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Accounting Policies of Gujarat Pipavav Port Ltd. Company

Dec 31, 2013

1. COMPANY OVERVIEW

i. Gujarat Pipavav Port Limited, ("the Company") was incorporated on 5 August 1992 to construct, operate and maintain an all weather port at Pipavav, District Amreli, in the State of Gujarat.

ii. The port is designed to handle bulk, container and liquid cargo and to provide port services such as marine services, material handling and storage operations.

iii. The Company has entered into a 30 year Concession Agreement with Government of Gujarat and Gujarat Maritime Board ("GMB") dated 30 September 1998 to engage in the business of developing, constructing, operating and maintaining the port on a BOOT (Build Own Operate Transfer) basis.

iv. During the year 2005, AP Moller-Maersk group together with certain financial investors acquired the complete shareholdings held by the original promoter viz. SKIL group, on receipt of approval from Government of Gujarat, and Gujarat Maritime Board. Accordingly, AP Moller-Maersk group became the key promoter of the Company under the Concession agreement.

v. Pursuant to the approval of the shareholders of the Company in an extra ordinary general meeting held on 17 November 2009 the Company has issued and allotted through Initial Public Offering (IPO) 108,695,652 equity shares of Rs. 10 each at a premium of Rs. 36 per share aggregating to a total of Rs. 5,000 Million to all categories of investors. The issue was made in accordance with the terms of the Company''s prospectus dated 30 August 2010 and the shares got listed on 9 September 2010 on Bombay Stock Exchange and National Stock Exchange.

2.1. Basis of preparation of financial statements

These financial statements have been prepared and presented on the accrual basis of accounting and comply with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, the relevant provisions of the Companies Act, 1956 ("the Act") which as per the clarification issued by the Ministry of Corporate Affairs continue to apply under Section 133 of the Companies Act, 2013 (which has superseded Section 211 (3C) of the Act w.e.f. 12 September 2013) and other accounting principles generally accepted in India, to the extent applicable. All figures, unless otherwise stated, are Rupees in Million.

2.2. Use of estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) in India requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods.

2.3. Current-non-current classification

All assets and liabilities are classified into current and non-current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

a) it is expected to be realised in, or is intended for sale or consumption in, the company''s normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is expected to be realised within 12 months after the reporting date; or

d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include the current portion of non-current financial assets.

All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

a) it is expected to be settled in the company''s normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is due to be settled within 12 months after the reporting date; or

d) the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification

Current liabilities include current portion of non-current financial liabilities.

All other liabilities are classified as non-current.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Based on the nature of operations the operating cycle is defined as 12 months.

2.4. Fixed assets and depreciation

Tangible fixed assets

Tangible fixed assets are carried at cost of acquisition or construction less accumulated depreciation and/or accumulated impairment loss, if any. The cost of an item of tangible fixed asset comprises its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price.

Borrowing costs are interest and other costs (including exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred by the Company in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of those tangible fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised. Other borrowing costs are recognised as an expense in the period in which they are incurred.

Tangible fixed assets under construction are disclosed as capital work in progress and advances paid for the same are disclosed under long term advances.

Tangible fixed assets acquired wholly or partly with specific grant/subsidy from government, are recorded at the net acquisition cost to the company.

Depreciation is provided on the straight-line method, over the estimated useful life of each asset as determined by the management from the subsequent month of the date of purchase. The rates of depreciation prescribed in Schedule XIV to the Act are considered as the minimum rates. If the management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management''s estimate of the useful life/remaining useful life. Pursuant to this policy, depreciation on following has been provided at the following rates which are higher than the corresponding rates prescribed in Schedule XIV of the Act:

Expenditure on roads constructed on land not owned by the Company - over the remaining concession period

Dredging - at 2% p.a.

Second hand Quay Cranes - First 5 years at 15% p.a. and next five years at 5% p.a.

Freehold land is not depreciated.

Depreciation is provided on a pro-rata basis i.e. from the date on which asset is ready for use.

All assets costing individually Rs. 125,000 or less shall be depreciated fully in the year of purchase.

Till the year ended 31 December 2012, Plant and Equipment and Furniture and Fixtures costing individually Rs. 5,000 or less were depreciated fully in the year of purchase. In the current year, inorder to reflect a more appropriate presentation of the financial statements, the Company has changed this accounting estimate, whereby all assets irrespective of their classification costing individually Rs. 125,000 or less shall be depreciated fully in the year of purchase. Had the Company continued to follow the earlier accounting estimate the profit before tax for the year ended 31 December 2013 would have been higher byRs. 23 Million.

The useful lives are reviewed by the management at each financial year-end and revised, if appropriate. In case of a revision, the unamortized depreciable amount is charged over the revised remaining useful life.

A fixed asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal.

Assets retired from active use and held for disposal are stated at the lower of their net book value and net realisable value and shown under ''Other current assets''.

Losses arising from retirement or gains or losses arising from disposal of fixed assets which are carried at cost are recognised in the Statement of Profit and Loss.

Acquired intangible assets

Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less any accumulated amortisation and any accumulated impairment loss.

Intangible assets are amortised in Statement of Profit and Loss over their estimated useful lives, from the date that they are available for use based on the expected pattern of consumption of economic benefits of the asset. Accordingly, at present, these are being amortised on straight line basis based on the period of the licences or 3 years, whichever is higher. Such intangible assets that are not yet available for use are tested annually for impairment.

Amortisation method and useful lives are reviewed at each reporting date. If the useful life of an asset is estimated to be significantly different from previous estimates, the amortisation period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortisation method is changed to reflect the changed pattern.

An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use and disposal.

Losses arising from retirement and gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss.

2.5. Impairment

Tangible and intangible fixed assets are reviewed at each reporting date to determine if there is any indication of impairment. For assets in respect of which any such indication exists and for intangible assets mandatorily tested annually for impairment, the asset''s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets (cash generating unit or CGU) that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its net selling price. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

Impairment losses are recognised in the Statement of Profit and Loss.

If at the balance sheet date, there is an indication that a previously assessed impairment loss no longer exists or has decreased, the assets or CGU''s recoverable amount is estimated. For assets, the impairment loss is reversed to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Such a reversal is recognised in the Statement of Profit and Loss.

2.6. Operating leases

Assets acquired under leases other than finance leases are classified as operating leases. The total lease rentals (including scheduled rental increases) in respect of an asset taken on operating lease are charged to the Statement of Profit and Loss on a straight line basis over the lease term unless another systematic basis is more representative of the time pattern of the benefit. Initial direct costs incurred specifically for an operating lease are deferred and charged to the Statement of Profit and Loss over the lease term.

Assets given by the company under operating lease are included in fixed assets. Lease income from operating leases is recognized in the Statement of Profit and Loss on a straight line basis over the lease term unless another systematic basis is more representative of the time pattern in which benefit derived from the leased asset is diminished. Costs , including depreciation, incurred in earning the lease income are recognized as expenses.

2.7. Investments

Investments that are readily realisable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long term investments which is expected to be realized within 12 months after the reporting date is also presented under ''current assets'' as "current portion of long term investments" in consonance with the current-non- current classification scheme of revised Schedule VI.

Long-term investments (including current portion thereof) are carried at cost less any other-than-temporary diminution in value, determined separately for each individual investment.

Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.

Any reductions in the carrying amount and any reversals of such reductions are charged or credited to the Statement of Profit and Loss.

2.8. Inventories

Inventories which comprise stores, spares, fuel and lubricants are carried at the lower of cost and net realisable value.

In determining the cost, first-in-first-out (''FIFO'') basis method is used. Systematic provisioning is made for inventories held for more than a year.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

The comparison of cost and net realisable value is made on an item-by-item basis.

2.9. Employee benefits

Short term employee benefits

Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus, short term compensated absences, ex-gratia, etc. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognised as an expense as the related service is rendered by employees.

Post employment benefits

Defined contribution plans:

A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards employee provident fund to Government administered provident fund scheme which is a defined contribution plan. The Company''s contribution is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.

Defined benefit plan:

The Company''s gratuity benefit scheme is a defined benefit plan. The Company''s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation of the Company''s obligation under the plan is performed annually by a qualified actuary using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the Balance sheet date.

The Company recognises all actuarial gains and losses arising from defined benefit plans immediately in the Statement of Profit and Loss. All expenses related to defined benefit plans are recognised in employee benefits expense in the Statement of Profit and Loss. The Company recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.

The Company has funded its gratuity liability with Life Insurance Corporation of India (LIC) under the Group Gratuity cum Life Assurance (Cash Accumulation) Scheme.

Compensated Absences

The employees can carry-forward a portion of the unutilised accrued compensated absences and utilise it in future service periods or receive cash compensation on termination of employment. Since the compensated absences do not fall due wholly within twelve months after the end of the period in which the employees render the related service and are also not expected to be utilized wholly within twelve months after the end of such period, the benefit is classified as a long-term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method.

2.10. Revenue recognition

Revenue from operations is recognised as and when services are performed, the consideration is reliably determinable and no significant uncertainty exists regarding the collection of the consideration. The amount recognised as revenue is exclusive of service tax and education cess wherever applicable.

Interest income is recognised on a time proportion basis at the applicable interest rates.

Income from export incentives such as Served from India Scheme are recognized as other operating income provided no significant uncertainty exists for the measurability, realisation and utilisation of the credit under this scheme.

Dividend income is recognised when the right to receive payment is established.

2.11. Foreign currency transactions

Foreign currency transactions are recorded in Indian rupees using the rates prevailing on the date of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognized in the Statement of Profit and Loss of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, are translated into Indian rupees at the closing exchange rates on that date; the resultant exchange differences are recognised in the Statement of Profit and Loss.

Exchange difference arising on the forward exchange contracts entered into to hedge the foreign currency risk of existing assets and liabilities is recognized in the Statement of Profit and Loss.

Premium / discount in respect of forward contracts, are recognized over the life of contract, and exchange difference arising on renewal or cancellation of forward exchange contracts are recognized in the Statement of Profit and Loss.

2.12. Provisions

A provision is recognised if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. The provisions are measured on an undiscounted basis.

2.13. Contingent liabilities and contingent assets

A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote. Contingent assets are neither recognised nor disclosed in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.

In case of certain litigations, legal opinions are obtained as necessary to support management estimates.

2.14. Earnings per share (EPS)

The basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.

2.15. Income taxes

Income tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income- tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year).

Provision for current tax is based on the results for the year ended 31 December, in accordance with the provisions of the Income Tax Act, 1961.

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future, however when there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.

Minimum Alternative Tax (MAT) under the provisions of the Income Tax Act, 1961 is recognized as current tax. The credit available under the said act in respect of MAT is recognized as an asset only when there is certainty that the company will pay income tax in future periods and MAT credit can be carried forward to set-off against the normal tax liability. MAT credit recognized as an asset is reviewed at each Balance sheet date and written down to the extent the aforesaid certainty no longer exists.

b. Rights, preferences and restrictions attached to equity shares

The Company has a single class of equity shares. Accordingly, all equity rank equally with regard to dividends and share in the Company''s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.

On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.


Dec 31, 2012

The accounting policies set out below have been applied consistently to the periods presented in these financial statements.

1.1. Basis of preparation of financial statements

These financial statements have been prepared and presented on the accrual basis of accounting and comply with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, the relevant provisions of the Companies Act, 1956 ("the Act") and other accounting principles generally accepted in India, to the extent applicable.

This is the first year of application of the revised Schedule VI to the Act for the preparation of the financial statements of the company. The revised Schedule VI introduces some significant conceptual changes as well as new disclosures. These include classification of all assets and liabilities into current and non-current. The previous year figures have also undergone a major reclassification to comply with the requirements of the revised Schedule VI.

The Ministry of Company Affairs vide letter dated 31 May 2005 has given approval to the Company to show the figures in Balance Sheet and Statement of Profit and Loss and Other Schedules for the financial year ended on 31 March 2005 and onwards in "Rupees in million" under sub-section (1) of Section 211 of the Act. All figures unless otherwise stated are Rupees in million.

1.2. Use of estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods.

1.3. Current-non-current classification

All assets and liabilities are classified into current and non-current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

a) it is expected to be realised in, or is intended for sale or consumption in, the company''s normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is expected to be realised within 12 months after the reporting date; or

d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include the current portion of non-current financial assets.

All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

a) it is expected to be settled in the company''s normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is due to be settled within 12 months after the reporting date; or

d) the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification

Current liabilities include current portion of non-current financial liabilities.

All other liabilities are classified as non-current.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.

1.4. Fixed assets and depreciation

Tangible fixed assets

Tangible fixed assets are carried at cost of acquisition or construction less accumulated depreciation and/or accumulated impairment loss, if any. The cost of an item of tangible fixed asset comprises its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price.

Borrowing costs are interest and other costs (including exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred by the Company in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of those tangible fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised. Other borrowing costs are recognised as an expense in the period in which they are incurred.

Tangible fixed assets under construction are disclosed as capital work in progress and advances paid for the same are disclosed under long term advances.

Depreciation is provided on the straight-line method, over the estimated useful life of each asset as determined by the management. The rates of depreciation prescribed in Schedule XIV to the Act are considered as the minimum rates. If the management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management''s estimate of the useful life/remaining useful life. Pursuant to this policy, depreciation on following has been provided at the following rates which are higher than the corresponding rates prescribed in Schedule XIV of the Act:

Expenditure on roads constructed on land not owned by the Company - over the remaining concession period

Dredging - at 2% p.a.

Second hand Quay Cranes - First 5 years at 15% p.a. and next five years at 5% p.a.

Freehold land is not depreciated.

Depreciation is provided on a pro-rata basis i.e. from the date on which asset is ready for use.

Plant and equipment and furniture and fixtures, costing individually INR 5,000 or less, are depreciated fully in the year of purchase.6

Depreciation for the year is recognised in the Statement of Profit and Loss. However for revalued assets, the additional depreciation relatable to revaluation is adjusted by transfer from revaluation reserve to Statement of Profit and Loss.

The useful lives are reviewed by the management at each financial year-end and revised, if appropriate. In case of a revision, the unamortized depreciable amount is charged over the revised remaining useful life.

A fixed asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal.

Assets retired from active use and held for disposal are stated at the lower of their net book value and net realisable value and shown under ''Other current assets''.

Losses arising from retirement or gains or losses arising from disposal of fixed assets which are carried at cost are recognised in the Statement of Profit and Loss.

Acquired intangible assets

Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less any accumulated amortisation and any accumulated impairment loss.

Intangible assets are amortised in Statement of Profit or Loss over their estimated useful lives, from the date that they are available for use based on the expected pattern of consumption of economic benefits of the asset. Accordingly, at present, these are being amortised on straight line basis. In accordance with the applicable Accounting Standard, the Company follows a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. However, if there is persuasive evidence that the useful life of an intangible asset is longer than ten years, it is amortised over the best estimate of its useful life. Such intangible assets and intangible assets that are not yet available for use are tested annually for impairment.

Amortisation method and useful lives are reviewed at each reporting date. If the useful life of an asset is estimated to be significantly different from previous estimates, the amortisation period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortisation method is changed to reflect the changed pattern.

An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use and disposal.

Losses arising from retirement and gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss.

1.5. Impairment

Tangible and intangible fixed assets are reviewed at each reporting date to determine if there is any indication of impairment. For assets in respect of which any such indication exists and for intangible assets mandatorily tested annually for impairment, the asset''s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets (cash generating unit or CGU) that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its net selling price. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

Impairment losses are recognised in Statement of Profit or Loss.

If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists or has decreased, the assets or CGU''s recoverable amount is estimated. For assets, the impairment loss is reversed to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Such a reversal is recognised in the Statement of Profit or Loss.

Operating leases

Assets acquired under leases other than finance leases are classified as operating leases. The total lease rentals (including scheduled rental increases) in respect of an asset taken on operating lease are charged to the Statement of Profit and Loss on a straight line basis over the lease term unless another systematic basis is more representative of the time pattern of the benefit. Initial direct costs incurred specifically for an operating lease are deferred and charged to the Statement of Profit and Loss over the lease term.

1.6. Investments

Investments that are readily realisable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long term investments which is expected to be realized within 12 months after the reporting date is also presented under ''current assets'' as "current portion of long term investments" in consonance with the current-non-current classification scheme of revised Schedule VI.

Long-term investments (including current portion thereof) are carried at cost less any other-than-temporary diminution in value, determined separately for each individual investment.

Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.

1.7. Inventories

Any reductions in the carrying amount and any reversals of such reductions are charged or credited to the Statement of Profit and Loss.

Inventories which comprise stores, spares, fuel and lubricants are carried at the lower of cost and net realisable value.

Cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

In determining the cost, first-in-first-out (''FIFO'') basis method is used. Systematic provisioning is made for inventories held for more than a year.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

The comparison of cost and net realisable value is ma
1.8. Employee benefits

Short term employee benefits

Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus, short term compensated absences, ex-gratia, etc. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognised as an expense as the related service is rendered by employees.

Post employment benefits

Defined contribution plans:

A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards employee provident fund to Government administered provident fund scheme which is a defined contribution plan. The Company''s contribution is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.

Defined benefit plan:

The Company''s gratuity benefit scheme is a defined benefit plan. The Company''s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation of the Company''s obligation under the plan is performed annually by a qualified actuary using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the Balance sheet date.

The Company recognises all actuarial gains and losses arising from defined benefit plans immediately in the Statement of Profit and Loss. All expenses related to defined benefit plans are recognised in employee benefits expense in the Statement of Profit and Loss. When the benefits of a plan are improved, the portion of the increased benefit related to past service by employees is recognised in the Statement of Profit or Loss on a straight-line basis over the average period until the benefits become vested. The Company recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.

The Company has funded its gratuity liability with Life Insurance Corporation of India (LIC) under the Group Gratuity cum Life Assurance (Cash Accumulation) Scheme.

Compensated Absences

The employees can carry-forward a portion of the unutilised accrued compensated absences and utilise it in future service periods or receive cash compensation on termination of employment. Since the compensated absences do not fall due wholly within twelve months after the end of the period in which the employees render the related service and are also not expected to be utilized wholly within twelve months after the end of such period, the benefit is classified as a long-term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method.

1.9. Revenue recognition

Revenue from operations is recognised as and when services are performed, the consideration is reliably determinable and no significant uncertainty exists regarding the collection of the consideration. The amount recognised as revenue is exclusive of service tax and education cess wherever applicable.

Interest income is recognised on a time proportion basis at the applicable interest rates.

Income from export incentives such as Served from India Scheme are recognized as other operating income on an accrual basis.

1.10. Foreign currency transactions

Foreign currency transactions are recorded in Indian rupees using the rates prevailing on the date of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognized in the Statement of Profit and Loss of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, are translated into Indian rupees at the closing exchange rates on that date; the resultant exchange differences are recognised in the Statement of Profit and Loss.

Exchange difference arising on the forward exchange contracts entered into to hedge the foreign currency risk of existing assets and liabilities is recognized in the Statement of Profit and Loss.

Premium / discount in respect of forward contracts, are recognized over the life of contract, and exchange difference arising on renewal or cancellation of forward exchange contracts are recognized in the Statement of Profit and Loss.

1.11. Provisions

A provision is recognised if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. The provisions are measured on an undiscounted basis.

1.12. Contingent liabilities and contingent assets

A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote. Contingent assets are neither recognised nor disclosed in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.

In case of certain litigations, legal opinions are obtained as necessary to support management estimates.

1.13. Earnings per share (EPS)

The basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.

1.14. Income Taxes

Income tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income- tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year).

Provision for current tax is based on the results for the year ended 31 December, in accordance with the provisions of the Income Tax Act, 1961.

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future, however when there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.


Dec 31, 2011

1. Background

i. Gujarat Pipavav Port Limited, ("the Company") was incorporated on 5 August 1992 to construct, operate and maintain an all weather port at Pipavav, District Amreli, in the State of Gujarat.

ii. The port is designed to handle bulk, container and liquid cargo and to provide port services such as marine services, material handling and storage operations.

iii. The Company has entered into a 30 year Concession Agreement with Government of Gujarat and Gujarat Maritime Board ("GMB") dated 30 September 1998 to engage in the business of developing, constructing, operating and maintaining the port on a BOOT (Build Own Operate Transfer) basis.

iv. During the year 2005, AP Moller-Maersk group together with certain financial investors acquired the complete shareholdings held by the original promoter viz. SKIL group, on receipt of approval from Government of Gujarat, and Gujarat Maritime Board. Accordingly, AP Moller-Maersk group became the key promoter of the Company under the Concession Agreement.

I. Basis of preparation of financial statements

The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting to comply with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 and with relevant provisions of Companies Act, 1956 ('the Act').

The Ministry of Company Affairs vide letter dated 31 May 2005 has given approval to the Company to show the figures in Balance Sheet and Profit and Loss Account and Other Schedules for the financial year ended on 31 March 2005 and onwards in "Rupees in million" under sub-section (1) of Section 211 of the Companies Act,1956. All figures unless otherwise stated are Rupees in million.

II. Use of Estimates:

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future years.

III. Fixed assets and depreciation

i. Tangible fixed assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost includes:

a) Preoperative expenses incidental and related to construction of the fixed assets up to the date of commencement of commercial operations, net of income earned from pre-commercial operations during the construction period;

b) Inward freight, duties, taxes and expenses incidental to construction, acquisition and installation.

(CURRENCY : INDIAN RUPEES IN MILLION)

ii. Depreciation

Depreciation on tangible fixed assets is provided on straight line method (SLM), at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except in the case of following fixed assets, which are depreciated at higher rates based on management's estimates of useful life.

a) Expenditure on roads constructed on land not owned by the Company - over the remaining concession period

b) Dredging - at 2% p.a.

c) Second hand Quay Cranes - First 5 years at 15% p.a. and next five years at 5% p.a.

iii. Leasehold improvements are amortised over the primary lease period or useful life of assets, whichever is lower.

iv. Assets individually costing up to Rupees five thousand are fully depreciated in the year of acquisition.

IV. Intangible assets are recognised only when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of such assets can be measured reliably. Intangible assets are stated at cost less accumulated amortisation and impairment loss, if any. All costs relating to the acquisition are capitalised. Intangible assets are amortised over its estimated useful life of the assets.

V. In accordance with AS 28 on 'Impairment of assets', the Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount is the greater of the net selling price and value in use. Value in use is the present value of the estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. In assessing the value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account.

If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

VI. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as a part of the cost of such assets. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are charged to the profit and loss account as and when incurred.

VII. Foreign currency transactions

Foreign currency transactions are recorded using the rates prevailing on the date of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognized in the profit and loss account of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, are translated at the closing exchange rates on that date; the resultant exchange differences are recognised in the profit and loss account.

Exchange difference arising on the forward exchange contracts entered into to hedge the foreign currency risk of existing assets and liabilities is recognized in the profit and loss account.

(CURRENCY : INDIAN RUPEES IN MILLION)

Premium in respect of forward contracts, are recognized over the life of contract, and exchange difference arising on renewal or cancellation of forward exchange contracts are recognized in the profit and loss account.

VIII. Investments

Long-term investments are stated at cost. Provision for diminution in the value of long term investments is made if such decline is considered other than temporary.

IX. Inventories

Stores, spare parts, fuel and lubricants are valued at cost or net realisable value whichever is lower; the cost is calculated on first-in-first-out ('FIFO') basis. Systematic provisioning is made for inventories held for more than a year.

X. Income recognition

Revenue from operations is recognised as and when services are performed. Revenue is exclusive of service tax and education cess wherever applicable.

Interest income is recognised on a time proportion basis at the applicable interest rates.

XI. Insurance Claims

The Company recognises insurance claims when the recoverability of the claims is established with a reasonable certainty.

XII. Employee benefits

Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages, and short term compensated absences, etc. and the expected cost of ex-gratia are recognized in the period in which the employee renders the related service. The undiscounted amount of short term employee benefits, expected to be paid in exchange for the services rendered by employees is recognised during the year.

Long term employment benefits

The Company's net obligation in respect of long-term employment benefits consisting of long term compensated absence is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated based on an independent actuarial valuation at balance sheet date using the Projected Unit Credit Method and is discounted to its present value and the fair value of any related assets is deducted. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the profit and loss account.

Post employment benefits

Defined contribution plans:

Contributions payable to the recognized Provident Fund, which is defined contribution scheme, is charged to the profit and loss account during the period in which the employee renders the related service. The Company has no further obligations under the provident fund plan beyond its monthly contributions.

Defined benefit plan:

The Company's gratuity benefit scheme is a defined benefit plan. The Company's net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plan is determined based on an independent actuarial valuation at balance sheet date using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.

When the calculation results in a benefit to the Company, the recognised asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan. Actuarial gains and losses are recognized immediately in the profit and loss account.

The Company has funded its gratuity liability with Life Insurance Corporation of India (LIC) under the Group Gratuity cum Life Assurance (Cash Accumulation) Scheme.

XIII. Taxation

Tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year).

Provision for current tax is based on the results for the year ended 31 December, in accordance with the provisions of the Income Tax Act, 1961. The final tax liability will be determined on the basis of the taxable profit for the period 1 April to 31 March, being the tax year of the Company.

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future, however when there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets.

Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.

XIV. Provisions and Contingent liabilities

The Company creates a provision where there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. In case of certain litigations, legal opinions are obtained as necessary to support management estimates.

(CURRENCY : INDIAN RUPEES IN MILLION)

XV. Earnings Per Share (EPS)

The basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.

XVI. Lease

Lease rentals in respect of assets acquired under operating lease are charged to profit and loss account on straight line basis.


Dec 31, 2010

I. Basis of preparation of financial statements

a. The financial statements have been prepared on a going concern basis and on accrual basis, under the historical cost convention and in accordance with the generally accepted accounting principles, the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards (NACAS) and relevant provisions of Companies Act, 1956 (the Act), to the extent applicable.

The Ministry of Company Affairs vide letter dated 31 May 2005 has given approval to the Company to show the figures in Balance Sheet and Profit and Loss Account and Other Schedules for the financial year ended on 31 March 2005 and onwards in "Rupees in million" under sub-section (1) of Section 211 of the Companies Act, 1956. All figures unless otherwise stated are Rupees in million.

b. Going Concern

These Financial Statements are prepared on a going concern basis as the Management believes that the Company will be able to meet its debts and other financial obligations as on 31 December 2010 and in the near future as and when they fall due based on the following :

i Updated cash flow projections as prepared by the management based on Business plan approved by Board of Directors.

ii Raising new equity of INR 5,000 million through an Initial Public Offer (IPO) concluded in September 2010;

iii Reduced level of long term debt consequent to the prepayment of INR 3,095 million in September 2010. The balance loan of INR 7,654 million as at 31 December 2010 is repayable on a scaling basis over a period of 12 years commencing from 1 June 2012.

II. Use of Estimates:

The preparation of financial statements in conformity with the generally accepted accounting principles often requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future years.

///. Fixed assets and depreciation

i. Tangible fixed assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost includes:

a) Preoperative expenses incidental and related to construction of the fixed assets upto the date of commencement of commercial operations, net of income earned from pre-commercial operations during the construction period;

b) Inward freight, duties, taxes and expenses incidental to construction, acquisition and installation.

ii. Depreciation

Depreciation on tangible fixed assets is provided on straight line method (SLM), at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except in the case of following fixed assets, which are depreciated at higher rates based on managements estimates of useful life.

a) Expenditure on roads constructed on land not owned by the Company - over the remaining concession period

b) Dredging-at 2% p.a.

c) Second hand Quay Cranes - First 5 years at 15% p.a. and next five years at 5% p.a.

iii. Leasehold improvements are amortised over the primary lease period or useful life of assets, whichever is lower.

iv. Assets individually costing upto Rupees five thousand are fully depreciated in the year of acquisition.

v. Intangible assets are recognised only when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of such assets can be measured reliably. Intangible assets are stated at cost less accumulated amortisation and impairment loss, if any. All costs relating to the acquisition are capitalised. Intangible assets are amortised over its estimated useful life of the assets.

vi. In accordance with Accounting Standard 28 - Impairment of assets (AS 28), the carrying amounts of the Companys assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets "recoverable amount" is estimated, as the higher of the "net selling price" and the "value in use". Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the assets and from its disposal at the end of its useful life. An impairment loss is recognised whenever the "carrying amount" of an asset or its "cash generating unit" exceeds its "recoverable amount".

IV. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as a part of the cost of such assets. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are charged to the profit and loss account as and when incurred.

V. Foreign currency transactions

Foreign currency transactions are recorded using the rates prevailing on the date of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognized in the profit and loss account of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, are translated at the closing exchange rates on that date; the resultant exchange differences are recognised in the profit and loss account

Exchange difference arising on the forward exchange contracts entered into to hedge the foreign currency risk of existing assets and liabilities is recognized in the profit and loss account.

Premium in respect of forward contracts, are recognized over the life of contract, and exchange difference arising on renewal or cancellation of forward exchange contracts are recognized in the profit and loss account.

VI. Investments

Long-term investments are stated at cost. Provision for diminution in the value of long term investments is made if such decline is considered other than temporary.

VII. Inventories

Stores, spare parts, fuel and lubricants are valued at cost or net realisable value whichever is lower; the cost is calculated on first-in-first-out (FIFO) basis. Systematic provisioning is made for inventories held for more than a year.

VIII. Income recognition

Revenue from operations is recognised as and when services are performed. Revenue is exclusive of service tax and education cess wherever applicable.

Interest income is recognised on a time proportion basis at the applicable interest rates.

IX. Insurance Claims

The Company recognises insurance claims when the recoverability of the claims is established with a reasonable certainty.

X. Employee benefits

Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages, and short term compensated absences, etc. and the expected cost of ex-gratia are recognized in the period in which the employee renders the related service. The undiscounted amount of short term employee benefits, expected to be paid in exchangefor the services rendered by employees is recognised during the year.

Long term employment benefits

The Companys net obligation in respect of long-term employment benefits consisting of long term compensated absence is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated based on an independent actuarial valuation at balance sheet date using the Projected Unit Credit Method and is discounted to its present value and the fair value of any related assets is deducted. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the profit and loss account.

Post employment benefits

Defined contribution plans:

Contributions payable to the recognized Provident Fund, which is defined contribution scheme, is charged to the profit and loss account during the period in which the employee renders the related service. The Company has no further obligations under the provident fund plan beyond its monthly contributions.

Defined benefit plan:

The Companys gratuity benefit scheme is a defined benefit plan. The Companys net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plan is determined based on an independent actuarial valuation at balance sheet date using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.

When the calculation results in a benefit to the Company, the recognised asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan. Actuarial gains and losses are recognized immediately in the profit and loss account.

The Company has funded its gratuity liability with Life Insurance Corporation of India (LIC) under the Group Gratuity cum Life Assurance (Cash Accumulation) Scheme.

XI. Taxation

Tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year). Provision for current tax is based on the results for the year ended 31 December, in accordance with the provisions of the Income Tax Act, 1961. The final tax liability will be determined on the basis of the taxable profit for the period 1 April to 31 March, being the tax year of the Company.

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future, however when there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets.

Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.

XII. Provisions and Contingent liabilities

The Company creates a provision where there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. In case of certain litigations, legal opinions are obtained as necessary to support management estimates.

XIII. Earnings Per Share (EPS)

The basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.

XIV. Lease

Lease rentals in respect of assets acquired under operating lease are charged to profit and loss account on straight line basis.


Dec 31, 2009

I. Basis of preparation of financial statements

a. The financial statements have been prepared on a going concern basis and on accrual basis, under the historical cost convention and in accordance with the generally accepted accounting principles, the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards (NACAS) and relevant provisions of Companies Act, 1956 (the Act), to the extent applicable.

The Ministry of Company Affairs vide letter dated 31 May 2005 has given approval to the Company to show the figures in Balance Sheet and Profit and Loss Account and Other Schedules for the financial year ended on 31 March 2005 and onwards in "Rupees in million" under sub-section (1) of Section 211 of the Companies Act, 1956. All figures unless otherwise stated are Rupees in million.

b. Going Concern

Management believes that the Company will be able to meet its debts and other financial obligations as on 31 December 2009 and in the near future as and when they fall due based on the following mitigating factors:

i Updated cash flow projections as prepared by the management based on Business plan approved by Board of Directors.

ii Debt of Rs 12,000 million tied up with consortium of banks led by IDFC, of which Rs 10,599.26 million has been drawn upto 31 December 2009;

iii Sponsor Support Undertaking provided by AP Moller- Maersk A/S for total amount not exceeding Rs. 3,000 million to new lenders which stands reduced to Rs. 2,000 million as the holding company has subscribed for shares aggregating Rs 1,000 million during the year;

iv Issue of shares to the Holding Company during the year amounting to Rs. 1,000 million;

v Proposed Initial Public Offer (IPO) for Rs. 5,000 million in the year 2010.

Accordingly these financial statements are prepared on a going concern basis. Further management is of the opinion that no adjustments are required to the recoverability and classification of the carrying amounts of the assets.

II. Use of Estimates:

The preparation of financial statements in conformity with the generally accepted accounting principles often requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future years.

III. Tangible fixed assets and depreciation

i. Tangible fixed assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost includes:

a) Preoperative expenses incidental and related to construction of the fixed assets upto the date of commencement of commercial operations, net of income earned from pre-commercial operations during the construction period;

b) Inward freight, duties, taxes and expenses incidental to construction, acquisition and installation.

ii. Depreciation

Depreciation on tangible fixed assets is provided on straight line basis (SLM), at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except in the case of following fixed assets, which are depreciated at higher rates based on the estimated useful life:

a) Expenditure on roads constructed on land not owned by the Company over the remaining concession period

b) Dredging - at 2% p.a.

c) Second hand Quay Cranes - First 5 years at 15% p.a. and next five years at 5% p.a.

iii. Leasehold improvements are amortised over the primary lease period.

iv. Assets individually costing upto rupees five thousand are fully depreciated in the year of acquisition.

IV. Intangible Asset

Intangible assets are recognised only when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of such assets can be measured reliably. Intangible assets are stated at cost less accumulated amortisation and impairment loss, if any. All costs relating to the acquisition are capitalised. Intangible assets are amortised over its estimated useful life of the assets.

V. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as a part of the cost of such assets. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are charged to the profit and loss account as and when incurred.

VI. Impairment of assets

In accordance with Accounting Standard 28 - Impairment of assets (AS 28), the carrying amounts of the Companys assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated, as the higher of the net selling price and the value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the assets and from its disposal at the end of its useful life. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount.

VII. Foreign currency transactions

a. Foreign currency transactions are recorded using the rates prevailing on the date of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognized in the profit and loss account of the year.

b. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, are translated at the closing exchange rates on that date; the resultant exchange differences are recognised in the profit and loss account

c. Exchange difference arising on the forward exchange contracts entered into to hedge the foreign currency risk of a firm commitment or a highly probable forecast transaction is recognized in the profit and loss account.

Premium in respect of forward contracts, are recognized over the life of contract, and exchange difference arising on renewal or cancellation of forward exchange contracts are recognized in the profit and loss account.

VIII. Investments

Long-term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such decline is other than temporary.

IX. Inventories

Stores and spare parts, fuel and lubricants are valued at cost or net realisable value whichever is lower; the cost is calculated on first in first out (FIFO) basis. Systematic provisioning is made for inventories held for more than a year.

X. Revenue recognition

i. Revenue from operations is recognised as and when services are performed. Revenue is exclusive of service tax and education cess wherever applicable.

ii. Interest income is recognised on a time proportion basis at the applicable interest rates.

XI. Employee benefits

(a) Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages, and short term compensated absences, etc. and the expected cost of ex-gratia are recognized in the period in which the employee renders the related service. The undiscounted amount of short term employee benefits, expected to be paid in exchange for the services rendered by employees is recognised during the year.

(b) Long term employment benefits:

The Companys net obligation in respect of long-term employment benefits consisting of long term compensated absence is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using the Projected Unit Credit Method and is discounted to its present value and the fair value of any related assets is deducted. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.

(c) Post employment benefits

Defined contribution plans:

Contributions payable to the recognized Provident Fund, which is defined contribution scheme, is charged to the profit and loss account during the period in which the employee renders the related service. The Company has no further obligations under the provident fund plan beyond its monthly contributions.

Defined benefit plan:

The Companys gratuity benefit scheme is a defined benefit plan. The Companys net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.

When the calculation results in a benefit to the Company, the recognised asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan. Actuarial gains and losses are recognized immediately in the profit and loss account.

The Company has funded its gratuity liability with Life Insurance Corporation of India (LIC) under the Group Gratuity cum Life Assurance (Cash Accumulation) Scheme.

XII. Taxation

Tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income-tax law), deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year) and fringe benefits tax. Provision for current tax is based on the results for the year ended 31 December, in accordance with the provisions of the Income Tax Act, 1961. The final tax liability will be determined on the basis of the taxable profit for the year 1 April to 31 March, being the tax year of the Company

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future, however when there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets.

Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.

Provision for fringe benefits tax is made on the basis of the applicable rates on the taxable value of eligible expenses of the Company, as prescribed under the Income Tax Act, 1961.

XIII. Insurance Claims

The Company recognises insurance claims when the recoverability of the claims is established with a reasonable certainty.

XIV. Provisions and Contingent liabilities

The Company creates a provision where there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. In case of certain litigations, legal opinions are obtained as necessary to support management estimates.

XV. Earnings per share (EPS)

The basic earnings per share is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.

XVI. Lease

Lease rentals in respect of assets acquired under operating lease are charged to profit and loss account on straight line basis.


Dec 31, 2005

1. Basis of preparation of financial statements:

i. The financial statements have been prepared on a going concern basis and on accrual basis, under the historical cost convention and in accordance with the generally accepted accounting principles, the accounting standards issued by the Institute of Chartered Accountants of India and provisions of the Companies Act, 1956, which have been adopted consistently by the Company.

ii. Going Concern

The Companys management believes that the Company will be able to meet its debts and other financial obligations as on 31 December 2005 and in the foreseeable future as and when they fall due based on the following mitigating factors.

i) Additional capital infusion of Rs 2,000 (inclusive of securities premium) received during the period.

ii) Debt of Rs 5,962 tied up with IDFC, of which Rs 509.17 has been drawn down during the period.

iii) Expansion plan under implementation; and

iv) Updated cash flow projections as prepared by the management based on Business plan approved by Board of Directors.

Accordingly these financial statements are prepared on a going concern basis. Further management believes that no adjustments are required to the recoverability and classification of the carrying amounts of the assets.

iii. With effect from the current accounting period, the Company has changed its financial year ending from 31 March to year ending 31 December. Accordingly the current financial period is for nine months ending 31 December 2005. As such the figures of the current financial period are not directly comparable with those of the previous year.

iv. Use of Estimates:

The preparation of financial statements in conformity with the generally accepted accounting principles often requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and reported amount of revenues and expenses during the reporting period. Any differences between the actual result and estimates are recognized in the period in which the results are known / materialise.

3. Significant accounting policies

A. Fixed assets and depreciation

i. Fixed assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost includes:

- Preoperative expenses incidental and related to construction of the port facility upto the date of commencement of commercial operations, net of income earned from pre-commercial operations during the construction period;

- Inward freight, duties, taxes and expenses incidental to construction, acquisition and installation; and

- Financing costs in relation to the specific borrowings for fixed assets upto the date the assets are put to use. In the case of general borrowing, the financing costs are included as part of preoperative expenses.

ii. Pre-operative expenses incidental and related to construction of the respective assets have been included under "Expenditure pending allocation- net". Such expenditure has been capitalised to fixed assets on completion, in accordance with the generally accepted accounting principles.

iii. Depreciation

I. Depreciation on fixed assets is provided on straight line basis (SLM), at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except in the case of following fixed assets, which are depreciated at different rates :

a) Expenditure on roads constructed on land not owned by the Company -over the remaining concession period

b) Dredging - at 2% p.a.

c) Second hand Quay Cranes - First 5 year at 15% p.a. and next five years at 5% p.a.

iv. Assets individually costing upto rupees five thousand are fully depreciated in the year of acquisition.

v. In accordance with Accounting Standard 28 - Impairment of assets (AS 28), the carrying amounts of the Companys assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated, as the higher of the net selling price and the value in use. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount.

B. Foreign currency transactions

a. Foreign currency transactions are recorded using the rates prevailing on the date of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognized in the profit and loss account of the year, except exchange differences related to acquisition of fixed assets from countries outside India, which are adjusted in the carrying amount of the related fixed assets.

b. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, are translated at the closing exchange rates on that date; the resultant exchange differences are recognised in the profit and loss account except those related to acquisition of fixed assets from countries outside India, which are adjusted in the carrying amount of the related fixed assets

c. Exchange difference arising on the forward exchange contracts entered into to hedge the foreign currency risk of a firm commitment or a highly probable forecast transaction is recognised in the profit and loss account.

Premium in respect of forward contracts, recognised over the life of contract, and exchange difference arising on renewal or cancellation of forward exchange contracts are recognized in the profit and loss account.

C. Investments

Long-term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such decline is of a permanent nature.

D. Inventories

Stores and spare parts are valued at cost or net realisable value whichever is lower; the cost is calculated on FIFO basis. Systematic provisioning is made for inventories held for more than a year.

E. Revenue recognition

i. Revenue from operations is recognised as and when services are performed.

ii. Interest income is recognised on a time proportion basis at the applicable interest rates.

F. Employee retirement benefits

i Companys contribution to a recognised Provident Fund is provided for in the year in which the contribution is due.

ii The Company is funding its gratuity liability with Life Insurance Corporation of India (LIC) under the Group Gratuity cum Life Assurance (Cash Accumulation) Scheme. Annual contributions to the scheme, based on actuarial valuation by LIC, are charged to the profit and loss account.

iii Leave encashment liability is determined, based on an independent actuarial valuation carried out at the year- end.

G. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as a part of the cost of such assets. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are charged to the profit and loss account as and when incurred.

H. Taxation

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charged or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period).

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future, however when there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets.

Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.

I. Insurance Claims

The Company recognises insurance claims when the recoverability of the claims is established with a reasonable certainty.

J. Provisions and Contingent liabilities

The Company creates a provision where there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. In case of certain litigations, legal opinions are obtained as necessary to support management estimates.

The Company has adopted a policy to provide for overdue sundry debtors on a progressive basis.

K. Earnings per share

The basic earnings per share is computed by dividing the net profit attributable to the equity shareholders for the period, by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing Diluted EPS comprises of weighted average shares considered for deriving Basic EPS, and also weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.


Mar 31, 2005

1. Basis of preparation of financial statements:

i. The financial statements have been prepared on a going concern basis and on accrual basis, under the historical cost convention and in accordance with the generally accepted accounting principles, the accounting standards issued by the Institute of Chartered Accountants of India and provisions of the Companies Act, 1956, which have been adopted consistently by the Company.

ii. Going Concern

The Companys management believes that the Company will be able to meet its debts and other financial obligations as on 31 March 2005 and in the foreseeable future as and when they fall due based on the following mitigating factors.

Additional capital infusion of Rs 1,450 (inclusive of share premium) received subsequent to the Balance Sheet date and a further equity contribution of Rs 550 is expected;

Additional debt of Rs 5,962 tied up with IDFC, of which Rs 255.77 has been drawn down subsequent to year end.

Expansion plans approved and under implementation; and

Updated cash flow projections as prepared by the management based on Business plan approved by Board of Directors.

Accordingly these financial statements are prepared on a going concern basis. Further management believes that no adjustments are required to the recoverability and classification of the carrying amounts of the assets.

iii. Use of Estimates:

The preparation of financial statements is in conformity with the generally accepted accounting principles often requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and reported amount of revenues and expenses during the reporting period. Any differences between the actual result and estimates are recognized in the period in which the results are known / materialize.

3. Significant accounting policies

A. Fixed assets and depreciation

i. Fixed assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost includes:

Preoperative expenses incidental and related to construction of the port facility upto the date of commencement of commercial operations, net of income earned from pre-commercial operations during the construction period;

Inward freight, duties, taxes and expenses incidental to construction, acquisition and installation; and

Financing costs in relation to the specific borrowings for fixed assets upto the date the assets are put to use. In the case of general borrowing, the financing costs are included as part of preoperative expenses.

ii. Pre-operative expenses incidental and related to construction of the respective assets have been included under "Expenditure pending allocation- net". Such expenditure has been capitalised to fixed assets on completion, in accordance with the generally accepted accounting principles.

iii. Depreciation on fixed assets other than second hand Quay cranes has been provided on pro rata basis from the month of addition, on straight line method, at the rates prescribed in Schedule XIV of the Companies Act 1956 or estimated useful life, whichever is higher, without restricting the estimated useful life to the end of the concession period. Management believes that it is unlikely that the Company will incur any loss on the transfer of assets, since the transfer is based on the depreciated replacement value. Depreciation on second hand Quay cranes is provided (using the straight line method) over a period of ten years being the economic useful life of the asset as estimated by the management, which is higher than that prescribed by schedule XIV of the Companies Act, 1956. Depreciation is adjusted in subsequent periods to allocate the assets revised carrying amount after the recognition of impairment loss, on a systematic basis over its remaining useful life. Improvements to leasehold premises are amortised over the primary lease of the lease. Assets individually costing upto rupees five thousand are fully depreciated in the year of acquisition.

iv. Expenditure on roads constructed on land not owned by the Company is disclosed under fixed assets.

Such roads are depreciated on the straight line method over the remaining concession period over which benefits are to be derived, although the Guidance Note issued by the Institute of Chartered Accountants of India on Treatment of expenditure during construction period suggests that expenditure on assets not owned by the Company should be written off over the approximate period of its utility or over a relatively brief period not exceeding five years.

v. In accordance with Accounting Standard 28 - Impairment of assets (AS 28), the carrying amounts of the Companys assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated, as the higher of the net selling price and the value in use. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount.

B. Foreign currency transactions

a. Foreign exchange transactions are recorded using the rates prevailing on the date of the respective transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the profit and loss account of the year, except exchange differences related to acquisition of fixed assets from countries outside India, which are adjusted in the carrying amount of the related fixed assets.

b. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognised in the profit and loss account except those related to acquisition of fixed assets from countries outside India, which are adjusted in the carrying amount of the related fixed assets.

C. Investments

Long-term investments are stated at cost and quoted current investment at lower of cost or market value. Provision for diminution in the value of long term investments is made only if such decline is of a permanent nature.

D. Inventories

Stores and spare parts are valued at cost or realisable value whichever is lower; the Cost is calculated on FIFO basis.

E. Revenue recognition

i. Revenue from operations is recognized as and when services are performed.

ii. Interest income is recognized on a time proportion basis at the applicable interest rates.

F Employee retirement benefits

i Companys contribution to a recognised Provident Fund is provided for in the year in which the contribution is due.

ii The Company is funding its gratuity liability with Life Insurance Corporation of India (LIC) under the Group

Gratuity cum Life Assurance (Cash Accumulation) Scheme. Annual contributions to the scheme, based on actuarial valuation by LIC, are charged to the profit and loss account.

iii Leave encashment liability is determined, based on an independent actuarial valuation carried out at the year-end.

G. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as a part of the cost of such assets. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are charged to the profit and loss account as and when incurred.

H. Taxation

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charged or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future, however when there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.

I Insurance Claims

The Company recognises insurance claims when the recoverability of the claims is established with a reasonable certainty.

J Provisions and Contingent liabilities

The Company creates a provision where there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. In case of certain litigations, legal opinions are obtained as necessary to support management estimates.

K. Earnings per share

The basic earnings per share is computed by dividing the net profit attributable to the equity shareholders for the period, by the weighted average number of equity shares outstanding during the reporting period.

 
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