 2013

(i) Controlled special purpose entities are subsidiary companies incroporated to execute the specific project on Build Operate Transfer / Design Build Finance Operate Transfer

(ii) In one of the subsidiary company, viz. Ashoka Infrastructure Limited toll collection has been discontinued at one out of the two toll plazas at the directive of the Employer, the loss of which the subsidiary expects to be compensated by the Employer. Based on additional directives of the employer, major maintenance work was carried out during the F.Y 2010-11. Both these factors have led to decline of the net worth of the company. However, the subsidiary is confident of receiving additional compensation from the employer. Consequently the value of investment of the Company in the subsidiary continues to be at its full value.

(iii) The Company has entered into Joint Venture in the nature of Jointly Controlled Operations, wherein there is no capital contribution with Valecha Engineering Ltd for execution of the construction of Chittorgarh Bypass. The work is to be executed separately as per agreed terms and conditions and the obligations and fortunes of the respective works is being accounted individually of the Venturers.

(iv) The Company, Ashoka Concessions Limited (ACL), a subsidiary and Macquarie SBI Infrastructure Investments Pte Limited, Singapore (MSIIPL) and SBI Macquarie Infrastructure Trust, Mumbai (SMIT) [MSIIPPL & SMIT have been referred to as Investors) have entered into a multi party agreement. Pursuant to this agreement the Company and Investors have to subscribe to the equity shares of ACL in a manner to have the inter-se holding in the ratio of 66:34.

Pursuant to this agreement the investments of ABL in following subsidiaries have been transferred to ACL during the year:-

1. Ashoka Highways (Bhandara) Limited

2. Ashoka HIghways (Durg) Limited

3. Ashoka Belgaum Dharwad Tollway Limited

4. Ashoka Sambalpur Bargarh Tollway Limited

5. Ashoka Dhankuni Kharagpur Tollway Limited

6. PNG Tollways Limited

7. Jarora Nayagaon Toll Road Co. Pvt Limited

(v) The Company has also entered into a Joint Venture with Ashoka Buildwell & Developers Pvt. Ltd. by the name of Ashoka Infrastructures, to implement the Dhule Project on BOT basis with a sharing of 99.99% and 0.01% in favour of the company and Ashoka Buildwell & Developers Pvt. Ltd. respectively.The said AOP has applied to PWD Maharashtra for a further increase in toll period. However, approval for the same has not been received till the date of adoption of the financial statements resulting in a material uncertainty of future toll collections and operations of the enterprise Proportionate interest of the company in the said Joint venture is as under:

(vi) Further to the Search u/s 132 of the Income Tax Act, 1961 in the month of April, 2010 the Company, with a view to avoid acrimonious and long drawn litigation, has preffered to file an application u/s 245C(1) to the Income Tax Settlement Commission, in pursuance of which the company has provided and paid as of 31.12.2012 a sum of Rs. 1081 Lac. The same has been provided as Tax for earlier years

(a) PWD Maharashtra vide its Notification dated November 14, 2012 directed the Company to stop collection of toll of the Ahmednagar (Nagar Karmala) Project. The Company has challenged this order and the matter is under arbitration. The company is confident that the arbitration award will be in its favour and it will be permitted to restart collection of toll. However, on a prudent basis the Company estimated the value in use of the intangible asset, Right to collect Toll and has impaired fifty percent of the written down value of Rs. 3137.70 which is presented as Exceptional item in the Profit & Loss account. The balance value of the asset of Rs. 1568.85 lakhs is classified as OtherNon-Current Assets.

Percentage completion method for income recognition on long term contracts involves technical estimates by engineers/ technical officials, of percentage of completion and costs to completion of each project/contract on the basis of which profit/ loss is allocated.

(b) PWD Maharashtra vide its Notification dated November 14, 2012 directed the Company to stop collection of toll of the Ahmednagar (Nagar Karmala) Project, Consequently the Company no longer retains the right to collect toll on the project, the written down value of the the project aggregating to Rs. 3137.70 lakhs has been fully amortised during the year. The Company has initiation aribitration proceedings on PWD against the said stoppage.

i) Contribution to Provident Fund is charged to accounts on accrual basis. The Company operates a defined contribution scheme with recognized provident fund. For this Scheme, contributions are made by the company, based on current salaries, to recognized Fund maintained by the company. In case of Provident Fund scheme, contributions are also made by the employees. An amount of Rs. 89.29 Lacs (Previous Period Rs. 81.20 Lacs) has been charged to the Profit & Loss Account on account of this defined contribution scheme.

(ii) The Gratuity benefit is funded through a defined benefit plan. For this purpose the Company has obtained a qualifying insurance policy from Life Insurance Corporation ofIndia.

(iii) The Company provides benefits to its employees under the Leave Encashment pay plan which is a non-contributory defined benefit plan. The employees of the Company are entitled to receive certain benefits in lieu of the annual leave not availed of during service, at the time of leaving the services of the Company. The benefits payable are expressed by means of formulae which takes into account the Salary and the leave balance to the credit of the employees on the date of exit.

(II) AS - 18 Related Party Transactions (A) List of Related Parties

(a) Parties where control exists

(i) Ashoka-DSC Katni Bypass Road Ltd.

(ii) Ashoka Highways (Bhandara) Ltd.

(iii) Ashoka Highways (Durg)Ltd.

(iv) Ashoka Infrastructure Ltd.

(v) Ashoka Infraways Ltd.

(vi) Viva Highways Ltd.

(vii) Ashoka Precon P. Ltd.

(viii) Ashoka Technologies P. Ltd.

(ix) Ashoka High-Way Ad.

(x) Ashoka Infrastructures

(xi) Ashoka Sambalpur Bargarh Tollway Ltd.

(xii) Ashoka Belgaum Dharwad Tollway Ltd.

(xiii) Ashoka Dhankuni Kharagpur Tollway Ltd.

(xiv) Ashoka Concessions Ltd

(xv) Ashoka Cuttak Angul Tollway Limited

(xvi) Viva Infrastructure Ltd.

(d) Directors and their relatives

(i) Asha A. Katariya

(ii) Ashish A. Katariya

(iii) Astha A. Katariya

(iv) S D Parakh HUF

(v) Aditya Parakh

(vi) Shewta V Kasera

(b) Enterprises in which Key Management Personnel / Directors have significant influence

(i) Ashoka Buildwell & Developers P. Ltd.

(ii) Ashoka Builders (Nasik) P. Ltd.

(iii) Jaora Nayagaon Toll Road Co. P.Ltd.

(iv) Ashoka Engineering Co.

(v) Ashoka Vastuvaibhav

(vi) Ashoka E-Tech

(vii) Shweta Agro Farm

(viii) Ashoka Construwell P. Ltd.

(ix) Ashoka Education Foundation

(x) Ashoka Biogreen Pvt Ltd

(xi) Ashoka City Tower construction

(xii) Ashoka Shilp Akruti Pvt Ltd

(xiii) Ashoka Vastukala Nirman Pvt Ltd

(xiv) Ashoka Housing Construction Pvt Ltd

(xv) Ashoka Township (AOP)

(c) Key Management Personnel

(i) Ashoka M Katariya

(ii) Satish D. Parakh

(iii) Sanjay P Londhe

(e) Associates & Joint Ventures

(i) Ashoka Bridgeways

(ii) Ashoka Highway AD.

(iii) Ashoka Infrastructures

(iv) Ashoka Valecha JV

(v) Abhijeet Ashoka Infrastructures Pvt. Ltd.

(vi) Cube Ashoka Joint Venture

(vii) PNG Tollways Ltd.

Note: Figures in brackets denote figures of previous period ended March 31,2012

(b) The Company has provided Rs. 3233.49 Lacs (Previous Period Rs. 667.00 Lacs) for Maintenance work arising out of Contractual Obligations during the defect liability period of the contracts, which is charged to the Profit & Loss Account.

(c) The Company has contractual obligation to periodically maintain, replace or restore infrastructure as per the terms of the concession agreement. The Company has recongnied the provision ofRs. 709.76 (Previous YearRs. Nil) in accordance with Account Standard - 29 ''Provision, Contingent Liabilities and Contingent Assets'' i.e., at the best estimate of the expenditure required to settle the present obligation at the balance sheet date.

(vii) The company has registered under Employees Provident Fund Act for employees of the company as well as employees of certain group companies.

(viii) Balance ofDebtors, Creditors, Advances, Deposits, Unsecured Loan etc. are subject to confirmation and reconciliation if any.

(ix) As per the requirement of Revised Schedule VI, the company has re-classified its assets and liabilities into current and non-current, based on the normal operating cycle, as determined by the management. Previous years figures have been accordingly re-grouped and re-classifed.

 
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