Mar 31, 2016
(b) Securities for Term Loans and NCD : Rupee Term Loan (RTL) - 1 and FITL thereon -
1) 1st pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company, including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade Receivables and Other Assets of the Company.
Rupee Term Loan (RTL) - 2 and FITL thereon -
1) 1st pari-passu charge on Gammon House.
2) 2nd pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company, including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.
3) 2nd pari-passu charge on entire Current Assets, Loans and Advances, Long Term Trade Receivables and Other Assets of the Company.
Rupee Term Loan (RTL) - 3 and FITL thereon -
1) 3rd pari-passu charge over the entire Fixed Assets (movable and immovable) and Current Assets of the Company excluding the Gammon House.
2) 3rd pari-passu charge on the Gammon House.
Working Capital Term Loan (WCTL) -
1) 1st pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company, including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade Receivables and Other Assets of the Company.
Priority Loan -
1) 1st pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company, including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade Receivables and Other Assets of the Company.
Non Convertible Debentures (NCD) and FITL thereon -
1) 1st pari-passu charge by mortgage of Gujarat Property and hypothecation over the pari-passu security with the Non Convertible Debentures.
2) 3rd pari-passu charge over the entire Fixed Assets (movable and immovable) and Current Assets of the Company excluding the Gammon House.
3) 3rd pari-passu charge on the Gammon House.
4) In case of 9.95% NCD of Rs. 50 Crore, being not part of CDR scheme, interest is not converted in to FITL. This redeemable NCD is secured by hypothecation of specific Plant and Machinery with pari-passu charge by mortgage of immovable property in Gujarat.
(c) Funded Interest Term Loan (FITL) -
The interest amount on RTL - 1, RTL - 2, RTL - 3 and NCDs for the initial period of 15 months i.e. from cutoff date till
31st March, 2014 are converted to FITL.
(f) Collateral security pari-passu with all CDR lenders
a) Pledge of entire unencumbered Equity Shares (present and future) of GIL held by Promoters subject to section 19(2) and 19(3) of Banking Regulation Act including pledge of encumbered Equity Shares as and when such shares are released by the respective existing lenders.
b) Personal guarantee of Mr Abhijit Rajan, Chairman and Managing Director.
c) Undertaking to create pledge over the resultant shares of Metropolitan Infrahousing Private Limited (MIPL) after signing the JV agreement with developer.
d) Undertaking to create pledge over shares of Nikhita Estate Developers Private Limited (Promoter group company), as and when they are released in the future.
e) Corporate guarantee provided by Nikhita Estate Developers Private Limited ("Promoter entity")
f) Pledge over the following shares -
23% of Deepmala Infrastructure Private Limited 100% of SEZ Adityapur Limited 24% of Ansaldocaldaie Boilers India Private Limited 100% of Gactel Turnkey Projects Limited
100% of Transrail Lighting Limited (out of which currently only 25% pledged with the CDR Lenders)
(h) For details of continuing defaults as at 31st March, 2016 and 30th September, 2014, Refer Annexure 1.
(i) The Company had pursuant to the Shareholders approval in May, 2015, issued Unsecured Zero Coupon Compulsorily Convertible Debentures ("CCD''s") of upto Rs. 100 Crore to the Promoters against their contribution made to the Company''s Corporate Debt Restructuring ("CDR") package. However no allotment was made, since the in-principle approval for allotment was awaited from BSE Limited On 26th April, 2016, BSE has directed the Company to modify the "relevant date" adopted by the Company for the pricing of the CCD''s and seek shareholders approval afresh. The amount contributed by the Promoters continues to remain as debt in the Company.
(j) Transmission and Distribution (T&D) Business:
The Joint Lender''s Forum ("JLF") meeting convened on 17th November, 2015 and 16th December, 2015 and CDR EG meeting held on 23rd November, 2015 and 22nd January, 2016 approved the adoption of the Strategic Debt Restructuring scheme of the Company which interalia entailed a carve out of Transmission and Distribution (T&D) Business with the entry of strategic investors. Pursuant to the same the Company, with effect from 1st January 2016, through a business transfer agreement, as detailed in discontinuing Note, transferred borrowings aggregating to Rs. 200.13 Crore to Transrail Lighting Limited ("TLL"). The Company also proposes to file with the Hon''ble High Court of Bombay a scheme of arrangement for transfer of the retained T&D facility as detailed in Note 49 where under borrowings aggregating to Rs. 93.21 Crore would be transferred to TLL. Pending approval of the scheme of arrangement the borrowings are continued in the books of the Company.
1. The Company, as part of its restructuring scheme in which it is carving out the EPC and T&D Business into separate entities with residual non-core assets and some claims remaining in the main Company, had during the eighteen month period evaluated its existing claims in respect of on-going, completed and / or terminated contracts with the help of an independent expert in the field of claims and arbitration to assess the likely amount of claims being settled in favour of the Company. The expert had reviewed the claims and had opined that an amount aggregating to Rs. 1,657.22 will be reasonably certain to be settled in favour of the Company.
Based on the above opinion, the Company has during the year recognized claims of an aggregate amount of Rs. 1,343.97 Crore including a further claim of Rs. 300 Crore during the quarter ended 31st March, 2016 excluding amounts recognized earlier of Rs. 313.25 Crore based on management estimates of reasonable realization. These claims have been accounted as unbilled revenue and the management expects 25% of such claims other than on terminated projects to be realized within the operating cycle. Accordingly unbilled revenue has been disclosed as current and non-current in the Balance Sheet. The effects in the Statement of Profit and Loss are dependent upon the percentage of completion of the project.
2. Foreign and Domestic Venture
(a) The Company through its Special Purpose Investment Vehicle holds the following stakes :
- Sofinter S.p.A, Italy
- Franco Tosi Mecannica S.p.A, Italy (FTM)
- Sadelmi S.p.A, Italy
- SAE Power Line S.r.l, Italy
(b) Pursuant to the put option exercised, one of the Subsidiaries of the Company had paid USD 32 Million for acquisition of further 35% stake in Sofinter Group. The transferor has created pledge in favour of the lenders of the transferee company. The process of transferring the ownership in favour of the transferee company is expected to be completed by 31st July, 2016. Considering the proposed holding of 67.5% in Sofinter Group, the order book position, the valuation carried out of the said Sofinter Group by an independent valuer and the current financials of Sofinter, the Management is of the view that no impairment is required in the exposure of the Company towards its combined exposure of Rs. 887.82 Crore in Sofinter Group.
(c) The Company''s funded and non-funded exposure towards Franco Tosi Mecannica S.p.A (FTM) group is Rs. 892.19 Crore (net of provisions already made) Crore as at 31st March, 2016 including Investments and guarantees towards the acquisition loan taken by the SPV. This also includes the corporate guarantee given.
The Commissioner in charge of the Extraordinary Administration of Franco Tosi Meccanica S.p.A. has already concluded the sale of the operating business of FTM to the successful bidder and has commenced the disposal of the non-core assets (i.e. those assets which were not part of the sale of operating business), which includes 60 acres of land in Legnano, Italy. The Commissioner has not started the actual disposal of the property. The valuation pegged by the Commissioner is based on the valuation of land in adjoining premises which is also under administration. However the liabilities to be discharged against the surplus on disposal (net of tax) has not been made available by the Commissioner. Despite these factors the management expects that the surplus available to the equity shareholder will be adequate to cover the exposure of the Company towards FTM and no provision for impairment is accordingly made.
The Commissioner or the said FTM has not released any financials since 31st December, 2011 and therefore no further effects have been taken in respect of the said FTM in these financials.
(d) The Company through its step down subsidiary P. Van Eerd Beheersmaatschappij B.V., Netherlands (PVAN) held a 50% shareholding in Sadelmi S.p.A for EUR 7.50 Million, Italy (Sadelmi) with the remaining 50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the economic conditions prevailing in different parts of the world where Sadelmi was present some of the projects under execution encountered serious contractual problems. Sadelmi therefore sought creditors'' protection through a Court in Italy and simultaneously, as part of scheme, applied for transferring the remaining projects and leased all references standing in its name since inception to a new company Busi Power S.r.l wholly held by Busi Group.
The above procedure however has not yet been completed as the decision in the Court is still awaited. The delay is on account of objections raised by some creditors among other reasons.
In view of the uncertainties prevailing in Europe and the delay in the outcome of the Court process in respect of the creditors'' protection sought by M/s Sadelmi in its application in connection therewith, the Company has, on prudent basis, made full provision towards its funded exposures in connection with the Investment in Sadelmi of Rs. 25.72 Crore and has charged the same as an exceptional item. The Company has exposure in respect of Corporate Guarantee for acquisition loan by its SPV.
The Company has made provision as risks and contingencies aggregating to Rs. 77. 54 Crore towards the guarantees issued to the banker of its wholly owned SPV PVAN, in respect of loans taken by the said subsidiary for making investment into Sadelmi, in accordance with AS-29 Provisions, Contingent Liabilities and Contingent Assets considering the net worth and operations of the said Sadelmi.
(e) The exposure of the Branch in SAE Powerlines S.r.l, Italy ("SAE"), a subsidiary of the Company and ATSL BV, Netherlands, the holding company of SAE, towards investments, loans, including guarantees towards the acquisition loan taken by the SPV is Rs. 196.84 Crore. The Branch has made provision for impairment of investments and Loan aggregating to Rs. 62.52 Crore and provision of Rs. 88.29 Crore for risk and contingencies for Corporate Guarantees for acquisition loan of the SPV and thus, the net exposure of the Branch is Rs. 46.03 Crore. The Branch has a further exposure of Rs. 139.48 Crore net of provision of Rs. 65.57 Crore towards receivables due from SAE which are outstanding for a long time. The Company had carried out a valuation of the business of SAE by an independent valuer in September, 2014, who determined an enterprise value of Rs. 71.34 Crore, which however is not updated to cover the present financial position. The Management is of the opinion that considering the order book position and adequate references and strengths in international markets especially the African and European Markets, the provision made by it for impairment of its investment, loan and trade receivable is adequate.
(f) During the year, a further amount of Rs. 18.82 Crore has been debited to the said ACBI on account of the encashment of Bank Guarantee. Considering that the Company has initatited arbitration proceedings and based on legal advice that it has a sound case against the wrongful encashment and therefore no further provision is required against the increased exposure of Rs. 32.61 Crore as on 31st March, 2016.
(g) The accounts of a subsidiary M/s Campo Puma Oriente S.A. have not been audited since December 2012, due to certain disputes with the partner in the project. The exposure of the Company in the said subsidiary is Rs. 411.67 Crore net of provisions made. The Company has received a valuation report for USD 60 Million approximately from an independent merchant banker for its share. Furthermore, the Company is in the process of enhancing its output of oil field from the current level, which is expected to further improve the value. Further the disputes between the partners are expected to be resolved within a short time after which the financial statements will be signed and released. In light of the same the management is confident that there will be no provision required for impairment.
3 ESOP Scheme
The erstwhile Associated Transrail Structures Limited("ATSL"), had instituted an ESOP Scheme during the Financial Year 2006-07 which was approved by the shareholders vide their resolution dated 27th March, 2007. The Board of Directors of ATSL granted 1,06,300 stock options to its employees on 27th March, 2007 pursuant to the ESOP Scheme. Each option entitled an Employee to subscribe to one equity share of ATSL at an exercise price of Rs. 80 per share.
The following options vest in a graded manner over a period of four years and are exercisable during a period of three years from the date of vesting thereof as described hereinafter :-
Options Granted on 27th March, 2007 :
The Intrinsic value was determined by independent valuer by following price to Net Assets Value (NAV) method, The fair value of options has been determined, using the Black-Scholes Option Pricing Model, by independent valuer as on 31st March, 2008.
Under this method, compensation expense, equivalent to the intrinsic value of the options granted, is amortized equally over the vesting period of the option following straight-line method. The intrinsic value is the excess of the value of the underlying stock as determined by the independent valuer over the exercise price at the measurement date, which typically is the grant date.
The fair value of 1,06,300 options, granted on 27th March, 2007 was determined using the Black-Scholes Option Pricing Model with the following assumptions:
NIL (Previous Period NIL) options were exercised by the employees during the year. NIL (Previous Period 8,700) options were lapsed during the year on account of cessation of employment / lapse of exercise period of option. None of the options granted have been forfeited during the year.
All the above options have an exercise price of Rs. 80 per share and have a weighted average remaining contractual life of 4 years.
Pursuant to the amalgamation of Associated Transrail Structures Limited (ATSL) with the Company, the outstanding options of the employees of the erstwhile ATSL outstanding as on 1st April, 2008,have been taken up as an obligation of the Company in accordance with the scheme approved by the Court, Accordingly, the Company has accounted for the grant of 1,06,300 options to such employees at an exercise price of Rs. 80 per share. The Company will issue two Equity Shares against each option in terms of the scheme of amalgamation approved by the Courts.
Since the assets and liabilities of the erstwhile ATSL have been accounted at the book value, the accounting effect in the accounts is continued at the same.
Had compensation cost been determined in accordance with the Fair Value Method described in the Guidance Note, the T&D Business net loss for the year ended 31st March, 2016 as reported would have changed to amounts indicated below
4 In respect of the projects undertaken by the Company
i) The Company in evaluating its jobs has considered an amount of Rs.153.29 Crore arising out of claims for work done on account of cost overruns arising due to client delays, changes of scope, escalation claims, variation orders, deviation in design and other charges recoverable from the client which are pending acceptance or certification by the client or referred the matter to the dispute resolution board / arbitration panel.
ii) In furtherance to the recommendation of the Dispute Resolution Board (DRB) and Arbitration Awards in the Company''s favour, the Company has recognized income to the extent of Rs. 135.75 Crore which is part of Long Term Trade Receivable. The Company contends that such awards have reached finality for the determination of the amounts of such claims and are reasonably confident of recovery of such claims although the client has moved the Court to set aside the awards. Considering the fact that the Company has received favourable awards from the DRB and the Arbitration Tribunal, the management is reasonably certain that the claims will get favourable verdict from the Courts.
iii) Trade Receivables includes Rs. 155.03 Crore in respect of two of its project based on advanced negotiation and discussion with the client and is confident of realising the same, pending the final revision in contract value.
iv) There are disputes in six projects of the Company. The total exposure against these projects is Rs. 355.56 Crore. The Company is pursuing legal recourse / negotiations for addressing the disputes in favour of the Company and is of the opinion that it has a good case in the matter hence does not require any provision considering the claims of the Company against the Clients.
v) The Company, as part of its restructuring scheme in which it is carving out the EPC and T&D Business into separate entities with residual non-core assets and some claims remaining in the main Company, had during the eighteen month period evaluated its existing claims in respect of on-going, completed and / or terminated contracts with the help of an independent expert in the field of claims and arbitration to assess the likely amount of claims being settled in favour of the Company. The expert had reviewed the claims and had opined that an amount aggregating to Rs. 1,657.22 will be reasonably certain to be settled in favour of the Company.
Based on the above opinion, the Company has during the year recognized claims of an aggregate amount of Rs. 1,343.97 Crore including a further claim of Rs. 300 Crore during the quarter ended 31st March, 2016 excluding amounts recognized earlier of Rs. 313.25 Crore based on management estimates of reasonable realization. These claims have been accounted as unbilled revenue and the management expects 25% of such claims other than on terminated projects to be realized within the operating cycle. Accordingly unbilled revenue has been disclosed as current and non-current in the Balance Sheet. The effects in the Statement of Profit and Loss are dependent upon the percentage of completion of the project.
5 The Company''s operating result have been affected in the last few years by various factors including liquidity crunch, unavailability of resources on timely basis, delays in execution of projects, delays in land acquisition, approval of design etc. by client, scarcity in availability of labour and materials, operational issues etc. Company''s overseas operations are characterized due to weak order booking, paucity of working capital and uncertain business environment. This has also resulted in various winding up claims filed against the Company. The Company is exploring several options for overcoming the liquidity crisis. The Group is in the process of development of its land parcel as well as monetizing its overseas investments and to divest some of its businesses, recovery towards final bills, retention money, settlement of non-routine collection including claims, arbitration awards etc. to meet the working capital needs. The Company is also in discussion with client for overcoming bottlenecks in timely executing the existing projects and to increase the order book. The Company is having a good order book in hand as on March 2016 of Rs. 11,000 Crore.
The Company continues to negotiate with vendors for settlement, improved commercial terms and better credit facility and is in process of arranging additional working capital finance to improve short term liquidity position. The Company is evaluating and exploring various courses of action for raising funds for Company''s operations, including options for strategic restructuring.
However due to the continuing stress and the inability of the Promoters to infuse fresh funds into the Company and the continuing losses, The Corporate Debt Restructuring Empowered Group in its meeting held on 23rd November, 2015 has discussed and noted the proposal of the CDR Lenders for invocation of Strategic Debt Restructuring ("SDR") in the Company and carve out of the Civil Engineering, Procurement and Construction and the Transmission and Distribution Businesses with change of management. The "Reference date" for the purpose of the SDR is 17th November, 2015. The lenders have invoked SDR and the requisite majority for approval of the SDR scheme in value and numbers had already been received and the CDR lenders have converted part of their loans and interest by taking a 62.65% stake in the Company up to the period ended 31st March, 2016. The Company has also as part of the SDR formulated a detailed restructuring package, which is detailed in a later paragraph.
Based on various developments including SDR by lenders resulting in lenders having majority stake and restructuring of businesses, the management is of the view that the Company will remain as going concern for future on the basis of existing order book, restructuring proposal, monetization of the various non-core assets, future business potential, pre-qualifications for project bidding and previous track record
6 Strategic Debt Restructuring
The lenders invoked SDR with reference date of 17th November, 2015. CDR EG noted the same in their meeting held on 23rd November, 2015 and approved by Joint Lenders Forum in its meeting held on 23rd November, 2015. As per the SDR proposal lenders can convert their debt into equity up to Rs. 300 Crore. As on date lenders have converted Rs. 272.22 Crore of the debt into equity representing 62.77 % of equity capital.
The Company as part of its revival plan has decided to carve out the Civil EPC and Transmission and Distribution (T&D) Businesses into separate companies through the process of BTA and Scheme of arrangement. This will help in getting new investors in the respective companies
T&D Business :
As part of the plan the Business Transfer Agreement (BTA) and the Court Scheme for transfer of the T&D Business in favour of Transrail Lighting Limited, a wholly owned subsidiary has been finalized. The BTA has been executed in October 2015 and the Court scheme is finalized and is pending approval of the Regulator. The Investor has been identified as Bilav Software Private Limited and the shareholder agreement is already signed with Bilav Software Private Limited for the T&D Businesses wherein they have acquired 75% stake in TLL at a cost of Rs. 2.33 Crore from GIL. They will also invest another Rs. 47.67 Crore approximately in TLL. As part of the carve out proposal of T&D Business Rs. 505 Crore funded and Rs. 3,350 Crore non-funded exposure will be transferred to TLL.
Civil EPC :
Company is in process of transfer its Civil EPC Business to its WOS through BTA and Scheme of arrangement. Company has signed BTA with its WOS. An investor GP Group of Thailand has given proposal to invest Rs. 250 Crore in Civil EPC Business.
Non-Core Assets:
Companies will develop / monetize its investments in India and also outside India in coming years to repay the loans remaining in the Company.
Conversion of Loan in to Equity:
Under SDR the lenders has converted overdue principal and interest of Rs. 272.22 Crore in to equity at Rs. 11.89 per share.
7 Disclosure of Discontinuing Operations as per AS 24
As part of its restructuring of its business in order to create sector focused companies and to invite investments by strategic investors the Company decided to carve out its Transmission and Distribution Business into Transrail Lighting Limited. The Company entered into shareholders agreement with M/s Bilav Software Private Limited to divest 75% of its stake in Transrail Lighting limited. The Restructuring plan contemplated carving out of a portion of business vide a Business Transfer Agreement and the balance portion of the T&D Business by way of a scheme of arrangement of the retained T&D Business in GIL through a Court process. Accordingly the businesses transferred under the BTA and proposed to be transferred under the Court scheme are treated as discontinuing operations.
Similarly, the EPC Business is proposed to be transferred out into a wholly owned subsidiary either through a BTA or a Scheme or a mix of both. The Board of Directors vide its meeting dated 12th February, 2016 have approved the restructuring plan. Attention is invited to note no 37 where the identification of the investor and other terms of the same are detailed. The said EPC Business proposed to be carved out are also included in as discontinuing operations.
The Statements of Profit and Loss , Balance Sheet and Cashflow relating to the discontinuing operations is given in Annexure 3
8 Disclosure under Accounting Standard - 19 "Leases" of the Companies (Accounting Standards) Rule, 2006
The Company has taken various residential / godowns / offices premises (including Furniture and Fittings, if any) under lease and license agreements for periods which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in Statement of Profit and Loss under Rent Expenses.
The Company has taken certain equipment on an operating lease and the future minimum committed lease rentals are given as follows on the basis of current usage -
9 Segment Reporting
The Company is engaged mainly in "Construction and Engineering" segment. During the previous year, the Company has started Real Estate Business which is a different segment of "Real Estate Development" and additionally the Company has revenue from Windmills. Revenue from such activities is not significant and accounts for less than 10% of the total revenue and total assets of the Company. Therefore no disclosure of separate segment reporting as required in terms of Accounting Standard AS -17 "Segment Reporting" is done. The Company also primarily operates under one geographical segment namely India.
10 Disclosure of transactions with Related Parties, as required by Accounting Standard - 18 "Related Party Disclosures" has been set out in a separate Annexure - 2.
11 The current period is from 1st October, 2014 to 31st March, 2016 . The comparative figures for the Previous period are for the period from 1st January, 2014 to 30th September, 2014. The figures for both these periods are therefore not strictly comparable.
12 I n the opinion of the Management, Current Assets and Non-Current Assets other than Fixed Assets and Non-Current Investments have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.
13 The Company has during the year, with effect from 1st January, 2015 has extended the terms of the supports by way of loans to the overseas Special Purpose Vehicles which hold the Company''s equity investment in overseas subsidiaries and Joint Ventures by treating the loans as long term loan repayable at the end of 5 years. Since these SPV''s are in the nature of non integral operation of the Company, exchange gain / loss on restatement of such loan are carried in the Foreign Exchange Translation Reserves in accordance with AS -11 "The Effects of changes in Foreign Exchange Rates" issued under the Companies (Accounting Standard) Rules, 2006.
14 Balances of Trade Receivables, Trade Payables, Loans and Advances are as per the Books of Accounts are subject to confirmation and reconciliation.
15 Previous period figures are regrouped and rearranged with those of the current period.
16 Details of Rounded Off Amounts
The Financial Statements are represented in Rupees Crore. Those items which were not represented in the financial statement due to rounding off to the nearest Rupees Crore are given below :
Sep 30, 2014
1 Shares reserved under options to be given
NIL (Previous Period 17,400) Equity Shares have been reserved for issue
as ESOP. Refer Note No. 34 for details of the ESOP Shares and Scheme.
2 Terms / rights attached to Equity Shares
The Company has only one class of equity shares having a par value of
Rs. 2/- each. Each holder of equity share is entitled to one vote per
share. The distribution will be in proportion to the number of equity
shares held by the shareholders.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive any of the remaining assets of the
Company, after distribution of all preferential amounts. However, no
such preferential amounts exist currently. The distribution will be in
proportion to the number of equity shares held by the shareholders.
3 Key features of the CDR proposal are as follows :
* Reschedulement of Short Term Loans & Term Loans (RTL) and NCD payable
over a period of ten years.
* Repayment of Rupee Term Loans (RTL) after moratorium of 27 months
from cut off date being 1 January 2013 in structured quarterly
instalments commencing from April 2015.
* Conversion of various irregular / outstanding / devolved financial
facilities into Working Capital Term Loan (WCTL).
* Repayment of WCTL after moratorium of 27 Months from cut off date in
structured quarterly instalments commencing from April 2015, subject to
mandatory prepayment obligation on realisation of proceeds from certain
asset sale and capital infusion.
* Restructuring of existing and fresh fund based and non fund based
financial facilities, subject to renewal and reassessment every year.
* Interest accrued but not paid on certain financial facilities till
March 2014 is converted into Funded Interest Term Loan (FITL).
* Waiver of existing events of defaults, penal interest and charges etc
in accordance with MRA.
* Right of Recompense to CDR Lenders for the relief and sacrifice
extended, subject to provisions of CDR Guidelines and MRA.
* Contribution of Rs. 100 Crore in the Company by promoters, in lieu of
bank sacrifice, in the form of Promoters Contribution which can be
converted to equity.
4 Securities for Term Loans and NCD :
Rupee Term Loan (RTL) - 1 and FITL thereon -
1) 1st pari-passu charge on the entire Fixed Assets (movable and
immovable), both present and future of the Company, including the
pari-passu security with Non Convertible Debenture but excluding the
exclusive security for Non Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire Current Assets,
Loans and Advances, Long Term Trade Receivables and other assets of the
Company.
3) For Canara Bank 1st pari-passu charge on land parcel of Metropolitan
Infrahousing Private Limited (MIPL) along with their NCD holders.
Rupee Term Loan (RTL) - 2 and FITL thereon -
1) 1st pari-passu charge on Gammon House.
2) 2nd pari-passu charge on the entire Fixed Assets (movable and
immovable), both present and future of the Company, including the
pari-passu security with Non Convertible Debenture but excluding the
exclusive security for Non Convertible Debenture and the Gammon House.
3) 2nd pari-passu charge on entire Current Assets, Loans and Advances,
Long Term Trade Receivables and other assets of the Company.
Rupee Term Loan (RTL) - 3 and FITL thereon -
1) 3rd pari-passu charge over the entire Fixed Assets (movable and
immovable) and Current Assets of the Company excluding the Gammon
House.
2) 3rd pari-passu charge on the Gammon house.
Working Capital Term Loan (WCTL) -
1) 1stpari-passu charge on the entire Fixed Assets (movable and
immovable), both present and future of the Company,including the
pari-passu security with Non Convertible Debenture but excluding the
exclusive security for Non Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire Current Assets,
Loans and Advances, Long Term Trade Receivables and other assets of the
Company.
Priority Loan -
1) 1stpari-passu charge on the entire Fixed Assets (movable and
immovable), both present and future of the Company,including the
pari-passu security with Non Convertible Debenture but excluding the
exclusive security for Non Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire Current Assets,
Loans and Advances, Long Term Trade Receivables and other assets of the
Company.
Non Convertible Debentures (NCD) and FITL thereon -
1) 1st pari-passu charge by mortgage of Gujarat Property and
hypothecation over the pari-passu security with the Non Convertible
Debentures.
2) 3rd pari-passu charge over the entire Fixed Assets (movable and
immovable) and Current Assets of the Company excluding the Gammon
House.
3) 3rd pari-passu charge on the Gammon house.
(c) Funded Interest Term Loan (FITL) -
The interest amount on RTL - 1, RTL - 2, RTL - 3 and NCDs for the
initial period of 15 months i.e. from cut off date till 31 March 2014
will be converted to FITL.
5 Collateral security pari-passu with all CDR lenders
a) Pledge of entire unencumbered equity shares (present and future) of
GIL held by Promoters subject to Section 19(2) & 19(3) of Banking
Regulation Act including pledge of encumbered equity shares as and when
such shares are released by the respective existing lenders.
b) Personal guarantee of Mr Abhijit Rajan, Chairman & Managing
Director.
c) Undertaking to create pledge over the resultant shares of
Metropolitan Infrahousing Private Limited (MIPL) after signing the JV
agreement with developer.
d) Undertaking to create pledge over shares of GACTEL Turnkey Projects
Limited (currently pledged to lenders of Gactel), as and when they are
released in the future.
e) Pledge over the following shares -
23% of Deepmala Infrastructure Private Limited
100% of SEZ AdityapurLimited
24% of Ansaldocaldaie Boilers India Private Limited
100% of Transrail Lighting Limited
6 Remittance of Dividend in Foreign Currency
During the period the Company has not remitted any amount of dividend
in foreign currency.
7 Foreign Venture
(a) The Company through its Special Purpose Investment Vehicle holds
the following stakes :
* Franco Tosi Mecannica S.p.A, Italy (FTM)
* Sofinter S.p.A, Italy
* Sadelmi S.p.A, Italy
* SAE Power Line S.r.l, Italy
(b) The Company''s exposure towards investment in Sofinter Group is Rs.
563.62 Crore including investments, loans and guarantees towards the
acquisition loan taken by the SPV, M/s Gammon International B.V. The
Company has carried out valuation of Sofinter Group through an
independent valuer considering business plan of all companies within
the Sofinter Group, order book position and economic environment where
the Company is operating. The carrying value as at September 2014 is
higher compared to the valuation by Rs.159.49 Crore. The management is
of the view that valuation carried out is based on current European
scenario whereas growth option to various sub-continents in future
cannot be ruled out. The management asserts that the valuation does not
factor future growth when the world economies including those in
Russia/CIS and USA improve and therefore considering the long term
commitment of the management and its business plan, the management does
not expect any provision towards diminution in the value of investment
in Sofinter.
The Company had in 2011, issued Guarantees, including Corporate
Guarantees, for an amount of USD 35.00 million on behalf of Gammon
Holdings Mauritius Limited (GHML), a wholly owned subsidiary, to
Guarantee its contractual commitment under a Put Option Agreement with
BT Global Investors Limited (BT) who was a holder of shares and
convertible bonds (the Sofinter Securities) in Sofinter S.p.A. The Put
was to be exercised within February 2014 and on all the Sofinter
Securities. Consequent upon the conversion of the bonds into additional
shares in Sofinter on 18 December 2013, BT has become the holder of 35%
shares in Sofinter, thereby diluting the holding of Gammon
International B.V. in Sofinter to 32.5%. Prior to the date of this
conversion, BT also exercised its Put Option on GHML for all the
Sofinter securities, for an amount of USD 32.00 Million (Rs.197.16
Crore). The Put Option was duly honored by GHML by drawing on debt
raised from Export Import Bank of India Limited (Exim) for USD 18.00
Million (Rs.110.90 Crore) and balance against the funded exposure by
the parent Company for Rs. 93.99 Crore. Pending transfer of the shares
by BT in favour of GHML, since certain pre-conditions in the bye-laws
of Sofinter and the Shareholders Agreement are in the process of being
fulfilled, without which the transfer cannot be recorded by Sofinter,
BT has committed to pledge the Shares to Exim on behalf of GHML.
Further pending the transfer of 35%, Sofinter continues to be an
''Associate Company''
Considering the valuation report issued by external agency and pending
transfer of shares from BT Global increasing the stake to 67.5%, the
carrying value of investment in Sofinter group will not require any
impairment.
(c) i) The Board of Franco Tosi Mecanica S.p.A (FTM) filed on May 30th
with the court of Milan (and with the Companies Registry)
a "preliminary" request for admission to the procedure of
pre-insolvency composition agreement with creditors and restructuring
debts ("concordato preventivo"), under Articles 161 Clause 6, Italian
Government Publication dated 10 March 1942 No 267 - further amended in
September 2012 in light of acute financial stress being faced by the
Company due to several extraneous reasons.
The said application was admitted by the Court on 7 June 2013 and the
court soon thereafter appointed a Judicial Commissioner to evaluate the
possibility of FTM continuing its operations and, if this was
established, to set out a procedure to continue and manage the Company
for a period of at least two years. On 31 July 2013, the presiding
Judge of the Court of Milan having received confirmation of the
possibility of continuity of FTM called for bids for the lease of the
business of FTM. Four bidders have submitted compliant bids for the
lease.
However, instead of finalizing the lease, the commissioner announced a
revised procedure by which, instead of lease of the business interested
bidders will have to place an offer for the outright purchase of the
operational business of FTM. One of the pre-conditions of the bidding
offer is for the bidders to takeover and substitute all the bank
guarantees issued by FTM in favour of its clients of its ongoing
projects. The date of bid submission was fixed for 7 October 2014. Only
two bids have been received by the commissioner, who after evaluation
has concluded that both bids were defective. Accordingly, a fresh bid
is being called to encourage large participation and the new date of
submission of bid is 22 December 2014. The entire procedure is expected
to be completed within 60 days thereafter.
The continuous delay in final closure has put the ongoing projects of
Franco Tosi in Congo, Nicaragua and Bolivia at risk of cancellation
with consequences thereof, unless immediate steps are taken to scale up
the execution with intent to meet the existing project schedules.
However in light of the ongoing procedure the commissioner has not
released any financial statements of the Company to date and it is
expected that this will not be released until the entire process is
complete.
ii) The Company''s exposure towards Franco Tosi Mecannica S.p.A group is
Rs.1162.87 Crore (net of provisions and credit balances in foreign
exchange translation reserve) which includes the loans and investments
of Rs. 268.06 Crore and exposure of corporate guarantee towards the
borrowings made by the overseas SPV through which the step down
subsidiary is held of Rs. 302.94 Crore. Further there are guarantee
exposures towards the non-fund based guarantees given to the projects
of the said subsidiary of Rs. 591.87 Crore outstanding as at September
2014. The application for a pre-insolvency procedure filed by FTM was
admitted by the court of Milan on 7 June 2013 after having received
confirmation of the possibility of continuity of the Company, by
calling for bids for the lease of its business. The successful bidder
for the lease was foreseen to be finalized by early December 2013.
However the commissioner has revised the procedure by which, instead of
lease of a business the bidder will have to place an offer for outright
sale of operational business to prospective bidders. The date of bid
submission was to finalized as December 2014, however the same is
delayed and not yet finalised. In light of the ongoing procedure no
financial statements of the Company have been released to date and it
is expected that this will not be released until the entire process is
complete.
iii) During the period the clients of the said FTM have encashed the
bank guarantees to a total amount of Rs.170.80 Crore (Euro 21.84
Million). The guarantees encashed includes an amount of (Euro 17.80
Million) Rs. 139.21 Crore relating to a project in Nicaragua of which,
based on the agreement with the bankers and the client, an amount of
Euro 12.00 Million would be reinstated by way of release of the amounts
from the client to the bankers and hence the net exposure for Nicaragua
would remain at Euro 5.80 Million for which the Company is negotiating
to cancel the demand, for the remaining Euro 4.04 Million (Rs. 31.59
Crore) the Company has made a provision against the possible liability
arising out of the said encashment to the Company.
(d) The Company through its step down subsidiary P. Van Eerd
Beheersmaatschappij B.V., Netherlands (PVAN) held a 50% shareholding in
Sadelmi S.p.A for Euro 7.50 Million, Italy (Sadelmi) with the remaining
50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the
economic conditions prevailing in different parts of the world where
Sadelmi was present some of the projects under execution encountered
serious contractual problems. Sadelmi therefore sought creditors''
protection through a Court in Italy and simultaneously, as part of
scheme, applied for transferring the remaining projects and leased all
references standing in its name since inception to a new Company Busi
Power S.r.l wholly held by Busi Group.
The above procedure however has not yet been completed as the decision
in the Court is still awaited. The delay is on account of objections
raised by some creditors among other reasons.
In view of the uncertainties prevailing in Europe and the delay in the
outcome of the Court process in respect of the creditors'' protection
sought by M/s Sadelmi in its application in connection therewith, the
Company has, on prudent basis, made full provision towards its funded
exposures in connection with the Investment in Sadelmi of Rs. 25.72
Crore and has charged the same as an exceptional item. The Company has
exposure in respect of Corporate Guarantee for acquisition loan by its
SPV.
The Company has made provision as risks and contingencies of Rs. 69.46
Crore towards the guarantees issued to the banker of its wholly owned
SPV PVAN, in respect of loans taken by the said subsidiary for making
investment into Sadelmi, in accordance with AS-29 Provisions,
Contingent Liabilities and Contingent Assets considering the net worth
and operations of the said Sadelmi.
(e) The Auditors of M/s SAE Powerlines S.r.l, Italy (SAE), a subsidiary
of the Company have expressed their inability to opine on the financial
statements in view of the said SAE''s ability to operate as a going
concern being at risk and the directors of the said SAE have
highlighted the liquidity crisis. The total exposure of the Company in
SAE and ATSL Netherlands B.V., the holding Company of SAE towards
investments including guarantees towards the acquisition loan taken by
SPV is Rs. 328.06 Crore. The Company has made provision for impairment
of investments and loan of Rs. 110.45 Crore and provision for Rs. 88.29
Crore for risk and contingencies for corporate guarantees for
acquisition loan of the SPV and the net exposure of the Company is Rs.
129.32 Crore. The management is of the opinion that considering the
order book position and adequate references and strengths in
international markets the provision made by it for impairment of its
investment, loans and trade receivable is adequate notwithstanding the
valuation carried out by an independent valuer for bankers specifying
the value Rs. 72.76 Crore.
(f) Considering the losses in one of its subsidiary M/s Ansaldocaldaie
Boilers India Private Limited (ACBI) of Rs. 37.15 Crore, the Company
has carried out an impairment test of its investments in ACBI. On the
basis of the impairment test carried out during the previous the
Management has made full provision towards the impairment of its
investment in ACBI of Rs. 37.15 Crore.
(g) In respect of outstanding balance of one the subsidiary, the
accounts of the said subsidiary for the period up to December 2013 and
later have not been finalized and therefore the balance outstanding of
Rs. 29.24 Crore has not been confirmed and is subject to reconciliation
thereof.
8 ESOP Scheme
Pursuant to the amalgamation of ATSL with the Company, the outstanding
options of the employees of the erstwhile ATSL outstanding as on 1
April 2008 have been taken up as an obligation by the Company in
accordance with the Scheme approved by the court. Accordingly the
Company has accounted for the grant of 1,06,300 options to such
employees at an exercise prize of Rs. 80 per share. The Company will
issue two equity shares against each option in terms of the scheme of
amalgamation approved by the Courts.
The options were granted by the erstwhile ATSL on 27 March 2007. The
options vest in a graded manner over the period of four years and are
exercisable during a period of three years from the date of vesting
thereof.
Since the assets and liabilities of the erstwhile ATSL has been
accounted at the book value, the accounting effect in the accounts are
continued at the same value.
The fair value of the option however has been computed under the Black
Scholes Method considering the data of the Company as on the date of
grant of option for the purpose of disclosure as required under
Guidance Note on Employee Share Based Payments detailed hereunder.
9 In respect of the projects undertaken by the Company -
i) The Company in evaluating its jobs has considered an amount of Rs.
451.56 Crore arising out of claims for work done on account of cost
overruns arising due to client delays, changes of scope, escalation
claims, variation orders, deviation in design and other charges
recoverable from the client which are pending acceptance or
certification by the client or referred the matter to the dispute
resolution board / arbitration panel.
ii) In furtherance to the recommendation of the Dispute Resolution
Board (DRB) and Arbitration Awards in the Company''s favour, the Company
has recognized income to the extent of Rs.167.23 Crore which is part of
Long Term Trade Receivable. The Company contends that such awards have
reached finality for the determination of the amounts of such claims
and are reasonably confident of recovery of such claims although the
client has moved the court to set aside the awards. Considering the
fact that the Company has received favourable awards from the DRB and
the Arbitration Tribunal, the management is reasonably certain that the
claims will get favourable verdict from the courts.
iii) Trade Receivables includes Rs.123.80 Crore in respect of two of
its project based on advanced negotiation and discussion with the
client and is confident of realising the same, pending the final
revision in contract value.
10 The Company''s CDR package was approved by the CDR EG in its meeting
held on 24 June 2013 and communicated to the Company vide its letter of
approval dated 29 June 2013. The Company executed the Master
Restructuring Agreement (MRA) with the CDR lenders on 24 September
2013. Substantial securities have been created in favour of the CDR
Lenders.
Based on robust order in hand of Rs.12800.00 Crore and additional order
inflow based on optimistic factors towards growth in infrastructure
industry in India, the management is exploring various options to
overcome the liquidity crunch such as sale of non- core and idle
assets, pursuing rigorous austerity measure across all levels,
downsizing its staff and actively exploring partnerships for its real
estate projects. Company is also pursuing aggressively to realise non
routine collection including claims and arbitration awards.
After detailed evaluation of current situation, annual operating plan,
expected cash flow and implementation of CDR package towards continuous
support to the Company by bankers, the management is confident about
continuation of operations of the Company. In view of this assessment
by the management the going concern assumption is appropriate.
11 Contingent Liability ( Rs. in Crore)
Particulars 30 Sep 2014 31 Dec 2013
a) Liability on contracts remaining to
be executed on Capital Account 23.89 6.68
b) Counter Guarantees given to Bankers
for Guarantees given by them and
Corporate Guarantees, on behalf of 4,517.43 4,670.91
Subsidiary, erstwhile Subsidiary,
Associate Companies
c) Corporate Guarantees and Counter
Guarantees given to Bankers towards
Company''s share in the Joint Ventures 89.22 99.92
for Guarantees given by them to the
Joint Venture Project Clients
d) Disputed Sales Tax Liability for
which the Company has gone into appeal 113.26 90.57
e) Claims against the Company not
acknowledged as debts 220.73 126.39
f) Disputed Excise Duty Liability 0.02 0.05
g) Disputed Service Tax Liability 23.49 31.81
h) Outstanding Letters of Credit Pending
Acceptance 164.77 144.16
i) On Partly Paid Shares (Refer Note 47(iii)) - -
j) In respect of Income Tax Matters of Company
and its Joint Ventures 364.09 185.09
k) Commitment towards capital contribution
in subsidiary under contractual obligation 47.36 47.36
l) Disputed stamp duty liability for assets
acquired during amalgamation with erstwhile
Associated Transrail Structures Limited 4.93 4.93
m) Right to recompense in favour of CDR
Lenders in accordance with the terms of MRA 504.96 504.96
n) There is a disputed demand of UCO Bank pending since 1986, of USD
436251 i.e. Rs. 1.72 Crore. Against this, UCO Bank has unilaterally
adjusted the Company''s Fixed Deposit of USD 30584 i.e. Rs. 0.12 Crore,
which adjustment has not been accepted by the Company.
o) Counter Claims in arbitration matters referred by the Company -
liability unascertainable.
p) The Disputed Service Tax Liability disclosed above is after
considering legal advice on the probability of the liability
materialising being remote.
12 Segment Reporting
The Company is engaged mainly in "Construction and Engineering"
segment. During the previous years, the Company has started Real Estate
Business which is a different segment of "Real Estate Development" and
additionally the Company has revenue from Windmills. Revenue from such
activities is not significant and accounts for less than 10% of the
total revenue and total assets of the Company. Therefore no disclosure
of separate segment reporting as required in terms of Accounting
Standard AS -17 "Segment Reporting" is done. The Company also primarily
operates under one geographical segment namely India.
13 The balance with The Freyssinet Prestressed Concrete Company Limited
is as per books of accounts and subject to reconciliation.
14 Disclosure of transactions with Related Parties, as required by
Accounting Standard - 18 "Related Party Disclosures" has been set out
in a separate Annexure - 2.
15 The current period is from 1 January 2014 to 30 September 2014. The
comparative figures for the previous period are for the period from 1
April 2013 to 31 December 2013. The figures for both these periods are
therefore not strictly comparable.
16 Previous period figures are regrouped and rearranged with those of
the current period.
Dec 31, 2013
1. Foreign Venture
(a) The Company through its Special Purpose Investment Vehicle holds
the following stakes :
-Franco Tosi Mecannica S.p.A, Italy (FTM)
-Sofinter S.p.A, Italy
-Sadelmi S.p.A, Italy
-SAE Power Line S.r.l, Italy
(b) The Company''s exposure towards investment in Sofinter group is Rs.
560.77 Crore including Investments and guarantees towards the
acquisition loan taken by the SPV The Company has carried out valuation
of Sofinter group through an independent valuer considering business
plan of all companies within the Sofinter group, order book position
and economic environment where the Company is operating. The carrying
value is higher compare to the valuation by Rs. 132.59 Crore. The
management is of the view that valuation carried out is based on
current European scenario whereas growth option to various
sub-continents in future cannot be ruled out. The management asserts
that the valuation does not factor future growth when the world
economies including those in South East Asia and India improve and
therefore considering the long-term commitment of the management and
its business plan, the management does not expect any provision towards
diminution in the value of Investment in Sofinter. The management is of
the view that the diminution in the value being the difference in the
carrying value of investment over the valuation carried out by the
external valuer is temporary in nature and does not require
provisioning. Hence, based on valuation report and management
perception for future scenario, the carrying value of investment in
this group does not require any impairment.
(c) The Board of FTM has approved on 29 May 2013, to go in for a
procedure permitted under recently notified Italian laws to minimize
the risks attributed to the Company''s legacy statutory and other debts,
while at the same time seeking to ensure the timely execution of
ongoing and future projects by optimizing operational cash flows. This
involves restructuring the Company with approval of the court. Post
restructuring, the operations of the Company are for seen to
significantly turn around and bring it back to profitability.
The said application was admitted by the Court on 7 June 2013 and the
court soon thereafter appointed a Judicial Commissioner to evaluate the
possibility of FTM continuing its operations and, if this was
established, to set out a procedure to continue and manage the Company
for a period of at least two years.
In July 2013, court received the confirmation of the possibility of
continuity of FTM from the Judicial Commissioner authorized him, in
agreement with FTM to call for bids for the lease of the business for
two years, to be followed by a sale. Four bidders have submitted
compliant bids for the lease. The initial date for identifying and
closing the transaction with the successful lessee was early September
2013; further postponed to October 2013. In October 2013, Court has
requested Ministry to directly handle this matter. The ministry has
appointed committee of 3 people, who will be meeting during end of
March 2014 to take a decision on bids.
In light of the on-going procedure, the Commissioner has not released
any financial statements or financial information relating to the
operations of FTM for 2013 and it is expected that this will not be
released until the entire process is complete.
The continuous shifting of dates thereby delaying the finalization of
the lease is affecting the ongoing projects of FTM. In few cases
corporate guarantee of Gammon India Limited were invoked for amount of
Euro 2.20 Million. This amount is fully provided in the books of Gammon
India Limited and shown under provision for risks and contingencies.
There is delay in other projects as well due to the slow pace of
execution for reasons mentioned above and slippage in completion dates,
these projects are also at high risk of cancellation with attendant
consequences thereof in respect of the Bank Guarantees.
The Company''s exposure in FTM (Net of provisions made and credit
balance in Foreign Exchange Translation Reserve) is Rs. 570.42 Crore
including corporate guarantee given for acquisition loan taken by its
SPV.
Management is of the view that due to this restructuring there will be
no impairment of its investment in the Company. Management is also
hopeful that notwithstanding the difficulties and risks, these Projects
will be completed with some delays but without contractual
consequences. Management is in an advance stage of negotiations with
intended buyer for sale of its stake in the Company, given its large
intellectual property, references etc.
(d) The Company through its step down Subsidiary P. Van Eerd
Beheersmaatschappij B.V., Netherlands (PVAN) held a 50% shareholding in
Sadelmi S.p.A for Euro 7.50 Million, Italy (Sadelmi) with the remaining
50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the
economic conditions prevailing in different parts of the world where
Sadelmi was present some of the projects under execution encountered
serious contractual problems. Sadelmi therefore sought creditors''
protection through a Court in Italy and simultaneously, as part of
scheme, applied for transferring the remaining projects and leased all
references standing in its name since inception to a new Company Busi
Power S.r.l wholly held by Busi Group.
The above procedure however has not yet been completed as the decision
in the Court is still awaited. The delay is on account of objections
raised by some creditors among other reasons.
In view of the uncertainties prevailing in Europe and the delay in the
outcome of the Court process in respect of the creditors'' protection
sought by M/s Sadelmi in its application in connection therewith, the
Company has, on prudent basis, made full provision towards its funded
exposures in connection with the Investment in Sadelmi of Rs. 25.72 Crore
and has charged the same as an exceptional item. The Company has
exposure in respect of Corporate Guarantee for acquisition loan by its
SPV.
The Company has made provision as risks and contingencies of Rs. 69.46
Crore towards the guarantees issued to the banker of its wholly owned
SPV PVAN, in respect of loans taken by the said Subsidiary for making
investment into Sadelmi, in accordance with AS-29 "Provisions,
Contingent liabilities and Contingent Assets" considering the net worth
and operations of the said Sadelmi.
(e) The accounts of M/s SAE Power Line S.r.l (SAE), a step down
Subsidiary, of the Company are not audited and are as per management
prepared unaudited accounts. The Company''s exposure towards investments
in SAE is Rs. 318.74 Crore including investments and guarantees towards
the acquisition Loan taken by the SPV. On the basis of offer received
for this business from intended buyer, the management is of the view
that carrying value of investment in this business needs to be impaired
considering offer price as based valuation of business. Considering the
offer price, the Company has provided for Impairment of investments,
loans of Rs. 110.45 Crore and provision towards risk and contingencies of
Rs. 88.29 Crore towards the guarantee given for the acquisition loan
taken by SPV.
(f) Considering the losses in one of its Subsidiary M/s Ansaldocaldaie
Boilers India Private Limited (ACBI) of Rs. 37.15 Crore, the Company has
carried out an impairment test of its investments in ACBI. On the basis
of the impairment test carried out the Management has made full
provision towards the impairment of its investment in ACBI of Rs. 37.15
Crore.
2. ESOP Scheme
Pursuant to the amalgamation of ATSL with the Company, the outstanding
options of the employees of the erstwhile ATSL outstanding as on 1
April 2008 have been taken up as an obligation by the Company in
accordance with the Scheme approved by the court. Accordingly the
Company has accounted for the grant of 1,06,300 options to such
employees at an exercise prize of Rs. 80 per share. The Company will
issue two equity shares against each option in terms of the scheme of
amalgamation approved by the Courts.
The options were granted by the erstwhile ATSL on 27 March 2007. The
options vest in a graded manner over the period of four years and are
exercisable during a period of three years from the date of vesting
thereof.
Since the assets and liabilities of the erstwhile ATSL has been
accounted at the book value, the accounting effect in the accounts are
continued at the same value.
The fair value of the option however has been computed under the Black
Scholes Method considering the data of the Company as on the date of
grant of option for the purpose of disclosure as required under
Guidance note on Employee share based payments detailed hereunder.
During the year NIL (Previous Year NIL) options were exercised by the
employees against which NIL equity shares (Previous Year NIL) were
allotted and NIL (Previous Year 13,090) options were lapsed during the
year on account of cessation of employment. None of the 8,700 options
outstanding have been forfeited during the year.
3. The Company''s CDR package was approved by the CDR EG in its meeting
held on 24 June 2013 and communicated to the Company vide its letter of
approval dated 29 June 2013. The Company executed the Master
Restructuring Agreement (MRA) with the CDR lenders on 24 September
2013. Substantial securities have been created in favour of the CDR
Lenders.
Considering the approval of the CDR package and the availability of
Priority Loans under the package, the Management is confident of
meeting its projections made to the lenders. The Company has received
further order during the period of Rs. 4,126 Crore, it is exploring sale
of non-core assets, pursuing rigorous austerity measure across all
levels, downsizing its staff and actively exploring partnerships for
its real estate projects. In view thereof, although there are cash
losses of Rs. 311.76 Crore during the period, the Management is confident
that the going concern assumption is appropriate.
4. Disclosure under Accounting Standard - 19 "Leases" of the Companies
(Accounting Standards) Rule, 2006
The Company has taken various residential / godowns / offices premises
(including Furniture and Fittings if any) under lease and license
agreements for periods which generally range between 11 months to 3
years. These arrangements are renewable by mutual consent on mutually
agreed terms. Under some of these arrangements the Company has given
refundable security deposits. The lease payments are recognized in
Statement of Profit and Loss Account under Rent, Rates and Taxes.
The Company has taken certain equipment on an operating lease and the
future minimum committed lease rentals are given as follows on the
basis of current usage-
5. Contingent Liability
(Rs. in Crore)
Particulars As at
31 Dec 2013 As at
31 Mar 2013
a Liability on contracts remaining to be
executed on Capital Accounts 6.68 18.27
b Counter Guarantees given to Bankers for
Guarantees given by them and Corporate 4,670.91 4,859.44
Guarantees, on behalf of Subsidiary,
erstwhile Subsidiary, Associate Companies
c Corporate Guarantees and Counter Guarantees
given to Bankers towards Company''s 99.92 105.08
share in the Joint Ventures for guarantees
given by them to the Joint Venture Project
Clients
d Disputed Sales Tax Liability for which the
Company has gone into Appeal 90.57 43.45
e Claims against the Company not acknowledged
as debts 126.39 68.34
f Disputed Excise Duty Liability 0.05 0.05
g Disputed Service Tax Liability 31.81 53.44
h Against bill discounting - 7.68
i Outstanding Letters of Credit Pending
Acceptance 144.16 459.56
j On partly paid shares (Refer Note 46(iii)) - -
6. Segment Reporting
The Company is engaged mainly in "Construction and Engineering"
segment. During the year, the Company has started Real Estate Business
which is a different segment of "Real Estate Development" and
additionally the Company has revenue from Windmills. Revenue from such
activities is not significant and accounts for less than 10% of the
total revenue and total assets of the Company. Therefore no disclosure
of separate segment reporting as required in terms of Accounting
Standard AS -17 - ''Segment Reporting'' is done. The Company also
primarily operates under one geographical segment namely India.
7. The balance with The Freyssinet Prestressed Concrete Company Limited
is as per books of accounts and subject to reconciliation.
8. Joint Venture and Operations in Oman
The Company has during the previous year suspended its operations at
Oman JV and its branch office and has provided towards all receivables
and assets in connection therewith. The Company has also suspended
recognition of the results of the Joint Venture in its financials and
does not expect any liabilities in connection therewith.
9. Disclosure of transactions with Related Parties, as required by
Accounting Standard -18 ''Related Party Disclosures'' has been set out in
a separate Annexure - 2.
8. In terms of the decision of the Board of Directors in their meeting
held on 18 February 2014 and as noted by the CDR lenders, the Company
has decided to close its financial year as at 31 December 2013.
Accordingly these financial statements are for a period of 9 months
from 1 April 2013 to 31 December 2013 and are not comparable with the
figures for the previous year of 12 months.
9. Previous year figures are regrouped and rearranged with those of the
current period.
Mar 31, 2013
1 Diminution in the Value of Investments
(a) The Company through its Special Purpose Investment Vehicle holds
the following stakes :
- Franco Tosi Mecannica S.p.A., Italy (FTM)
- Sofi nter S.p.A., Italy
- Sadelmi S.p.A., Italy
- SAE S.r.l., Italy
(b) The Company has carried out an impairment test of its investments
in Sofi nter and SAE Italy. Considering the business plans of these
entities and the results of the tests and the fact that all these
entities have an healthy order book positions and adequate references
in international markets notwithstanding the turbulent market
conditions in Europe, the management is of the view that there is no
impairment of its investments in these companies.
(c) The Company through its step down subsidiary P. Van Eerd
Beheersmaatschappij B.V., Netherlands (PVAN) held a 50% shareholding in
Sadelmi S.p.A for Euro 7.5 million., Italy (Sadelmi) with the remaining
50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the
economic conditions prevailing in different parts of the world where
Sadelmi was present some of the projects under execution encountered
serious contractual problems. Sadelmi therefore sought creditors''
protection through a Court in Italy and simultaneously, as part of
scheme, applied for transferring the remaining projects and leased all
references standing in its name since inception to a new Company Busi
Power S.r.l. wholly held by Busi Group.
The above procedure however has not yet been completed as the decision
in the Court is still awaited. The delay is on account of objections
raised by some creditors among other reasons.
In view of the uncertainties prevailing in Europe and the delay in the
outcome of the Court process in respect of the creditors'' protection
sought by M/s Sadelmi in its application in connection therewith, the
Company has, on prudent basis, made full provision towards its funded
exposures in connection with the Investment in Sadelmi of Rs. 25.72 Crore
and has charged the same as an exceptional item. The Company has
exposure of Rs. 64.78 Crore in respect of Corporate Guarantee towards
which it will make provisions as and when the same translates to funded
exposures
(d) The Board of FTM has approved on 29 May 2013, to go in for a
procedure permitted under recently notifi ed Italian laws to minimize
the risks attributed to the Company''s legacy statutory and other debts,
while at the same time seeking to ensure the timely execution of
ongoing and future projects by optimizing operational cash fl ows. This
involves restructuring the Company with approval of the court and will
be carried out within a time frame of between 60 days to 120 days. Post
restructuring, the operations of the Company are forseen to signifi
cantly turn around and bring it back to profi tability. Management is
of the view that due to this restructuring there will be no impairment
of its investment in the Company. However on a prudent basis the
Company has provided as impairment of ~ Rs. 69.54 Crore (Euro 10 Mn)
towards its exposure to Gammon Holdings B.V. holding Company of FTM.
(e) Considering the losses in one of its subsidiary M/s Ansaldo Caldaie
Boilers India Private Limited (ACBI), the Company has carried out an
impairment test of its investments in ACBI. Considering the business
plans of the entity as approved by the board of ACBI and the results of
the tests and the fact that the Company is in the process of executing
certain jobs to be received from M/s Ansaldo Caldaie S.p.A and the jobs
to be secured by it and adequate references in that context, the
management is of the view that there is no permanent dimunition in the
value of its investments in the Company.
2 ESOP Scheme
Pursuant to the amalgamation of ATSL with the Company, the outstanding
options of the employees of the erstwhile ATSL outstanding as on 1st
April 2008 have been taken up as an obligation by the Company in
accordance with the Scheme approved by the court. Accordingly the
Company has accounted for the grant of 1,06,300 options to such
employees at an exercise prize of Rs. 80 per share. The Company will
issue two equity shares against each option in terms of the scheme of
amalgamation approved by the Courts.
The options were granted by the erstwhile ATSL on 27th March 2007. The
options vest in a graded manner over the period of four years and are
exercisable during a period of three years from the date of vesting
thereof.
Since the assets and liabilities of the erstwhile ATSL has been
accounted at the book value, the accounting effect in the accounts are
continued at the same value.
The fair value of the option however has been computed under the Black
Scholes method considering the data of the Company as on the date of
grant of option for the purpose of disclosure as required under
Guidance note on Employee share based payments detailed hereunder.
3 The board of directors in its meeting had decided to approach the
banks through the corporate debt restructuring (CDR) process for
restructuring of the Company''s debt. The CDR empowered group in its
meeting held on 25th March, 2013 has admitted the Company''s proposal
under the CDR which is under consideration.
4 Segment Reporting
The Company is engaged mainly in ''Construction and Engineering''
segment. During the year, the Company has started Real Estate Business
which is a different segment of ''Real Estate Development'' and
additionally the Company has revenue from Windmills. Revenue from such
activities is not signifi cant and accounts for less than 10% of the
total revenue and total assets of the Company. Therefore no disclosure
of separate segment reporting as required in terms of Accounting
Standard AS -17 is done. The Company also primarily operates under one
geographical segment namely India.
5 Joint Venture and operations in Oman
The Company has during the year suspended its operations at Oman JV and
its branch offi ce and has provided towards all receivables and assets
in connection therewith. The Company has also suspended recognition of
the results of the Joint Venture in its fi nancials and does not expect
any liabilities in connection therewith.
6 Disclosure of transactions with Related Parties, as required by
Accounting Standard - 18 ''Related Party Disclosures has been set out in
a separate Annexure - 2.
7 Previous year fi gures are regrouped and rearranged with those of
the current year to make them comparable.
Mar 31, 2012
(a) Shares reserved under options to be given
43,580 (Previous Year 92,466) Equity shares have been reserved for
issue as ESOP. Refer Note No. 33 for details of the ESOP Shares and
Scheme.
(b) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.
2/- each. Each holder of equity share is entitled to one vote per
share. The distribution will be in proportion to the number of equity
shares held by the shareholders.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive any of the remaining assets of the
Company, after distribution of all preferential amounts. However, no
such preferential amounts exist currently. The distribution will be in
proportion to the number of equity shares held by the shareholders.
(a) The General Reserve is created to comply with the Companies
(Transfer of Profit and Reserve rules 1975) and is bound by the rules
in connection therewith.
(b) The foreign Currency Translation Reserve is created in terms of
Accounting Standard 11 "The effect of changes in foreign exchange
rates" issued under the Companies Accounting Standard Rules 2006.
(c) During the year an amount of Rs. 16.85 Crore (Previous YearRs.13.33
Crore) has been transferred from Foreign Currency Translation Reserve
to the Statement of Profit and Loss on retirement of certain portion of
the long term loans from the subsidiaries.
(d) The Special Contingency Reserve has been created by the Company to
meet any possible contractual losses / liabilities / claims following
the principles of conservatism and prudence.
(e) Dividend received from own investment held through Gammon Trust is
adjusted under Surplus Rs. 0.23 Crore (Previous Year Rs. 0.58 Crore).
Note :
(a) Employer's contribution includes payments made by the Company
directly to its past employees.
(b) The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
(c) The Company's Gratuity fund is managed by Life Insurance
Corporation of India. The plan assets under the fund are deposited
under approved securities.
(d) The Company's Leave Encashment liability is entirely unfunded.
(i) Unpaid dividend includes Rs. 0.17 Crore (Previous Year Rs. 0.14 Crore)
and Unpaid matured deposits includes interest accrued and due Rs. 0.01
Crore (Previous YearRs. 0.05 Crore) towards interest on fixed deposit to
be transferred to the Investor Education & Protection Fund.
(ii) The provisions of the Employees' Provident Fund and Miscellaneous
Provisions Act, 1952, have been implemented at the work sites where
code numbers have been allotted. In respect of the remaining work sites
necessary applications have been made for allotment of code numbers.
However, a provision of Rs. 0.25 Crore is available under other payables
to cover any liability arising there from.
NOTES :
1) Freehold Property includes cost of Freehold Land Rs. 123.50 Crore
including the revaluation portion (Previous Year Rs. 123.50 Crore).
2) Leasehold Land is at cost less amount written off.
3) The Company has once again revalued on 31st March, 2007 all its
Freehold Property, most of which were revalued earlier on 31st March,
1999 by Approved valuers.
The consequent increase in the value of Fixed Assets pursuant to the
second revalutaion amounted to Rs. 186.89 Crore and has been credited to
the Revaluation Reserve A/c.
4) Depreciation for the Year amounts to Rs. 104.03 Crore (Previous Year Rs.
94.84 Crore) from which has been deducted a sum ofRs. 3.13 Crore
(Previous YearRs. 3.13 Crore) being the depraciation in respect of
Revaluation of Fixed Assets which has been drawn from the Revaluation
Reserve.
5) Exchange Valuation difference in respect of Oman Fixed Assets Rs. Nil
(Previous Year Rs. 0.22 Crore) being transferred to Foreign Currency
Translation reserve.
6) Borrowing cost capitalised to Capital Work In Progress is Rs. 2.41
Crore (Previous Year -2.61 Crore)
NOTE :
(a) Pursuant to the scheme of amalgamation, the Company owns 58,04,620
equity shares of itself through Gammon India Trust which was allotted
the shares against the Company's holding in erstwhile ATSL in terms of
the order of the Hon'ble High Court of Mumbai and Gujarat.
(b) The details of Beneficial & Contractual interest acquired and
transferred in favor of it's subsidiary M/s Gammon Infrastructure
Projects Limited is detailed herein below -
The Company with effect from 1st, Jan 2010 has modified the terms of
the supports by way of loans to the overseas Special Purpose Vehicles
which hold the Company's equity investment in overseas subsidiaries and
Joint Ventures by treating the loans as long term loan repayable at the
end of 5 years. Since these SPV's are in the nature of non integral
operation of the Company, exchange gain / loss on restatement of such
loan are carried in the Foreign Exchange Translation Reserves in
accordance with AS -11 "The Effects of changes in Foreign Exchange
Rates" issued under the Companies (Accounting Standard ) Rules, 2006.
(a) In respect of the road projects undertaken by the Company, in
furtherance to the recommendation of the Dispute Resolution Board
(DRB), the Company has been awarded claims by the Arbitration Tribunal
for an aggregate amount of Rs. 109.09 Crore which has been recognized as
revenue & included in Non-Current Trade Receivables. The Company
contends that such awards have reached finality for the determination
of the amounts of such claims and are reasonably confident of recovery
of such claims although the client has moved the Court to set aside the
awards.
Considering the fact that the Company has received favourable awards
from the DRB and the arbitration tribunal, the Management is reasonably
certain that the claims will get favourable verdict from the Courts.
(a) Interest from Joint Stock Companies includes accrued onetime
non-recurring interest income of Rs. Nil (Previous Year Rs. 182.39 Crore)
under contractual conditions from one of the subsidiary of the Company.
(b) Dividend received from own investment held through Gammon Trust is
adjusted under appropriation Rs. 0.23 Crore (Previous YearRs. 0.58 Crore).
In respect of currency swap derivative contracts entered into by the
Company, the Company has Marked to Market (Gain) / loss of Rs. Nil
(Previous Year (gain) Rs. (2.36) Crore) as at 31st March 2012 based on
the valuation given by the bankers. Following the principle of prudence
and in accordance with the announcement of the ICAI, the Company has
made a provision for the same. Since the same was entered into to
reduce the cost of borrowings, the said MTM loss is included under
Financial Costs.
1 Diminutions in the Value of Investments
(a) The Company through its Special Purpose Investment Vehicle holds
the following stakes :
- Franco Tosi Mecannica S.p.A., Italy
- Sofinter S.p.A., Italy
- Sadelmi S.p.A., Italy
- SAE S.r.l., Italy
(b) The Company has carried out an impairment test of its investments
in Franco Tosi Meccanica S.p.A., Sofinter and SAE Italy. Considering
the business plans of these entities and the results of the tests and
the fact that all these entities have an healthy order book positions
and adequate references in international markets notwithstanding the
turbulent market conditions in Europe, the management is of the view
that there is no impairment of its investments in these Companies.
(c) The Company through its step down subsidiary P. Van Eerd
Beheersmaatschappij BV, Netherlands (PVAN) held a 50% shareholding in
Sadelmi S.p.A for à 7.5 million., Italy (Sadelmi) with the remaining
50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the
economic conditions prevailing in different parts of the world where
Sadelmi was present some of the projects under execution encountered
serious contractual problems. Sadelmi therefore sought creditors'
protection through a Court in Italy and simultaneously, as part of
scheme, applied for transferring the remaining projects and leased all
references standing in its name since inception to a new Company Busi
Power S.r.l. wholly held by Busi Group. By an Agreement dated 2nd March
2009, Busi Group agreed to give PVAN 50% stake in lieu of its stake in
Sadelmi for a consideration of à 1 while also agreeing to capitalise
the Company with à 2.5 million and convert the S.r.l. status into an
S.p.A. to facilitate the same.
The above procedure however not yet been completed as the decision in
the Court is still awaited. The delay is on account of objections
raised by some creditors among other reasons.
The management is reasonably optimistic of a satisfactory conclusion of
the matters. The total exposures of the Company as of balance sheet
date is Rs. 5.04 Crore under loans and advances, Rs. 0.05 Crore under
investment and under corporate guarantee Rs. 60.93 Crore. The result of
these operations will be consolidated in the Company on completion of
Court procedures and after upto date financials are drawn up.
In the managements assessment the value of such references and infusion
of à 2.5 million by Busi Group would be in excess of the acquisition
cost of such stake and hence no impairment is considered necessary.
2 ESOP SCHEME
Pursuant to the amalgamation of ATSL with the Company, the outstanding
options of the employees of the erstwhile ATSL outstanding as on 1st
April 2008 have been taken up as an obligation by the Company in
accordance with the Scheme approved by the Court. Accordingly the
Company has accounted for the grant of 1,06,300 options to such
employees at an exercise prize of Rs. 80 per share. The Company will
issue two equity shares against each option in terms of the scheme of
amalgamation approved by the Courts.
The options were granted by the erstwhile ATSL on 27th March 2007. The
options vest in a graded manner over the period of four years and are
exercisable during a period of three years from the date of vesting
thereof.
Since the assets and liabilities of the erstwhile ATSL has been
accounted at the book value, the accounting effect in the accounts are
continued at the same value.
The fair value of the option however has been computed under the Black
Scholes method considering the data of the Company as on the date of
grant of option for the purpose of disclosure as required under
Guidance note on Employee share based payments detailed hereunder.
3 Disclosure under Accounting Standard - 19 "Leases" of the
Companies (Accounting Standards) Rule, 2006
The Company has taken various residential/godowns/offices premises
(including Furniture and Fittings if any) under lease and license
agreements for periods which generally range between 11 months to 3
years. These arrangements are renewable by mutual consent on mutually
agreed terms. Under some of these arrangements the Company has given
refundable security deposits. The lease payments are recognized in
Profit and Loss Account under Rent, Rates and Taxes.
4 Contingent Liability
(Rs. in Crore)
S.N. Particulars 31-Mar-12 31-Mar-11
1 Liability on contracts remaining to be
executed on Capital Accounts 23.90 12.59
2 Counter Guarantees given to Bankers for
Guarantees given by them and Corporate
Guarantees, on behalf of 7,443.95 6,531.96
subsidiary, erstwhile subsidiary,
associate Companies
3 Corporate Guarantees and Counter
Guarantees given to Bankers towards
Company's share in the Joint Ventures 542.06 556.31
for guarantees given by them to the
Joint Venture Project clients
4 Disputed Sales Tax liability for which
the Company has gone into Appeal 29.71 24.66
5 Claims against the Company not
acknowledged as debts 56.11 47.26
6 Disputed Excise Duty Liability 0.03 0.03
7 Disputed Customs Duty Liability - 0.32
8 Disputed Service Tax Liability 21.13 18.61
9 Against bill discounting 22.20 -
Since Realised (8.81) -
10 On partly paid shares - -
11 In respect of Income Tax Matters 19.70 -
12 Commitment towards capital contribution
in subsidiary under contractual obligation 47.36 -
13 Disputed stamp duty liability for assets
acquired during amalgamation with erstwhile
Associated Transrail 4.93 -
Structures Limited
14 There is a disputed Demand of UCO Bank pending since 1986, of US$
436251 i.e. Rs. 1.72 Crore. Against this, UCO Bank has unilaterally
adjusted the Company's Fixed Deposit of US$ 30584 i.e. Rs. 0.12 Crore,
which adjustment has not been accepted by the Company
15 The Company had deposited customs duty of Rs. 2.20 Crore under protest
in respect of certain machineries imported for the project in Sikkim.
The Company contends that the import of machinery is duty free as per
the Project Import regulations prevailing then. The Company has
preferred an appeal against the levy of Custom Duty. Pending outcome of
the appeal, the said amount is carried under Advances recoverable in
cash or in kind
16 In respect of Joint Venture and operations in Oman, Gammon India
Limited-AL Matar JV, refer note no. 41
17 Counter claims in arbitration matters referred by the Company -
liability unascertainable
5 Segment Reporting
The Company is engaged mainly in one reportable segment viz.,
"Construction and Engineering". Additionally the Company has revenue
from Windmills which is not significant and accounts for less than 10%
of the total revenue and total assets of the Company. Therefore no
disclosure of separate segment reporting as required in terms of
Accounting Standard AS -17 is done. The Company also primarily operates
under one geographical segment namely India.
6 The balance with The Freyssinet Prestressed Concrete Company Limited
is as per books of accounts and subject to reconciliation.
7 Joint Venture and operations in oman
(a) As on March 31st, 2012, there were primary Court rulings against
certain legal cases arising out of disputes in the Joint Venture's
commercial operations amounting to RO 620,455 (Rs. 8.33 Crore) as of
March 2012. The Joint Venture has appealed against the primary Court
judgements and is currently awaiting judgements from the Appeal Court.
Based on legal advice, the management believes that the Appeal Court
judgements will be in Joint Ventures favor and no amount will be
payable. However a provision of RO 4818 for liability pertaining to
these claims has been made in the financial statements.
(b) The statutory auditors of the Joint Venture have qualified their
report stating that in their view it more likely than not that the
Joint Venture will be liable to incur expense against these claims and
accordingly it should record the total liability in the financial
statements as of March 2012. Thus in their view the accounts payable
and loss for the year are understated by RO 615,637 (Rs. 8.27 Crore).
(c) As on March 31st, 2012, the Joint Venture has contingent
liabilities in respect of bank and other guarantees and other matters
arising in the ordinary course of business from which it is anticipated
that no material liabilities will arise, amounting to RO(177,891)
(Rs.2.39 Crore) previous year RO (377891)C 4.43 Crore).
(d) Transactions of the Oman branch and the Joint Venture are accounted
on the basis of the audited accounts received from the statutory
Auditors of the respective entity.
8 Exceptional Item represents prior year expenditure of Rs. 6.32 Crore
(Previous Year Rs. 2.72 Crore)net of Rs. 2.30 Crore of prior period income
(Previous Year NIL).
9 Disclosure of transactions with Related Parties, as required by
Accounting Standard - 18 "Related Party Disclosures" has been set out
in a separate statement - 1 annexed to this schedule.
10 Basis of preparation
Till the year ended March 31, 2011, the Company was preparing the
financial statements as per the pre-revised Schedule VI to the
Companies Act, 1956. During the year ended March 31, 2012, the Revised
Schedule VI notified under the Companies Act, 1956, has become
applicable to the Company. The Company has reclassified the published
previous year figures to conform to the norms of the Revised Schedule
VI. The adoption of the revised Schedule VI does not impact recognition
and measurement principles followed for preparation of the financial
statements. However, it significantly impacts presentation and
disclosures made in the financial statements, particularly presentation
of Balance Sheet.
Mar 31, 2011
1. 8.75% Ã Secured Redeemable Non Convertible Debentures of Rs. 5
Crores are secured by hypothecation of specific Plant & Machinery with
paripassu charge by mortgage of immovable property in Gujarat. Out of
Rs. 5 Crores, based on contractual terms, debentures valuing Rs. 1.5
Crores have been redeemed on 30th March, 2011. The debentures are due
for repayment at the end of 8th, 9th and 10th year from the date of
allotment. i.e. 30th March, 2003.
7.50% Ã Redeemable Non Convertible Debentures of Rs. 15 Crores and
7.25% Ã Redeemable Non Convertible Debentures of Rs. 6 Crores are
secured by hypothecation of specific Plant & Machinery with paripassu
charge by mortgage of immovable property in Gujarat with 8.75% Secured
Redeemable Non Convertible Debentures of Rs. 3.5 Crores. The Debenture
holders holding Rs. 15 Crores of 7.50% Redeemable Non-Convertible
Debentures and Rs. 6 Crores of 7.25% Redeemable Non Convertible
Debentures have exercised their put option and accordingly same have
been redeemed on 29th September, 2010.
7.50% Ã Redeemable Non-Convertible Debentures of Rs. 50 Crores are
secured by hypothecation of specific Plant & Machinery with paripassu
charge by mortgage of immovable property in Gujarat with 8.75% Secured
Redeemable Non-Convertible Debentures of Rs. 3.5 Crores. The Debentures
are due for repayment at the end of 8th, 9th and 10th year from the
date of allotment i.e. 5th August, 2005.
9.95% Ã Redeemable Non-Convertible Debentures of Rs. 50 Crores are
secured by hypothecation of specific Plant & Machinery with paripassu
charge by mortgage of immovable property in Gujarat with 8.75% Secured
Redeemable Non-Convertible Debentures of Rs. 3.5 Crores and 7.50%
Secured Non-convertible Debenture of Rs. 50 Crores. The Debentures are
due for repayment at the end of 8th, 9th and 10th year from the date of
allotment being, 24th March, 2008.
10.80% Ã Redeemable Non Convertible Debentures of Rs. 100 Crores are
secured by hypothecation of specific Plant & Machinery with paripassu
charge by mortgage of immovable property in Gujarat with 9.95 % Secured
Redeemable Non-Convertible Debentures of Rs. 50 Crores and 8.75%
Secured Redeemable Non-Convertible Debentures of Rs. 3.5 Crores and
7.50% Secured Non-convertible Debenture of Rs. 50 Crores. The
Debentures are due for repayment at the end of 5th, 6th and 7th year
from the date of allotment being, 25th July, 2008.
10.50% Ã Redeemable Non Convertible Debentures of Rs. 74 Crores are
secured by hypothecation of specific Plant & Machinery with paripassu
charge by mortgage of immovable property in Gujarat with 10.80% Secured
Redeemable Non-Convertible Debentures of Rs. 100 Crores and 9.95%
Secured Redeemable Non-Convertible Debentures of Rs. 50 Crores and
8.75% Secured Redeemable Non-Convertible Debentures of Rs. 3.5 Crores
and 7.50% Secured Non-convertible Debenture of Rs. 50 Crores. The
Debentures are due for repayment at the end of 8th, 9th and 10th year
from the date of allotment being, 7th May, 2009.
9.50% Ã Redeemable Non Convertible Debentures of Rs. 50 Crores are
secured by hypothecation of specific Plant & Machinery with paripassu
charge by mortgage of immovable property in Gujarat with 10.50% Secured
Redeemable Non-Convertible Debentures of Rs. 74 Crores and 10.80%
Secured Redeemable Non-Convertible Debentures of Rs. 100 Crores and
9.95% Secured Redeemable Non-Convertible Debentures of Rs. 50 Crores
and 8.75% Secured Redeemable Non-Convertible Debentures of Rs. 3.5
Crores and 7.50% Secured Non-convertible Debenture of Rs. 50 Crores.
The Debentures are due for repayment at the end of 8th, 9th and 10th
year from the date of allotment being 18th June, 2010.
9.50% Ã Redeemable Non Convertible Debentures of Rs. 50 Crores are
secured by hypothecation of specific Plant & Machinery with paripassu
charge by mortgage of immovable property in Gujarat with 9.50% Secured
Redeemable Non-Convertible Debentures of Rs. 50 Crores and 10.50%
Secured Redeemable Non-Convertible Debentures of Rs. 74 Crores and
10.80% Secured Redeemable Non-Convertible Debentures of Rs. 100 Crores
and 9.95% Secured Redeemable Non-Convertible Debentures of Rs. 50
Crores and 8.75% Secured Redeemable Non-Convertible Debentures of Rs.
3.5 Crores and 7.50% Secured Non-convertible Debenture of Rs. 50
Crores. The Debentures are due for repayment at the end of 8th, 9th and
10th year from the date of allotment being 5th September, 2010.
2. Issued Share Capital includes 725,800 shares of Rs. 2 each kept in
abeyance.
3. Share Forfeited account includes Rs. 0.26 Crores of Share Premium
collected on application in respect of forfeited shares.
4. In terms of the approval of the shareholders in the Extra Ordinary
General Meeting of the Company on 17th June, 2009 the Company issued
16,000,000 equity warrants to the promoter group on a preferential
basis, entitling them to apply for and obtain allotment of one equity
shares of Rs. 2 each at a premium of Rs. 88.20 per share. During F.Y.
2009-2010, the promoter group had exercised 7,750,000 warrants for
conversion to equity shares and paid in an amount equivalent to 25% of
the 8,250,000 outstanding warrants. The balance warrant of 8,250,000
have been exercised during the year for conversion to equity share and
accordingly 8,250,000 shares have been allotted on 7th January, 2011.
5. As per the intimation available with the Company, there are no
Micro, Small and Medium Enterprises, as defined in the Micro, Small, and
Medium Enterprises Development Act, 2006, to whom the Company owes dues
on account of principal amount together with interest and accordingly
no additional disclosures have been made.
The above information regarding Micro, Small and Medium Enterprises
have been determined to the extent such parties have been identifed on
the basis of information available with the Company. This has been
relied upon by the Auditors.
6. Loans and advances include Rs. Nil (previous year Rs. 50.00 Crores)
which are secured by pledge of equity shares of a private Company. The
security value is adequate to recover the amount advanced. The said
loan has been repaid during the year.
8. (a) In respect of currency swap derivative contracts entered into by
the Company, the Company has Marked to Market (Gain)/loss of Rs. (2.36)
Crores (Previous Year loss Rs. 3.92 Crores) as at 31st March 2011 based
on the valuation given by the bankers. Following the principle of
prudence and in accordance with the announcement of the ICAI, the
Company has made a provision for the same. Since the same was entered
into to reduce the cost of borrowings, the said MTM loss is included
under Financial Costs.
In respect of these shares where the voting rights and beneficial rights
are so transferred, the holder continues to be the original allotees as
per the records of the respective companies.
10. Provident Fund:
The provisions of the Employees' Provident Fund and Miscellaneous
Provisions Act, 1952, have been implemented at the work sites where
code numbers have been allotted. In respect of the remaining work sites
necessary applications have been made for allotment of code numbers.
However, a provision of Rs. 0.25 Crores is available to cover any
liability arising there from.
13. In respect of the road projects undertaken by the Company, in
furtherance to the recommendation of the Dispute Resolution Board
(DRB), the Company has been awarded claims by the Arbitration Tribunal
for an aggregate amount of Rs. 94.54 Crores which has been recognized
as revenue & included in Sundry Debtors. The Company contends that such
awards have reached finality for the determination of the amounts of
such claims and are reasonably confdent of recovery of such claims
although the client has moved the court to set aside the awards.
Considering the fact that the Company has received favorable awards
from the DRB and the arbitration tribunal, the Management is reasonably
certain that the claims will get favorable verdict from the courts.
16. Dividend income includes dividend of Rs. Nil (Previous Year Rs.
0.07 Crores) from trade investments. Dividend received from own
investment held through Gammon Trust is adjusted under appropriation
Rs. 0.58 Crores.
1 7. Interest from Joint Stock companies includes accrued onetime
non-recurring interest income of Rs. 182.39 Crores under contractual
conditions from one of the subsidiary of the Company.
18. Pursuant to the amalgamation of ATSL with the Company, the
outstanding options of the employees of the erstwhile ATSL outstanding
as on 1st April, 2008 have been taken up as an obligation by the
Company in accordance with the Scheme approved by the court.
Accordingly the Company has accounted for the grant of 106,300 options
to such employees at an exercise prize of Rs. 80 per share. The Company
will issue two equity shares against each option in terms of the scheme
of amalgamation approved by the Courts.
The options were granted by the erstwhile ATSL on 27th March, 2007. The
options vest in a graded manner over the period of four years and are
exercisable during a period of three years from the date of vesting
thereof.
Since the assets and liabilities of the erstwhile ATSL has been
accounted at the book value, the accounting effect in the accounts are
continued at the same value.
The fair value of the option however has been computed under the Black
Scholes method considering the data of the Company as on the date of
grant of option for the purpose of disclosure as required under
Guidance note on Employee share based payments detailed hereunder.
(c) The requirement of quantitative information of the Company as
required by A.S.E. 494 Ã E dated 30.10.1973 is not applicable to the
Company as regards construction activities of transmission line. As
regards various other quantitative details the same have not been
reported as various items are of dissimilar nature and it is not
practicable to disclose the quantitative information.
23. The Company is engaged mainly in only one reportable segment viz.,
"Construction and Engineering". Additionally the Company has revenue
from Windmills which is not significant and accounts for less than 10%
of the total revenue and total assets of the Company. Therefore no
disclosure of separate segment reporting as required in terms of
Accounting Standard AS Ã 17 is done. The Company also primarily
operates under one geographical segment namely India.
24. Disclosure of transactions with Related Parties, as required by
Accounting Standard à 18 'Related Party Disclosures' has been set out
in a separate statement à 1 annexed to this Schedule.
25. Disclosure under Accounting Standard à 19 "Leases", issued by the
Institute of Chartered Accountants of India.
The Company has taken various residential/godowns/offices premises
(including Furniture and Fittings if any) under lease and license
agreements for periods which generally range between 11 months to 3
years. These arrangements are renewable by mutual consent on mutually
agreed terms. Under some of these arrangements the Company has given
refundable security deposits. The lease payments are recognized in
Profit and Loss Account under Rent, Rates and Taxes.
For the purposes of computation of earning per shares the equity shares
issued against the options granted to the employees of the erstwhile
ATSL have been considered in the weighted average shares during the
period. Similarly 725,800 equity shares kept in abeyance from earlier
equity offerings have also been considered for dilution. The weighted
shares have been determined with reference to the respective dates of
allotment of the shares issued under ESOP's and the Warrants
respectively.
2 7. During the year an amount of Rs. 13.33 Crores has been
transferred from Foreign Currency Translation Reserves Account to the
Profit & Loss Account on retirement of certain portion of the long term
loans from the subsidiaries.
28. Pursuant to the scheme of amalgamation, the Company owns 5,804,620
equity shares of itself through Gammon India Trust which was allotted
the shares against the Company's holding in erstwhile ATSL in terms of
the order of the Hon'ble High Court of Mumbai and Gujarat.
29. Diminution in the Value of Investments:
A. The Company through its Special Purpose Investment Vehicle holds
the following stakes:
(1) Franco Tosi Meccanica S.p.A., Italy
(2) Sofnter S.p.A., Italy
(3) Sadelmi S.p.A., Italy
(4) SAE S.r.l., Italy
B. The Company has carried out its impairment test of the investments
of Franco Tosi Meccanica , Sofnter and SAE Italy. Considering the
business plans of these entities and the results of the tests and the
fact that all these entities have healthy order book positions and
adequate references in international markets notwithstanding the
turbulent market conditions in Europe, the management is of the view
that there is no impairment in its investments in these companies.
C. The Company through its step down subsidiary P. Van Eerd
Beheersmaatschappij B.V., Netherlands (PVAN) held a 50% shareholding in
Sadelmi S.p.A for Euro 7.5 million, Italy (Sadelmi) with the remaining
50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the
economic conditions prevailing in different parts of the world where
Sadelmi was present some of the projects under execution encountered
serious contractual problems. Sadelmi therefore sought creditors'
protection through a Court in Italy and simultaneously, as part of
scheme, applied for transferring the remaining projects and leased all
references standing in its name since inception to a new Company Busi
Power S.r.l. wholly held by Busi Group. By an Agreement dated 2nd
March, 2009, Busi Group agreed to give PVAN 50% stake in lieu of its
stake in Sadelmi for a consideration of Euro 1 and convert the S.r.l.
status into an S.p.A. to facilitate the same. Consequently PVAN will
cease to be a shareholder of Sadelmi from that date and will become a
shareholder of Busi Power. The compliances is expected to be reached in
ensuing year, at which time Busi Group will duly capitalize its wholly
owned subsidiary in India with an equity infusion of Euro 2.5 million
and will also permit it to freely draw up the references to undertake
future projects in India, as was mentioned in the previous year
consequent upon this arrangement. The management's assessments of the
references indicate that the value of such references and the infusion
of Euro 2.5 million by Busi Group would be in excess of the acquisition
cost of such stake.
Consequent upon this arrangement, Busi Group will be wholly responsible
for the operations and all future funding of Busi Power S.r.l. and
Gammon will be wholly responsible for the operations and future funding
of the Indian subsidiary for the projects undertaken by them in the
territories identifed respectively for them. The results of these
operations will be consolidated in the Company after the Court scheme
is given effect to and the fresh set of financial are drawn up.
31. Unpaid dividend includes Rs. 0.14 Crores (Previous Year à Rs. 0.10
Crores) and accrued interest includes Rs. 0.05 Crores (Previous Year Ã
Rs. 0.16 Crores) towards interest on fxed deposits to be transferred to
the Investor Education & Protection Fund.
32. CONTINGENT LIABILITIES:
(Rs. in Crores)
Sr. Particulars As at As at
No. 31st March,
2011 31st March,
2010
1. Liability on contracts remaining to be
executed on Capital Accounts 12.59 73.83
2. Counter Guarantees given to Bankers for
Guarantees given by them and Corporate
Guarantees, on behalf of subsidiary,
erstwhile subsidiary, associate
Companies stand at 6,531.96 5,436.41
3. Corporate Guarantees and Counter
Guarantees given to Bankers towards
Company's share in the Joint Ventures
for guarantees given by them to the
Joint Venture Project Clients 556.31 463.36
4. Disputed Sales Tax liability for which
the Company has gone into Appeal is 24.66 23.88
5. Claims against the Company not
acknowledged as debts 47.26 47.76
6. Disputed Excise Duty Liability 0.03 0.03
7. Disputed Customs Duty Liability 0.32 0.32
8. Disputed Service Tax Liability 18.61 29.21
9. Contingent Liability on partly paid shares à Ã
10. There is a disputed demand of UCO Bank pending since 1986, of US$
436,251 i.e. Rs. 1.72 Crores. Against this, UCO Bank has unilaterally
adjusted the Company's Fixed Deposit of US$ 30,584 i.e. Rs. 0.12
Crores, which adjustment has not been accepted by the Company.
11. The Company had deposited customs duty of Rs. 2.20 Crores under
protest in respect of certain machineries imported for the project in
Sikkim. The Company contends that the import of machinery is duty free
as per the Project Import regulations prevailing then. The Company has
preferred an appeal against the levy of Custom Duty. Pending outcome of
the appeal, the said amount is carried under Advances recoverable in
cash or in kind.
12. In respect of Joint Venture and operations in Oman, Gammon India
Limited à AL Matar JV, refer note no. 37.
13. Counter claims in arbitration matters referred by the Company Ã
liability unascertainable.
33. The balance with The Freyssinet Prestressed Concrete Company
Limited is as per books of accounts and subject to reconciliation.
34. Cash & Bank balances include Rs. 2.00 Crores (Previous Year Rs.
2.13 Crores) with bank branches in foreign countries relating to
certain foreign projects which are not readily available for use by the
Company and are subject to exchange control regulation of the
respective countries. The Fixed Deposit related interest and principal
account as at the year-end are as per ledger and are subject to
reconciliation, which is under progress.
35. During the F.Y. 2010-2011, search action was initiated against the
Company u/s 132 of the Income Tax Act, On a prudent basis an additional
tax provision of Rs. 17 Crores have been made in accounts of F.Y.
2009-2010.
3 7. Joint venture and operations in Oman:
(a) There are claims against the Joint venture not acknowledged as
debts of RO 0.84 million (Rs. 9.85 Crores) in respect of which the
lower courts have ruled in favour of the claimant. The Management is
hopeful of obtaining relief from the higher courts in the matter.
(b) The joint venture has carried out certain works including
operations and maintenance of the project based on work instructions
received from the consultant/client which is subject to certification
and acceptance by the client on account of certain disputes with the
client which the management is hopeful of resolving in favour of the
Joint venture. The total value of such works being carried as part of
the job estimates is RO 0.91 million (Rs. 10.67 Crores).
(c) The banking facilities including fund and other non-fund based
borrowings utilized by the Joint Venture entity which are in the name
of the Company but have been accounted in the books of Joint Venture.
The borrowings have been guaranteed by the Company and are secured by
assignment of the Joint Venture contract receivable and Joint
registration and insurance of all equipments and Corporate guarantees
of Gammon India Limited of RO 1.25 million (Rs. 14.66 Crores). The
total of such borrowings as at 31st March, 2011 is RO 169,337 (Rs. 1.99
Crores) [Previous Year RO 4,002,265 (Rs. 46.99 Crores)] which consists
of Fund based RO (208,554) (Rs. 2.44 Crores) [Previous Year RO
3,628,768 (Rs. 42.61 Crores)] and Non-fund based RO 377,891 (Rs. 4.43
Crores) [Previous Year RO 373,498 (Rs. 4.39 Crores)].
(d) Transactions of Oman Branch and the accounting effect of the Gammon
Al Matar Joint Venture Profits are accounted on the basis of the
accounts prepared specially for this purpose and which is duly audited
by the Company's auditor.
(e) During the year the Assets held by the Oman Branch have been
transferred to India. The related Foreign Currency Translation Reserve
has been reversed.
39. Previous year's fgures are regrouped and rearranged with those of
the current year to make them comparable.
SCHEDULE Ã 1
Related Party Disclosure (AS Ã 18):
(A) Relationships:
Subsidiaries/Fellow Subsidiaries:
1. Andhra Expressway Limited
2. Ansaldo Caldaie Boilers India Private Limited
3. ATSL BV, Netherland
4. ATSL Infrastructure Projects Limited
5. Associated Transrail Structures Limited, Nigeria
6. Campo Puma Oriente SA
7. Chitoor Infra Company Private Limited
8. Chitoor Infrastructure Projects Private Limited
(formerly known as Satyavedu Infra Company Private Limited)
9. Cochin Bridge Infrastructure Company Limited
10. Deepmala Infrastructure Private Limited
11. Dohan Renewable Energy Private Limited
12. Franco Tosi Hydro Private Limited
13. Franco Tosi Meccanica S.p.A.
14. Franco Tosi Turbines Private Limited
15. GACTEL Turnkey Projects Limited
16. Gammon & Billimoria Limited
17. Gammon & Billimoria LLC
18. Gammon Holdings BV
19. Gammon Holdings (Mauritius) Limited
20. Gammon Infrastructure Projects Limited
21. Gammon International BV
22. Gammon International FZE
23. Gammon International LLC, Oman
24. Gammon Italy S.r.l.
25. Gammon Logistics Limited
26. Gammon Power Limited
27. Gammon Projects Developers Limited
28. Gammon Realty Limited
29. Gammon Renewable Energy Infrastructure Limited
30. Gammon Retail Infrastructure Private Limited
31. Gammon Road Infrastructure Limited
32. Gammon Seaport Infrastructure Limited
33. Ghaggar Renewable Energy Private Limited
34. Gorakhpur Infrastructure Company Limited
35. Indori Renewable Energy Private Limited
36. Jaguar Projects Developers Limited
3 7. Kasavati Renewable Energy Private Limited
38. Kosi Bridge Infrastructure Company Limited
39. Lilac Infra Projects Developers Limited
40. Marine Project Services Limited
41. Markanda Renewable Energy Private Limited
42. Metropolitan Infrahousing Private Limited
43. Mumbai Nasik Expressway Limited
44. P. Van Eerd Beheersmaatschappij BV Ã Netherlands
45. Pataliputra Highway Limited
46. Patna Highway Projects Limited
47. Pravara Renewable Energy Limited
48. Preeti Townships Private Limited
49. Rajahmundry Expressway Limited
50. Rajahmundry Godavari Bridge Limited
51. RAS Cities and Townships Private Limited
52. SAE Powerlines S.r.l.
53. SAE Transmission India Limited
54. Sikkim Hydro Power Ventures Limited
55. Sirsa Renewable Energy Private Limited
56. Sutlej Renewable Energy Private Limited
57. Tada Infra Development Company Limited (formerly Gammon
Hospitality Limited)
58. Tada Infrastructure Projects Private Limited (formerly known as
Tada SEZ Private Limited)
59. Tangri Renewable Energy Private Limited
60. Tidong Hydro Power Limited
61. Transrail Lighting Limited
62. Vizag Sea Port Private Limited
63. Yamuna Renewable Energy Private Limited
64. Youngthang Power Ventures Limited
Joint Ventures:
1. Afghanistan ATSL AEPC Consortium
2. Aydeniz Gammon
3. BBJ Gammon
4. BBJ GIL
5. Bhutan Consortium Jyoti Structures Limited and Gammon India Limited
6. Blue Water Iron Ore Terminal Private Limited
7. Gammon Al Matar
8. Gammon Ansaldo (Kakrapara BOT Pkg. I)
9. Gammon Atlanta
10. Gammon Atlanta (Ghana Road Project)
11. Gammon Aydinar (Rammam)
12. Gammon BBJ
13. Gammon Cadagua (Guwahati WS Pkg. III)
14. Gammon CMC (DFCC Eastern Corridor)
15. Gammon Construtora Cidade Tensaccia Joint Venture
16. Gammon Construtora Tensacuai
17. Gammon Encee Consortium
18. Gammon Encee Rail (Consortium)
19. Gammon JMC
20. Gammon Limak (Vishnugod Pipalnote HEPP)
21. Gammon Marti
22. Gammon Mosmetrostroy (Bangalore Metro)
23. Gammon OJSC Mosmetrostroy Joint Venture
24. Gammon OSE
25. Gammon Patel
26. Gammon Pratibha (BWSSB)
27. Gammon Pratibha (Hogenkkal WS)
28. Gammon Progressive
29. Gammon Sew
30. Gammon Rizzani
31. Gammon Srinivas
32. Gammon Technofab (Transmission & Distribution of Electricity &
Water)
33. Gammon Tensacuai
34. Gammon Yuksel (Greenfeld Airport, Sasan)
35. GIL Archirodon
36. GIL KCT (Rupiasagar Kasiabara HEP)
3 7. GIL Marti (Civil Work Sainj HEP)
38. GIL Simplex (Dholakal Tupul)
39. GIL Simplex (Khongsang Imphal)
40. Haryana Biomass Power Limited
41. Hyundai Gammon
42. Indira Container Terminal Private Limited
43. Jaeger Gammon
44. Jager Gammon
45. Lencon Gammon
46. OSE GIL
47. Patel Gammon
48. Punjab Biomass Power Limited
49. SEZ Adityapur Limited
50. Sofnter S.p.A.
51. Sumitomo Corp. Gammon, C & C Const. Limited, Sadbhav Engg. Limited
Associates & Group Companies:
1. Eversun Sparkle Maritime Services Private Limited
2. Finest S.p.A. Italy
3. Modern Toll Roads Limited
Entities where control exists:
1. Devyani Estate & Properties Private Limited
2. First Asian Capital Resources Private Limited
3. Masayor Enterprises Limited
4. Nikhita Estate Developers Private Limited
5. Pacific Energy Private Limited
Key Management Personnel & Relatives:
1. Mr. Abhijit Rajan
2. Mr. Himanshu Parikh
3. Mr. Rajul A. Bhansali
4. Mr. Rohit Modi
5. Mr. Harshit Rajan
6. Mr. D. C. Bagde
Mar 31, 2010
1. 8.75% - Secured Redeemable Non-Convertible Debentures of Rs. 5
Crores are secured by hypothecation of specific Plant & Machinery and
paripassu charge by mortgage of immovable property in Gujarat. The
debentures are due for repayment at the end of 8th, 9th and 10th year
from the date of allotment. i.e. 30th March, 2003.
7.50% - Redeemable Non-Convertible Debentures of Rs. 15 Crores and
7.25% - Redeemable Non-Convertible Debentures of Rs. 6 Crores are
secured by hypothecation of specific Plant & Machinery and paripassu
charge by mortgage of immovable property in Gujarat with 8.75% Secured
Redeemable Non Convertible Debentures of Rs. 5 Crores. The Debentures
are due for repayment at the end of 8th, 9th and 10th year from the
date of allotment i.e. 29th September, 2003.
7.50% - Redeemable Non-Convertible Debentures of Rs. 38 Crores and
7.25% Redeemable Non-Convertible Debentures of Rs. 12 Crores are
secured by hypothecation of specific Plant & Machinery with paripassu
charge by mortgage of immovable property in Gujarat with 8.75% Secured
Redeemable Non-Convertible Debentures of Rs. 5 Crores and 7.50% Secured
Non-convertible Debenture of Rs. 15 Crores and 7.25% Secured
Non-Convertible Debenture of Rs. 6 Crores. The Debentures are due for
repayment at the end of 8th, 9th and 10th year from the date of
allotment i.e. 5th August, 2005.
9.95% - Redeemable Non-Convertible Debentures of Rs. 50 Crores are
secured by hypothecation of specific Plant & Machinery with pari passu
charge by mortgage of immovable property in Gujarat with 8.75% Secured
Redeemable Non-Convertible Debentures of Rs. 5 Crores and 7.50% Secured
Non-convertible Debenture of Rs. 53 Crores and 7.25% Secured
Non-Convertible Debenture of Rs. 18 Crores. The Debentures are due for
repayment at the end of 8th, 9th and 10th year from the date of
allotment being, 24th March, 2008.
10.80% - Redeemable Non-Convertible Debentures of Rs. 100 Crores are
secured by hypothecation of specific Plant & Machinery with pari passu
charge by mortgage of immovable property in Gujarat with 9.95% Secured
Redeemable Non-Convertible Debentures of Rs. 50 Crores and 8.75%
Secured Redeemable Non-Convertible Debentures of Rs. 5 Crores and 7.50%
Secured Non-convertible Debenture of Rs. 53 Crores and 7.25% Secured
Non-Convertible Debenture of Rs. 18 Crores. The Debentures are due for
repayment at the end of 5th, 6th and 7th year from the date of
allotment being, 25th July, 2008.
10.50% - Redeemable Non-Convertible Debentures of Rs. 74 Crores are
secured by hypothecation of specific Plant & Machinery with pari passu
charge by mortgage of immovable property in Gujarat with 10.80% Secured
Redeemable Non-Convertible Debentures of Rs. 100 Crores and 9.95%
Secured Redeemable Non-Convertible Debentures of Rs. 50 Crores and
8.75% Secured Redeemable Non-Convertible Debentures of Rs. 5 Crores and
7.50% Secured Non-convertible Debenture of Rs. 53 Crores and 7.25%
Secured Non-Convertible Debenture of Rs. 18 Crores. The Debentures are
due for repayment at the end of 8th, 9th and 10th year from the date of
allotment being, 7th May, 2009.
2. Issued Share Capital includes 725,800 shares of Rs. 2 each kept in
abeyance.
3. Share Forfeited account includes Rs. 0.26 Crores of Share Premium
collected on application in respect of forfeited shares.
4. In terms of the approval of the shareholders in the Extra-Ordinary
General Meeting of the Company on 17th June, 2009 the Company issued
16,000,000 equity warrants to the promoter group on a preferential
basis, entitling them to apply for and obtain allotment of one equity
shares of Rs. 2 each at a premium of Rs. 88.20 per share. The promoter
group during the year has exercised 7,750,000 warrants for conversion
to equity shares and paid in an amount equivalent to 25% of the
8,250,000 outstanding warrants.
5. (a) The Company allotted 3,000,000 preference shares of Rs. 350
each aggregating to Rs. 105.00 Crores to the preference shareholders of
the erstwhile ATSL in terms of the scheme of amalgamation between ATSL
and the Company approved by the HonÃble High Court of Mumbai and
Gujarat. The holders of the preference shareholders have sought
redemption of the preference shares and the Company has during the year
redeemed the said shares from its profits in accordance with the
provision of Sec. 80. Accordingly, an amount of Rs. 105 Crores has been
transferred to the Capital Redemption Reserve from the General Reserve.
Dividend is payable for the proportionate period up to the date of
redemption to the preference shareholders.
(b) The Company allotted 12,809,400 equity shares of Rs. 2 each at a
premium of Rs. 235.45 per share to Qualified Institutional Buyers under
Qualified Institutional Placement.
6. As per the intimation available with the Company, there are no
Micro, Small and Medium Enterprises, as defined in the Micro, Small,
and Medium Enterprises Development Act, 2006, to whom the Company owes
dues on account of principal amount together with interest and
accordingly no additional disclosures have been made.
The above information regarding Micro, Small and Medium Enterprises
have been determined to the extent such parties have been identified on
the basis of information available with the Company. This has been
relied upon by the Auditors.
7. Loans and advances include Rs. 50.00 Crores (Previous Year Rs.
50.00 Crores) which are secured by pledge of equity shares of a private
company. The security value is adequate to recover the amount advanced.
8. Sundry Creditors include Rs. 10.81 Crores (Previous Year Rs. 12.03
Crores) due to Gammon Infrastructure Projects Ltd., Rs. 0.16 Crores
(Previous Year Rs. 0.16 Crores) due to Cochin Bridge Infrastructure
Company Ltd., Advance from client include Rs. Nil (Previous Year Rs.
24.00 Crores) due to Mumbai Nasik Expressway Ltd., Rs. 23.09 Crores
(Previous Year Rs. 47.71 Crores) due to Kosi Bridge Infrastructure
Company Ltd., and Rs. 44.48 Crores (Previous Year Rs. 56.03 Crores) due
to Gorakhpur Infrastructure Company Ltd., Rs. 51.27 Crores (Previous
Year Rs. 31.25 Crores) due to Rajahmundry Godavari Bridge Ltd., all
subsidiary companies, Rs. 53.63 Crores (Previous Year Rs. 0.97 Crores)
due to Indira Container Terminal Private Ltd., a Joint Venture company.
Sundry Debtors include Rs. 4.71 Crores (Previous Year Rs. 8.92 Crores)
due from Rajamundry Expressway Ltd., Rs. 6.37 Crores (Previous Year Rs.
5.21 Crores) due from Andhra Expressway Ltd., Rs. 34.13 Crores
(Previous Year Rs. 3.89 Crores) due from Rajahmundry Godavari Bridge
Ltd., Rs. 13.62 Crores (Previous Year Rs. 1.56 Crores) due from SAE
Powerlines S.r.l., Rs. 4.67 Crores (Previous Year Rs. 9.31 Crores) due
from Mumbai Nasik Expressway Ltd., Rs. Nil (Previous Year Rs. 0.87
Crores) due from Vizag Seaport Pvt. Ltd. all subsidiary companies.
Interest receivables include Rs. 3.35 Crores (Previous Year Rs. 2.40
Crores) due from Gammon & Billimoria Ltd., Rs. 13.19 Crores (Previous
Year Rs. 13.62 Crores) due from Gammon Realty Ltd., Rs. 1.10 Crores
(Previous Year Rs. Nil Crores) due from Gammon Cooling Tower Ltd., Rs.
1.95 Crores (Previous Year Rs. 0.14 Crores) due from Deepmala
Infrastructure Pvt. Ltd., Rs. 0.87 Crores (Previous Year Rs. 1.42
Crores) due from SAE Power Lines S.r.l., Rs. 0.10 Crores (Previous Year
Rs. 0.02 Crores) due from ATSL Holding B.V. Nethrlands, Rs. 0.27 Crores
(Previous Year Rs. 0.02 Crores) due from Transrail Lighting Ltd., Rs.
0.04 Crores (Previous Year Rs. Nil) due from Associated Transrail
Structure Ltd., Nigeria.,all subsidiary companies.
Investment includes Rs. 65.56 Crores (Previous Year Rs. 32.88 Crores)
received from Gammon Infrastructure Projects Ltd., on account of
deposit for acquisition of shares.
9. In respect of the road projects undertaken by the Company, in
furtherance to the recommendation of the Dispute Resolution Board
(DRB), the company has been awarded claims by the Arbitration Tribunal
for an aggregate amount of Rs. 94.54 Crores which has been recognized
as revenue & included in Sundry Debtors. The Company contends that such
awards have reached finality for the determination of the amounts of
such claims and are reasonably confident of recovery of such claims
although the client has moved the court to set aside the awards.
Considering the fact that the Company has received favorable awards
from the DRB and the arbitration tribunal, the Management is reasonably
certain that the claims will get favorable verdict from the courts.
Accordingly the Company has recognized contract revenue of Rs. Nil
(Previous Years Rs. 37.50 Crores) from such awards on the basis of the
DRB recommendation and opinion of experts on the matter.
10. Provident Fund:
The provisions of the Employeesà Provident Fund and Miscellaneous
Provisions Act, 1952, have been implemented at the work sites where
code numbers have been allotted. In respect of the remaining work sites
necessary applications have been made for allotment of code numbers.
However, a provision of Rs. 0.25 Crores is available to cover any
liability arising there from.
11. Dividend income includes dividend of Rs. 675,000 from trade
investments.
12. Pursuant to the amalgamation of ATSL with the Company, the
outstanding options of the employees of the erstwhile ATSL outstanding
as on 1st April, 2008 have been taken up as an obligation by the
Company in accordance with the Scheme approved by the court.
Accordingly the Company has accounted for the grant of 106,300 options
to such employees at an exercise prize of Rs. 80 per share. The Company
will issue two equity shares against each option in terms of the scheme
of amalgamation approved by the Courts.
The options were granted by the erstwhile ATSL on 27th March, 2007. The
options vest in a graded manner over the period of four years and are
exercisable during a period of three years from the date of vesting
thereof.
Since the assets and liabilities of the erstwhile ATSL has been
accounted at the book value, the accounting effect in the accounts are
continued at the same value.
The fair value of the option however has been computed under the Black
Scholes method considering the data of the Company as on the date of
grant of option for the purpose of disclosure as required under
Guidance note on Employee share based payments detailed hereunder.
Note:
(i) Employers contribution includes payments made by the Company
directly to its past employees.
(ii) The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
(iii) The Companys Gratuity fund is managed by Life Insurance
Corporation of India. The plan assets under the fund are deposited
under approved securities.
(iv) Provision for gratuity has been made on the basis of the earlier
amounts of Rs. 350,000. The data for the incremental liability is being
computed by LIC and the effect will be given in next year.
(v) The Companys Leave Encashment liability is entirely unfunded.
13. The Company is engaged mainly in only one reportable segment viz.,
"Construction and Engineeringà including the business transferred from
the erstwhile ATSL on amalgamation with the company with all its
manufacturing operations which are integral to its transmission tower
business. Additionally the company has revenue from Windmills which is
not significant and accounts for less than 10% of the total revenue and
total assets of the Company. Therefore no disclosure of separate
segment reporting as required in terms of Accounting Standard AS-17 is
done. The Company also primarily operates under one geographical
segment namely India.
14. Disclosure of transactions with Related Parties, as required by
Accounting Standard - 18 Related Party Disclosures has been set out
in a separate statement annexed to this Schedule.
15. Disclosure under Accounting Standard - 19 "Lases" issued by the
Institute of chartered Accountants of India.
The Company has taken various residential/godowns/offces premises
(including Furniture and Fittings if any) under lease and license
agreements for periods which generally range between 11 months to 3
years. These arrangements are renewable by mutual consent on mutually
agreed terms. Under some of these arrangements the company has given
refundable security deposits. The lease payments are recognized in
Profit and Loss Account under Rent, Rates and Taxes.
16. With effect from 1st January, 2010 the Company has modified the
terms of the supports by way of loans to the overseas Special Purpose
Vehicles which hold the Companies equity investments in overseas
subsidiaries and joint ventures by treating the loans as long term loan
repayable at the end of 5 years. Since these SPV are in the nature of
non integral operations of the company, exchange gain / loss on
reinstatement of such loans are carried in the Foreign Exchange
Translation Reserves in accordance with AS-11 ÃThe Effects of changes
in Foreign Exchange Rates" issued under the Companies (Accounting
Standard) Rules, 2006.
17. Pursuant to the scheme of amalgamation, the Company owns 5,804,620
equity shares of itself through Gammon India Trust which was allotted
the shares against the CompanyÃs holding in erstwhile ATSL in terms of
the order of the HonÃble High Court of Mumbai and Gujarat.
18. Diminution in the Value of Investments:
A. The Company through its Special Purpose Investment Vehicle holds
the following stakes:
(1) Francotosi Meccanica, Italy
(2) Sofnter, Italy
(3) Sadelmi, Italy
(4) SAE, Italy
B. The Company has carried out its impairment test of the investments
of Franco Tosi Mechannica , Sofinter and SAE Italy. Considering the
results of the tests and the fact that all these investments have
turned around their performance from loss to a marginal profits despite
the turbulent market conditions in Europe, the management is of the
view that there is no impairment in its investments in these companies.
C. The Company through its step down subsidiary P. Van Eerd
Beheersmaatschappij B. V, Netherlands (PVAN) held a 50% shareholding in
Sadelmi S.p.A., Italy (Sadelmi) with the remaining 50% held by Busi
Impianti S.p.A, Italy since April 2008. Due to the economic conditions
prevailing in different parts of the world where Sadelmi was present
some of the projects under execution encountered serious contractual
problems. Sadelmi therefore sought creditorsprotection through a Court
in Italy and simultaneously, as part of scheme, applied for
transferring the remaining projects of Euro 46 million and leased all
references standing in its name since inception to a new company Busi
Power S.r.L. wholly held by Busi Group. By an Agreement dated 2nd
March, 2009, Busi Group agreed to give PVAN 50% stake in lieu of its
stake in Sadelmi for a consideration of Euro 1 and convert the S.r.L.
status into an S.p.A. to facilitate the same. Consequently PVAN will
cease to be a shareholder of Sadelmi from that date and will become a
shareholder of Busi Power. The Court approval which was received
subsequent to 31st March, 2010 was subject to several compliances being
met and which are currently in progress. All compliances are expected
to be reached in the 4th quarter of 2010, at which time Busi Group will
duly capitalize its wholly owned subsidiary in India with an equity
infusion of Euro 2.5 million and will also permit it to freely draw up
the references to undertake future projects in India, as was mentioned
in the previous year consequent upon this arrangement.
Consequent upon this arrangement, Busi Group will be wholly responsible
for the operations and all future funding of Busi Power S.r.L. and
Gammon will be wholly responsible for the operations and future funding
of the Indian subsidiary for the projects undertaken by them in the
territories identifed respectively for them. The results of these
operations will be consolidated in the Company with effect from FY
2010-11 after the Court scheme is given effect to and the fresh set of
financial are drawn up.
19. The Company had deposited customs duty of Rs. 2.20 Crores under
protest in respect of certain machineries imported for the project in
Sikkim. The Company contends that the import of machinery is duty free
as per the Project Import regulations prevailing then. The Company has
preferred an appeal against the levy of Custom Duty. Pending outcome of
the appeal, the said amount is carried under Advances recoverable in
cash or in kind.
20. Unpaid dividend includes Rs. 0.10 Crores (Previous Year à Rs. 0.09
Crores) and accrued interest includes Rs. 0.16 Crores towards interest
on fixed deposits to be transferred to the Investor Education &
Protection Fund.
21. CONTINGENT LIABILITIES:
(Rs. in Crores)
Sr. Particulars As at As at
No. 31st March, 2010 31st March, 2009
1. Liability on contracts
remaining to be executed on
Capital Accounts 73.83 63.73
2. Counter Guarantees given to
Bankers for Guarantees given by them
and Corporate Guarantees, on behalf
of subsidiary, erstwhile subsidiary,
associate Companies stand at 5,436.41 4,515.33
3. Corporate Guarantees and Counter
Guarantees given to Bankers towards
Companys share in the Joint Ventures
for guarantees given by them to the
Joint Venture Project Clients 463.36 502.51
4. Disputed Sales Tax liability for
which the Company has gone into
Appeal is 23.88 22.23
5. Claims against the Company not
acknowledged as debts 4.81 47.69
6. Disputed Excise Duty liability 0.03 0.03
7. Disputed Customs Duty liability 0.32 0.32
8. Disputed Service Tax Liability 29.21 15.24
9. Contingent Liability on partly paid shares - -
10. There is a disputed demand of UCO Bank pending since 1986, of US$
436,251 i.e. Rs. 1.72 Crores. Against this, UCO Bank has unilaterally
adjusted the Companys Fixed Deposit of US$ 30,584 i.e. Rs. 0.12
Crores, which adjustment has not been accepted by the Company.
11. In respect of Joint Venture and operations in Oman, Gammon India
Limited - AL Matar JV, refer note no. 38.
12. Counter claims in arbitration matters referred by the Company Ã
liability unascertainable.
22. The balance with The Freyssinet Prestressed Concrete Company
Limited is as per books of accounts and subject to reconciliation.
23. Balances in Foreign Bank Accounts are as per ledger and are
subject to reconciliation.
24. During the course of action u/s 132 of the Income Tax Act after
the Balance Sheet date, the Company has made declaration in order to
buy peace. On a prudent basis an additional tax provision of Rs. 17
Crores have been made in accounts, pending receipt of all the paper and
statements from the Income Tax department.
25. Cash & Bank balances include Rs. 2.13 Crores (Previous Year Rs.
2.13 Crores) with bank branches in foreign countries relating to
certain foreign projects which are not readily available for use by the
Company and are subject to exchange control regulation of the
respective countries. The Fixed Deposit related interest and principal
account as at the year-end are as per ledger and are subject to
reconciliation, which is under progress.
26. Joint venture and operations in Oman:
(a) There are claims against the Joint venture not acknowledged as
debts of OR 0.88 million (Rs. 10.36 Crores) in respect of which the
lower courts have ruled in favour of the claimant. The Management is
hopeful of obtaining relief from the higher courts in the matter.
(b) The joint venture has raised invoices on the client which is
subject to certification and acceptance by the client which the
management is hopeful of recovery. No effects have been given in these
accounts for the same. The total value of such uncertified billing
considered in these accounts aggregates to OR 0.73 million (Rs. 9.13
Crores).
The joint venture has carried out certain works including operations
and maintenance of the project based on work instructions received from
the consultant/client which is subject to certification and acceptance
by the client on account of certain disputes with the client which the
management is hopeful of resolving in favour of the Joint venture. The
total value of such works being carried as part of the job estimates is
OR 0.91 million (Rs. 11.33 Crores). Further the control estimates for
the balance work includes certain expected variation orders aggregating
to OR 0.90 million (Rs. 11.20 Crores) which the joint venture has
factored considering the discussions with the client and the past
trends of the acceptance by the client. Accordingly the works in
progress are being carried as part of inventory pending receipt of the
variation order from the client.
(c) The banking facilities including fund and other non-fund based
borrowings utilized by the Joint Venture entity which are in the name
of the company but have been accounted in the books of Joint Venture.
The borrowings have been guaranteed by the Company and are secured by
assignment of the Joint Venture contract receivable and Joint
registration and insurance of all equipments. The total of such
borrowings as at 31st March, 2010 is OR 4,002,265 (Rs. 46.99 Crores)
[Previous Year OR 2,442,185 (Rs. 32.12 Crores)] which consists of Fund
based OR 3,628,768 (Rs. 42.61 Crores) [Previous Year OR 860,440 (Rs.
11.32 Crores)] and Non-fund based OR 373,498 (Rs. 4.39 Crores)
[Previous Year OR 1,581,741 (Rs. 20.80 Crores)].
(d) Transactions of Oman Branch and the accounting effect of the Gammon
Al Matar Joint Venture profits are accounted on the basis of the
accounts prepared specially for this purpose and which is duly audited
by the Companys Auditor.
27. (a) The Company had in the past acquired voting rights and other
beneficial interests in two companies Rajahmundry Expressway Limited
and Andhra Expressway Limited in respect of 4,360,500 equity shares and
4,564,500 equity shares respectively from its Joint Venture partner in
these entities in consideration of payment of deposit for the
acquisition of shares of Rs. 5.66 Crores. Subsequently the company
transferred its voting rights and other beneficial interests so
acquired along with the voting rights and beneficial interests in
respect of 11,092,500 equity shares of Rajahmundry Expressway Limited
and 11,092,500 equity shares of Andhra Expressway Limited to its then
wholly owned subsidiary Gammon Infrastructure Projects Limited against
receipt of consideration being deposit for sale of equity shares in
these companies of Rs. 32.84 Crores from the subsidiary. During the
previous year 2008-2009, out of the said transfer of beneficial
interest, the Company had transferred titular interest in respect of
5,437,500 equity shares of Rajahmundry Expressway Limited and 5,437,500
equity shares of Andhra Expressway Limited and had adjusted the deposit
received against the consideration of transfer. The balance deposit
made and deposit received as aforesaid are refected under the
Investment Schedule. In respect of these shares where the voting rights
and beneficial rights are so transferred, the holder continues to be
the original allotees as per the records of the respective companies.
(b) Similarly the company had also transferred beneficial interest in
respect of the investment in Kosi Bridge Infrastructure Company Ltd.,
Gorakhpur Infrastructure Company Ltd. and Tidong Hydro Power Ltd. in
favour of its subsidiary company Gammon Infrastructure Project Ltd. In
consideration of payment of deposit for an aggregate sum of Rs. 15.91
Crores. The said deposits received are refected in the Investment
schedule.
During the year, the Company has transferred beneficial interest in
respect of 6,278,685 Shares in Kosi Bridge Infrastructure Company Ltd.
& the investment in Indira Container Terminal Pvt. Ltd. in favour of
its subsidiary company Gammon Infrastructure Project Ltd. in
consideration of payment of deposit for an aggregate sum of Rs. 32.69
Crores. The said deposits received are refected in the Investment
schedule.
28. Auditors remuneration does not include Rs. 1,378,750/- paid
towards fees for QIP issue which is debited to Security Premium
Account.
29. Previous years figures are regrouped and rearranged with those of
the current year to make them comparable.
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