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Notes to Accounts of Ramky Infrastructure Ltd.

Mar 31, 2015

1. Company overview

Ramky Infrastructure Limited ("the Company") is an integrated construction, infrastructure development and management company headquartered in Hyderabad, India. The Company diversified in a range of construction and infrastructure projects in various sectors such as water and waste water, transportation, irrigation, industrial construction and parks (including SEZs), power transmission and distribution, and residential, commercial and retail property. A majority of the development projects of the Company are based on Public-Private Partnerships (PPP) and are operated by separate Special Purpose Vehicles (SPV) promoted by RIL, joint venture partners and respective Governments.

2. Leases

The Company is obligated under cancellable operating lease agreements. Total rental expense for the period under cancellable leases was Rs. 5.90crores(previous year: Rs. 8.26crores) has been disclosed as 'Rent' in the statement of profit and loss.

3. As at March 31, 2015, the Company has recognized deferred tax asset aggregating to Rs. 409.08 Crore including an amount of Rs. 209.88 crore recognized during the year on account of timing differences on unabsorbed depreciation,business losses and other timing differences incurred by the Company during the year. Based on unexecuted orders on hand, which in the opinion of the management does meet the criteria of establishing the virtual certainty of sufficient future taxable income for realisation of deferred tax assets as enunciated in Accounting Standard 22 "Accounting for Taxes on Income" (AS 22). (refer note 14)

4. During the year, Company's road project, at Srinagar in Jammu and Kashmir, has impacted due to the floods. The insured concessionaire of the Project, a subsidiary Company, has lodged a claim of Rs. 141.51Crore for the damage to the project materials and assets located at the site with the insurers. After an initial assessment/survey, an amount of Rs. 14.99Crore was released by the insurer on provisional basis and the same was received by the company being a principal contractor. Pending final settlement of claim, no adjustment has been made in the financial statements for the year. The management of the company does not expect any material adjustment for loss to be provided for in this respect.

5. During the year ended 31 March 2015, an amount of Rs. 580.78 crores (including amount pertaining to advances, retention money, contract work-in- progress and performance bank guarantees invoked) is receivable from customers against the contracts not been pursued on account of foreclosure by the Company/disputes with customers. The Management of the Company, keeping in view the long term nature of the contracts, terms and condition implicit in these contracts and the ongoing discussion based on which steps to recover are currently in process, is confident of recovering the amount as they are contractually tenable.

6. During the year the Company has incurred a Net Loss of Rs. 445.48 Crore resulting into accumulated losses of Rs. 276.72 Crore and erosion of its reserves. The Company has obligations towards borrowings aggregating to Rs. 1,565.13 Crore including an amount of Rs. 1383.61 crore falling due over next twelve months period, obligations pertaining to operations including unpaid creditors and statutory dues as at March 31, 2015. These matters require the Company to generate additional cash flows to fund the operations as well as other statutory obligations notwithstanding the current level of low operating activities. The Company has plans to divest its stake in certain subsidiaries undertaking BOT projects for generation of cash flows and during the year, approached lender Bankers with a scheme seeking certain reliefs in relation to repayment timelines of loans and accumulated unpaid interest which was approved by the Bankers with certain conditions. The Company is confident of implementing the divestment and approved restructuring scheme with lenders and meeting its obligations in due course of time.

7. During an earlier year ended March 31, 2013 a search and seizure operation under section 132 of the Income Tax Act, 1961 was carried out by the Income Tax Authority on the Company's premises. The Company had accepted for additional disallowances and filed revised returns for the respective previous year and accounted respective tax expenses of Rs.10.78 Crore. Further, the Company made a provision for income tax aggregating to Rs. 66.56 crore during financial year ended March 31, 2012, on account of disallowance of the deductions claimed by the Company under Section 80-IA (4) of the Income Tax Act, 1961 relating to assessment years 2003-04 to 2013-14. During the year, based on the centralized assessment for the financial years upto 2011-12, a refund of Rs. 51.89 crores (including Rs. 11.99 crores for interest) as ascertained by department, has been accounted for during the year ended March 31, 2015. This has resulted into reversal of provision of income tax amounting to Rs. 74.62 crores, including Rs. 62.47 Crore directly credited to the surplus in statement of profit and loss account balance under "Reserve and Surplus" for the year ended March 31, 2015. (Refer Note 4)

8. Prior period expenses' aggregating to Rs. 33.64 Crore represents charge of depreciation on shuttering material amounting to Rs. 15.80 Crore and unrealizable VAT receivable recognized in earlier years amounting to Rs. 17.84 Crore. (Refer Note 26)

9. In accordance with the Companies Act, 2013, the Company has revised the useful life of its fixed assets to comply with the useful life as mentioned in the schedule - II of the said Act. As per the transitional provisions, the Company has adjusted Rs. 3.41 Crore (net of deferred tax of Rs. 1.31 crore) from the opening balance of retained earnings. (Refer Note 4)

10. Segment information

a) Business Segment:

The services rendered by the Company primarily consist of execution of civil contracts on turnkey basis. The Company is managed organizationally as a unified entity and not along product lines and accordingly, there is only one business segment.

b) Geographical Segment:

During the year under report, the Company has engaged in its business primarily within India. The conditions prevailing in India being uniform, no separate geographical disclosure is considered necessary.

11. Related party disclosures a) List of related parties:

i) Subsidiary Companies including a step down subsidiary Company Name of the related party

1 Ramky Pharma City (India) Limited

2 MDDA-Ramky IS Bus Terminal Limited

3 Ramky Food Park (Chattisgarh) Limited

4 Naya Raipur Gems and Jewellery SEZ Limited

5 Ramky Herbal and Medicinal Park (Chattisgarh) Limited

6 Ramky - MIDC Agro Processing Park Limited

7 Ramky Engineering and Consulting Services (FZC)

8 Ramky Elsamex Hyderabad Ring Road Limited

9 Ramky Towers Limited

10 Ramky Enclave Limited

11 Ramky Esco Limited

12 Srinagar Banihal Expressway Limited

13 Ramky Multi Product Industrial Park Limited

14 Ramky Food Park (Karnataka) Limited

15 Sehore Kosmi Tollways Limited

16 Agra Etawah Tollways Limited

17 Hospet Chitradurga Tollways Limited

18 Frank Lloyd Tech Management Services Limited

19 Jabalpur Patan Shahpura Tollways Limited

20 Ramky Infrastructure Sociedad Anonima Cerradda (Step-down subsidiary company)

21 JNPC Pharma Innovation Limited (Step-down subsidiary company)

22 Ramky Engineering and Consulting Services Gabon SA (Step-down subsidiary company)

12. There is no micro or small enterprises, under the Micro, Small and Medium Enterprises Development Act, 2006, to whom the Company owes dues, which are outstanding as at March 31, 2015 (FY 13-14: NIL).The Company has not received any claim for interest from any supplier under the said Act.

13. Disclosures pursuant to Accounting Standard (AS) 7 - Construction Contracts:

In terms of the disclosures required to be made under the Accounting Standard 7 for 'Construction Contracts' as notified in the Companies (Accounting Standards) Rules, 2006, the amounts considered in the financial statements up to the Balance Sheet date are as follows:

14. Contract revenue earned in foreign currency On accrual basis during the year is Rs. Nil and for the previous year ended March 31, 2014 is Rs. 0.82 Crore.

15. Value of imports on C.I.F. basis (on accrual basis) in respect of Plant & equipment for current year is Rs. Nil and previous year ended March 31, 2014 is Rs. 6.74 Crore.

16. Additional information as required under paragraph 5 of the part II of the Schedule III to the Act to the extent either "Nil" or "Not Applicable" has not been furnished.

17. Comparative figures Previous year's figures have been regrouped/reclassified, where necessary, to confirm to current year's classification.


Mar 31, 2013

Company overview

Ramky Infrastructure Limited (RIL) is an integrated construction, infrastructure development and management company headquartered in Hyderabad, India. The Company diversified in a range of construction and infrastructure projects in various sectors such as water and waste water, transportation, irrigation, industrial construction and parks (including SEZs), power transmission and distribution, and residential, commercial and retail property. A majority of the development projects of the Company are based on Public-Private partnerships (PPP) and are operated by separate Special Purpose Vehicles (SPV) promoted by RIL, joint venture partners and respective Governments.

1.1 Commitments and contingent liabilities: (Rs. in Crores)

As at As at 31 March 2013 31 March 2012

i) Commitments:

(a) Equity commitments towards subsidiaries and jointly controlled entities 825.92 882.85

(b) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 20.10 6.49

ii) Contingent liabilities:

(a) Performance Guarantees issued by banks: On behalf of the subsidiaries associate and other 205.44 111.19

(b) Corporate guarantees to banks and financial institutions against credit facilities extended to: Subsidiaries, step-down subsidiary and jointly controlled entity 280.44 303.73

iii) Claims against the Company not acknowledged as debts in respect of:

(a) Indirect tax and other matters 213.01 140.76

(b) Disputed claims from customers and vendors 32.58 1.77

1.2 Nature, terms of repayment and delays in repayment of borrowings are as follows: Secured borrowings:

a. Term loan from bank amounting to Rs. 150 crores (previous year Rs. 75 crores) are secured by way of residual charge over moveable fixed and current assets (both present and future) ranking subsequent to prior charge created in favour of other lenders and first and exclusive ranking charge over all the receivables both present and future arising out of debt infused in the infrastructure project companies and by way of first and exclusive ranking charge over Debt Service Reserve Account (DSRA). This loan is repayable in 24 equal quarterly instalments starting at the end of 15 months from the first draw down date (i.e. 8 February 2012) along with interest of 10% p.a plus spread payable on monthly basis.

b. Term loan from bank amounting to Rs. Nil (previous year Rs. 45 crores) was secured by pari-passu charge on the entire project specific current assets. Loan amount was repaid by the Company during the current year. Interest rate was applicable at 11.75% p.a to 12.00% p.a. paid on monthly basis.

c. Equipment and vehicle loans from banks amounting to Rs. 28.29 crores (previous year: Rs. 36.75 crores) and from others amounting to Rs. 81.23 crores (previous year: Rs. 95.35 crores) are secured by way of hypothecation of the respective equipment/ vehicles. These loans are repayable in monthly payment of equated monthly instalments beginning along the month subsequent to the loan along with interest in the range of 7.05% p.a. to 12.00% p.a. and 6.55% p.a. to 13.50% p.a. against loans taken from banks and others respectively.

d. Buyers credit from banks amounting to Rs. 24.14 crores (previous year: Rs. 24.63 crores) are secured by way of first pari-passu charge on the current assets of the Company namely raw materials, contract work-in-progress, bills receivable and book debts and all other movables both present and future of the Company and exclusive charge on the capital equipment imported with loan proceeds. Buyers credit are obtained on short-term basis and repayable within 360 days from the date of drawdown along with the interest in the range of 1.94% p.a. to 3.30% p.a

e. Cash credits from banks amounting to Rs. 582.49 crores (previous year: Rs. 242.22 crores) and working capital loans from banks amounting to Rs. 230.00 crores (previous year Rs. 409.25 crores) are secured by way of:

(i) first pari-passu charge on the current assets of the Company namely raw materials, contract work-in-progress, bills receivable and book debts and all other movables both present and future of the Company along with other working capital lenders; and

(ii) first charge on the entire unencumbered fixed assets of the company ranking pari-passu basis to all the working capital lenders.

Cash credits are repayable on demand along with interest in the range of 10.20% p.a. to 14.50% p.a. (previous year: 12.50% p.a. to 14.45% p.a.) payable on monthly basis. Working capital loans are repayable within 90 to 180 days from the date of drawdown along with the interest in the range of 11.50% p.a. to 13.50% p.a. (previous year: 11.75% p.a. to 12.50% p.a.) payable on monthly basis.

f. Loan outstanding for repayment represent working capital loan from a bank amounting to Rs. 24.96 crores were secured by way of post-dated cheques submitted by the Company. The Company has defaulted in the repayment of the working capital loan which was due on 2 March 2013. The default is continuing at the balance sheet date. The said loan carries interest rate in the range of 12.50 % p.a. to 12.60% p.a. payable on monthly basis.

Unsecured borrowings:

Unsecured loans from corporate are repayable on demand and along with the interest rate applicable at 12.50% p.a.

1.3 Segment information

a) Business Segment:

The services rendered by the Company primarily consist of execution of civil contracts on turnkey basis. The Company is managed organizationally as a unified entity and not along product lines and accordingly, there is only one business segment.

b) Geographical Segment:

During the year under report, the Company has engaged in its business primarily within India. The conditions prevailing in India being uniform, no separate geographical disclosure is considered necessary.

1.4 During the year a search and seizure operation under Section 132 of the Income Tax Act, 1961 was carried out by the Income Tax Authorities on the Company''s premises. The Management has agreed to cooperate and provide clarifications on the information collected and further information as and when sought for by the Income Tax Authorities. The Company has till date not been served with a show cause notice/demand arising from the search operations and consequently there is an uncertainty on the final outcome. The Company believes that it has complied with all applicable rules and regulations.

1.5 Related party disclosures

Enterprise where control exists (Subsidiaries and step-down subsidiary)

l Ramky Pharma City (India) Limited

l MDDA-Ramky IS Bus Terminal Limited

l Ramky Food Park (Chattisgarh) Limited

l Naya Raipur Gems and Jewellery SEZ Limited

l Ramky Herbal and Medicinal Park (Chattisgarh) Limited

l Ramky - MIDC Agro Processing Park Limited

l Ramky Engineering and Consulting Services (FZC)

l Gwalior Bypass Project Limited

l Ramky Elsamex Hyderabad Ring Road Limited

l Ramky Towers Limited

l Ramky Enclave Limited

l Srinagar Banihal Expressway Limited

l Ramky Multi Product Industrial Park Limited

l Ramky Food Park (Karnataka) Limited

l Sehore Kosmi Tollways Limited

l Agra Etawah Tollways Limited

l Hospet Chitradurga Tollways Limited

l Frank Lloyd Tech Management Services Limited

l Ramky Infrastructure Sociedad Anonima Cerradda

l Jabalpur Patan Shahpura Tollways Limited

l Ramky Esco Limited

l JNPC Pharma Innovation Limited

l Ramky Engineering and Consulting Services Gabon SA

Enterprises where joint control exists (Jointly controlled entities)

l N.A.M.Expressway Limited

l Jorabat Shillong Expressway Limited

Enterprises where significant influence exists (Associates)

l Ramky Integrated Township Limited

l JNPC Pharma Innovation Limited (upto 22 November 2012)

Enterprises where Key Management Personnel have significant influence (Significant interest entities) (SIE)

l Ramky Enviro Engineers Limited

l Ramky Estates and Farms Limited

l Mumbai Waste Management Limited

l Ramky Finance & Investment Private Limited

l SembRamky Environmental Management Private Limited

l Ramky Global Solutions Private Limited

l Tamil Nadu Waste Management Limited

l West Bengal Waste Management Limited

l Ramky Energy & Environment Limited

l RVAC Facilities Management (India) Limited

l Ramky Villas Limited

l Ramky Advisory Services Limited

l Delhi MSW Solutions Limited

l Smilax Laboratories Limited

l Tridax Laboratories Limited

l Ramky Foundation

l Ramky Academy of Culture & Education

l Dakshayani Academy

l Hyderabad Integrated MSW Limited

l Chhattisgarh Energy Consortium (India) Private Limited

l Ramky Wavoo Developers Private Limited

Key Management Personnel (KMP) l A Ayodhya Rami Reddy

l Y R Nagaraja

1.6 Employee benefit plans

a) Liability for retiring gratuity benefit obligation as on 31 March 2013 is Rs. 1.89 crores (previous year: Rs. 2.43 crores) of which Rs. 0.39 crores (previous year: Rs. 0.56 crores) is funded with the Life Insurance Corporation of India. The balance of Rs. 1.50 crores (previous year: Rs. 1.87 crores) is included in provision for gratuity. The expected contribution is based on the same assumptions used to measure the Company''s gratuity obligations as of 31 March 2013.

b) Liability for cost of compensated absence as on 31 March 2013 is Rs. 3.67 crores (previous year: Rs. 3.80 crores). Cost of compensated liability is a non funded liability.

c) Contribution towards employee provident fund for the year ended 31 March 2013 is Rs. 6.23 crores (previous year: Rs. 5.87 crores).

d) The liability for gratuity and cost of compensated absences has been actuarially determined and provided for in the books.

e) Employee benefit plans The following tables set out the status of the gratuity plan as required under AS 15

1.7 The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2013 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.

Note: This information is required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 and has been determined to the extent such parties have been identified on the basis of information available with the Company.

1.8 The Company has claimed deduction under Section 80-IA (4) of the Income Tax Act, 1961 in its returns of income relating to assessment years 2003-04 to 2011-12. However, the Department contested the same on the grounds that the Company was not "developing" the infrastructure facility and disallowed the deduction for assessment years 2003-04 to 2009-10. The Company filed appeal against these orders with CIT (Appeals), of which the appeals with respect to assessment years 2003-04 to 2008-09 were dismissed. The Company has filed an appeal with Income Tax Appellate Tribunal (ITAT) for these assessment years, which is currently pending.

The Company is contending its case before the appropriate appellate authorities, however the Company not, withstanding the fact that its position in the matter is strong on merits has based on an internal assessment and various factors such as industry practice, legal counsel advice etc. decided to make a provision for the total deductions under the said Sections and for the assessment years 2003-04 to 2011-12 amounting to Rs. 66.56 crores. As this provision related to taxes for earlier years the same had been directly debited to the surplus in statement of profit and loss account balance under "Reserves and Surplus" for the year ended 31 March 2012.

1.9 IPO proceeds utilization:

During the year 2010-11, the Company had issued 7,777,777 equity shares having a face value of Rs. 10 per share at a price of Rs. 450 per share (including a premium of Rs. 440 per share) through IPO. The amount raised Rs. 350 crores has been utilised in the following manner:

1.10 Trade receivables as at 31 March 2013 include Rs. 42.08 crores relating to receivables long outstanding from Government and private parties, Rs. 0.90 crores relating to retention money outstanding beyond the defect liability period, Rs. 13.81 crores relating to amounts withheld by the client outstanding for more than 3 years. Management has evaluated recoverability keeping in view the long term nature of the contracts, terms and conditions implicit in the contract and the ongoing discussions based on which steps to recover are currently in process. Management believes that though these amounts are long outstanding, these are good and recoverable as they pertain to delays attributable to the customers for work carried out on customer work orders, claims for amounts pertaining to changes in scope/work order variations, claims for amounts withheld on beyond the normal credit terms. Management also believes that the delay in collections is a temporary phenomenon on account of the overall macroeconomic environment and the consequent slowdown in the infrastructure sector. Further, based on the ongoing discussions with the customers it is confident of fully recovering its debts as these are contractually tenable and accordingly, no further provision is required.

Advances recoverable in cash or in kind or for value to be received as at 31 March 2013 include amount aggregating to Rs. 24.96 crores relating to advances to suppliers and sub-contractors which are long pending due to factors attributable to the overall environment and its customers. The Management is of the view that these advances are fully recoverable in cash or in kind for value to be received in due course as it is in constant engagement with suppliers and sub-contractors.

Inventories as at 31 March 2013 include amount aggregating to Rs. 45.75 crores relating contract work-in-progress which has not been billed for more than one year. The Management is of the view that this contract work-in-progress is entirely billable. The Company is in constant engagement with the clients to get the works certified and bill the same.

1.11 Comparative figures:

Previous year''s figures have been regrouped/reclassified, where necessary, to conform to current year''s classification.


Mar 31, 2012

Company overview

Ramky Infrastructure Limited (RIL) is an integrated construction, infrastructure development and management company headquartered in Hyderabad, India. The Company diversified in a range of construction and infrastructure projects in various sectors such as water and waste water, transportation, irrigation, industrial construction and parks (including SEZs), power transmission and distribution, and residential, commercial and retail property. A majority of the development projects of the Company are based on Public-Private partnerships (PPP) and are operated by separate Special Purpose Vehicles (SPV) promoted by RIL, joint venture partners and respective Governments.

i) Rights, preferences and restrictions attached to the equity shares:

(a) The Company has only one class of equity shares having par value of Rs 10 each. Each shareholder is eligible for one vote per share held.

(b) The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing general meeting.

(c) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by equity shareholders.

Notes :

a) 9,750,000 (previous year: 9,750,000) equity shares have been pledged in favour of Infrastructure Development Finance Company Limited for the loan availed by MDDA-Ramky IS Bus Terminal Limited.

b) 14,800,000 (previous year: 14,800,000) equity shares and 2,950,000 (previous year : 25,000,000) preference shares have been pledged in favour of IDBI Trusteeship Services Limited for loan availed by Ramky Elsamex Hyderabad Ring Road Limited.

c) 9,129,000 (previous year: 8,942,000) equity shares have been pledged in favour of Infrastructure Development Finance Company Limited (previous year pledged with Axis Bank Limited) for loan availed by Ramky Pharma City (India) Limited.

d) 15,766 (previous year: Nil) equity shares of Srinagar Banihal Expressway Limited pledged in favour of ICICI bank Limited for the loan availed by Srinagar Banihal Expressway Limited.

e) 13,005 (previous year: 13,005) equity shares have been pledged in favour of Punjab National Bank for loan availed by Gwalior Bypass Project Limited.

* Other services includes professional charges of Nil (previous year: Rs 0.56 crores) paid in connection with issue of equity shares through its initial public offer are treated as share issue expenses and adjusted to securities premium account.

1.1 Leases

The Company is obligated under cancellable operating lease agreements. Total rental expense for the period under cancellable leases was Rs 9.84 crores (previous year: Rs 5.25 crores) has been disclosed as 'Rent' in the statement of profit and loss.

1.2 Nature and terms of repayment for secured and unsecured borrowings are as follows:

Secured borrowings:

a. Term loan from bank amounting to Rs 75 crores (previous year Nil) are secured by way of residual charge over moveable fixed and current assets (both present and future) ranking subsequent to prior charge created in favour of other lenders and first and exclusive ranking charge over all the receivables both present and future arising out of debt infused in the infrastructure project companies and by way of first and exclusive ranking charge over Debt Service Reserve Account (DSRA). This loan is repayable in 24 monthly installments starting at the end of 15 months from the first draw down date (i.e. 8 February 2012) along with interest of 12.75% p.a. payable on monthly basis.

b. Term loan from bank amounting to Rs 45 crores (previous year Rs 55 crores) are secured by pari-passu charge on the entire project specific current assets. These loans are repayable on 25 May 2012 (previous year: 15 December 2011) along with interest of 11.75% p.a. payable on monthly basis.

c. Term loan from bank amounting to Nil (previous year Rs 5 crores) are secured by way of post-dated cheques given by the Company. Loan was repaid by the on 2 February 2012 along with interest of 11.50% p.a. payable on monthly basis.

d. Equipment and vehicle loans from banks amounting to Rs 36.75 crores (previous year: Rs 47.82 crores) and from others amounting to Rs 95.35 crores (previous year: Rs 86.28 crores) are secured by way of hypothecation of the respective equipment/ vehicles. These loans are repayable in monthly payment of equated monthly installments beginning along the month subsequent to the loan along with interest in the range of 7.05% p.a. to 14.20% p.a. and 6.55% p.a. to 12.15% p.a. against loans taken from banks and others respectively.

e. Cash credits from banks from banks amounting to Rs 242.22 crores (previous year: Rs 267.26 crores) and working capital loans from banks amounting to Rs 409.25 crores (previous year Rs 179 crores) are secured by way of:

(i) first pari-passu charge on the current assets of the Company namely raw materials, contract work-in-progress, bills receivable and book debts and all other movables both present and future of the Company along with other working capital lenders.

(ii) first charge on the entire unencumbered fixed assets of the company ranking pari-passu basis to all the working capital lenders and

(iii) loans during the previous year were also secured by way of personal guarantees of Chairman of the Company and Managing Director of the Company.

Cash credits are repayable on demand along with interest in the range of 12.50% p.a. to 14.45% p.a. (previous year: 13.25% p.a. to 14.45% p.a.) payable on monthly basis. Working capital loans are repayable within 90 to 180 days from the date of drawdown along with the interest in the range of 11.75% p.a. to 12.50% p.a. (previous year: 10.65% p.a. to 13% p.a.) payable on monthly basis.

f. Working capital loan from bank amounting to Rs 25 crores (previous year: Nil) are secured by way of post-dated cheques submitted by the Company. Loan is repayable on 2 June 2012 along with the interest of 12.50% p.a.

g. Buyers credit from banks amounting to Rs 24.63 crores (previous year: Nil) are secured by way of first pari-passu charge on the current assets of the Company namely raw materials, contract work-in-progress, bills receivable and book debts and all other movables both present and future of the Company and exclusive charge on the capital equipment imported with loan proceeds. Buyers credit are obtained on short-term basis and repayable within 360 days from the date of drawdown along with the interest in the range of 1.94% p.a. to 3.30% p.a.

Unsecured borrowings:

Unsecured loan from corporate was repaid on 30 August 2011 and interest rate applicable was 14% p.a.

1.3 Segment information

a) Business Segment:

The services rendered by the Company primarily consist of execution of civil contracts on turnkey basis. The Company is managed organizationally as a unified entity and not along product lines and accordingly, there is only one business segment.

b) Geographical Segment:

During the year under report, the Company has engaged in its business primarily within India. The conditions prevailing in India being uniform, no separate geographical disclosure is considered necessary.

1.4 Employee benefit plans

a) Liability for retiring gratuity as on 31 March 2012 is Rs 2.43 crores (previous year: Rs 1.46 crores) of which Rs 0.56 crores (previous year: Rs 0.45 crores) is funded with the Life Insurance Corporation of India. The balance of Rs 1.87 crores (previous year: Rs 1.01 crores) is included in provision for gratuity. The expected contribution is based on the same assumptions used to measure the Company's gratuity obligations as of 31 March 2012.

b) Liability for cost of compensated absence as on 31 March 2012 is Rs 3.80 crores (previous year: Rs 3.62 crores). Cost of compensated liability is a non funded liability.

c) Contribution towards employee provident fund for the year ended 31 March 2012 is Rs 5.87 crores (previous year: Rs 3.93 crores).

d) The liability for gratuity and cost of compensated absences has been actuarially determined and provided for in the books.

e) Employee benefit plans

The following tables set out the status of the gratuity plan as required under AS 15

Discount rate: The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

Expected rate of return on plan assets: This is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate: The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

1.5 The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2012 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.

Note: This information is required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 and has been determined to the extent such parties have been identified on the basis of information available with the Company.

1.6 The Company has claimed deduction under Section 80-IA (4) of the Income Tax Act, 1961 in its returns of income relating to assessment years 2003-04 to 2011-12. However, the Department contested the same on the grounds that the Company was not "developing" the infrastructure facility and disallowed the deduction for assessment years 2003-04 to 2009-10. The Company filed appeal against these orders with CIT (Appeals), of which the appeals with respect to assessment years 2003-04 to 2008-09 were dismissed. The Company has filed an appeal with Income Tax Appellate Tribunal (ITAT) for these assessment years, which is currently pending.

The Company is contending its case before the appropriate appellate authorities, however the Company notwithstanding the fact that its position in the matter is strong on merits has based on an internal assessment and various factors such as industry practice, legal counsel advice etc. decided to make a provision for the total deductions under the said Sections and for the assessment years 2003-04 to 2011-12 amounting to Rs 66.56 crores. As this provision relates to taxes for earlier years the same has been directly debited to the surplus in statement of profit and loss account balance under "Reserves and Surplus" for the year ended 31 March 2012. Further no deduction has been claimed on account of the aforesaid Section in the current year.

1.7 IPO proceeds utilization:

During the previous year the Company had issued 7,777,777 equity shares having a face value of Rs 10 per share at a price of Rs 450 per share (including a premium of Rs 440 per share) through IPO. Out of the proceeds aggregating Rs 350 crores, a sum of Rs 7.78 crores was credited to the share capital and the balance amount of Rs 342.22 crores is credited to the securities premium account. Share issue expenses aggregating Rs 14.70 crores (excluding Rs 7.56 crores incurred on behalf of shareholders whose holdings were divested at the time of the IPO and which were recovered from the shareholders) have been charged to the securities premium account in accordance with the provisions of Section 78(2) of the Companies Act, 1956.

1.8 Comparative figures

On applicability of revised Schedule VI from current year, the Company has reclassified previous year figures to conform to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of the financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.

 
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