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Notes to Accounts of SPML Infra Ltd.

Mar 31, 2015

1. The Company has operating leases that are renewable on a periodic basis and are cancellable by giving a notice period ranging from one month to three months. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements. The amount of rent expenses included in the Statement of Profit and Loss towards operating leases aggregate to Rs. 406.50 lakhs (previous year Rs. 293.17 lakhs).

2. The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under the law/ Accounting Standards for the material foreseeable losses on such long term contracts has been made in the books of accounts.

3. The following amount are due from subsidiaries, associates and companies in which directors are interested as on the balance sheet date:

4. (a) Gratuity plan (AS 15 Revised)

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the provisions of The Payment of Gratuity Act, 1972. The scheme is non-funded.

5. The Company has claimed income tax benefits of Rs. 29,758.6 lakhs (Rs. 28,380.19 lakhs upto March 31, 2014) approx. having tax impact of Rs. 8,666.38 lakhs (Rs. 8,197.86 lakhs upto March 31, 2014) including Rs. 468.52 lakhs (March 31, 2014 : Rs 163.41 lakhs) for the year under Section 80IA of the Income Tax Act, 1961, on construction contracts for certain infrastructure projects executed on behalf of various departments / agencies of different State Governments during the financial years 2003-04 onwards. In the tax assessments for the financial years upto 2011-12 , the above claims were initially disallowed by the Tax Authorities, but the appellate authority during the previous year allowed the aforesaid claims for the years 2005-2006 to 2009-2010. Accordingly, the Company believe that all such claims under Section 80IA would be allowed for subsequent years also. The Company's writ with the Honourable Calcutta High Court, challenging the validity of the retrospective amendment in Section 80IA, which, as per legal opinion obtained by the Company, is ultra vires to the main Section of the Income Tax Act, 1961, however, remains pending disposal. In view of the above 80IA deductions , the Company is not carrying MAT credit in the books.

6. Sundry balances/liabilities written back aggregating Rs 2,471.56 lakhs (Rs. 2,622.40 lakhs) consisting of numerous balances being unclaimed / unmoved since long (mostly more than three years) have been writen back during the year as the management believes that these amounts are no longer payable.

7. During the previous year, one of the client of the Company has foreclosed the contract, which is under arbitration. The management, based on the fact of the case is confident to recover the receivables and net book value of fixed assets of Rs.2,768.24 (Rs 1,904.00 lakhs) and Rs. 1,084.28 (Rs. 1,608.00 lakhs) respectively.

8. During the year, one of the client of the Company has foreclosed the contract. Pending the settlement of dispute, the management, based on the fact of the case is confident to recover the receivables and inventories of Rs.2,060.86 and Rs.557.74 lakhs.

9. Segment information

The Company is primarily engaged in the business of construction, which is as per Accounting Standard - 17 on "Segment Reporting" notified pursuant to Companies (Accounting Standard) Rules, 2006 (as amended) is considered to be the only reportable business segment. The Company is primarily operating in India which is considered as single geographical segment.

10. The Company has recognised income of Rs.15,543.40 lakhs in earlier years and interest of Rs. 4,280.06 lakhs (including Rs.1,377.11 lakhs during the year) thereon arising out of arbitration awards pronounced in favour of the Company. Against these awards, the customers have preferred appeals in the jurisdictional courts and the legal proceedings are going on. Pending the outcome of the said legal proceedings, the above amounts are being carried forward as receivable as the management believes that the final outcome of the appeals would be in favor of the Company based on the facts of the respective cases and is confident to recover the aforesaid claims in full.

11. Trade receivables aggregating Rs. 2,135.12 lakhs (previous year Rs 2,135.12 lakhs) are under arbitration proceedings. The management is confident that based on the facts of the respective cases; there is no uncertainty as regards their realization.

12. In respect of a project, based on the representation made by the Company to its customer, it has considered additional price increase impact of Rs.5,072.00 lakhs (Rs.5,250.00 lakhs upto March 31, 2014) in the contract value for billing to be made subsequent to March 31, 2015, considering Extension of Time (EOT) for the entre contract. The management is confident that EOT for the entre contract will be granted by the customer based on similar decisions taken in some other contracts and also based on the merits of the case.

13. The company has entered into a transact on amounting Rs 35.55 lakhs in the previous years requiring Central Government prior approval under Section 297 of the Companies Act, 1956. During the current year Company has fled for compounding under the relevant provisions of the Companies Act, 1956

14. The Company has entered into an EPC Contract with a Joint Venture during the previous year, which requires prior approval of Central Government under Section 297 of the Companies Act,1956. During the current year Company has fled for compounding under the relevant provisions of the Companies Act, 1956. During the year, the Company has recognised revenue of Rs.1,271.42 (Rs.2,254.64 lakhs), having approximate profit of Rs.8.89 (Rs.247.40 lakhs) from this contract.

15. The Company has entered into an EPC contract with a Joint Venture during the previous year for which the company had applied for prior approval under Section 297 of the Companies Act, 1956. However, in view of non-approval of the application fled by the Company in this regard by the Central Government, the Company has fled for compounding during the current year under the relevant provisions of the Companies Act, 1956. During the year, the Company has recognised revenue of Rs. 1282.44 (Rs. 1,532.02 lakhs), having approximate profit of Rs. 205.43 (Rs. 146.47 lakhs) from this contract.

16. During the previous year, based on technical and legal evaluation, the Company has revised the contract value of a project to bring it in line with the agreement signed with the client, which was not considered earlier. Consequently, sales for the year 2013-14 include an amount of Rs. 4,198.00 lakhs on account of the aforesaid revision in the contract value.

17. In accordance with the provisions of Section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms of the provisions of the Act, the Company was to spend a sum of Rs. 21.36 lakhs towards the CSR activities during the year ended March 31, 2015. The CSR Committee has approved the deployment of such funds towards CSR initiatives of promoting health care through improved sanitation at various locations. During the year ended March 31, 2015, out of total eligible amount to be spent under CSR activities, the Company has paid Rs. 16.07 lakhs during the year and the balance amount of Rs. 5.29 lakhs shall be spent in subsequent year in accordance with the progress of the project being undertaken by Company.

18. Figures in bracket represent the previous year numbers and have been regrouped / rearranged wherever considered necessary to confirm to the figures presented in the current period.


Mar 31, 2014

1.1 Security and repayment terms in respect of term loans from banks

a. Term loan of Rs. 2,500 lakhs (Previous Year Rs. 3,750 lakhs) carries interest Rs.13.25 % p.a. and is repayable in eight quarterly instalments of Rs. 312.50 lakhs each along with interest thereon by March 2016. The said loan is secured against a subservient charge on all the fixed assets and current assets (both present and future) of the Company and also by the personal guarantee of a Promoter Director of the Company.

b. Term loan of Rs. 833.33 lakhs (Previous Year Rs. 2,500 lakhs) carries interest Rs.13.75 % p.a. and is repayable in two quarterly instalments of Rs. 416.67 lakhs each along with interest thereon by 27th August 2014.

c. Term loan of Rs. 3,000 lakhs (Previous Year Rs. 3,000 lakhs) carries interest Rs.13.75 % p.a. and is repayable in quarterly instalments of Rs. 187.50 lakhs each along with interest thereon by June 2018.

The loan referred in (b) and (c) are taken from same lender and are secured against an exclusive charge over the Company''s landed property located at Gurgaon.

d. Term loan of Rs. 1,500 lakhs taken during the year carries interest Rs.13.50 % p.a. (I - Base plus spread Rs.3.5% p.a) and is repayable in 3 monthly instalments of Rs. 50 lakhs each and 18 monthly instalments of Rs. 75 lakhs each along with interest thereon by January 2016. The said loan is secured against an exclusive charge over the Company''s landed property located at Gurgaon ranking pari passu with other term loan. Further, loan is backed by the personal guarantee of the Managing director and the Chairman of the Company.

e. Overdue interest of Rs. 77.33 lakhs on term loans (disclosed in Note. 10 "Other Current Liabilites") has been paid subsequently.

4.2 Security and repayment terms in respect of term loans from financial Insttutons

a. Loan of Rs. 172.07 lakhs taken during the year from a Financial Insttuton carries interest Rs.14.50% p.a. and is repayable in remaining 29 equated monthly instalments.

b. Interest free loan of Rs. 64.53 lakhs taken during the year from a Financial Insttuton is repayable in 3 monthly instalments of Rs. 18.18 lakhs each and 1 instalment of Rs. 9.98 lakhs.

The loans referred in (a) and (b) above are secured against hypothecaton of respectve constructon equipments.

2.1 Deferred payment credits from banks and others are secured against hypothecaton of Vehicles / Constructon equipments purchased against such loans and are repayable in equated monthly instalments (ranging from 32 to 56) carrying interest rates ranging from 8.50% to 10% p.a.

2.3 Loan from a Body Corporate carries interest Rs.12.50% p.a. and is repayable in 3 instalments of Rs. 553.50 lakhs, Rs. 1,616.40 lakhs and Rs. 1,329.98 lakhs in the month of April''14, June''14 and November''14 respectvely. The loan is secured against the Bank Guarantee which, in turn, is secured by the same securites as are available to the bank with respect to cash credit facilites.

3. DEFERRED TAX LIABILITY (NET)

In terms of Accountng Standard - 22, net deferred tax asset (DTA) of Rs. 79.65 lakhs (DTA of Rs.478.97 lakhs) has been recognized in the accounts during the year and consequently the net Deferred Tax Liability (DTL) as at 31st March, 2014 stands at Rs. 347.35 lakhs (Rs. 427 lakhs).

4. SHORT-TERM BORROWINGS

a. Buyer''s credit is secured by hypothecaton of stocks and book debts of the Company, both present and future, and also by hypothecaton of certain Specific plant and machinery, furniture/fixtures & ofce equipments. It carries interest in the range of Libor plus 0.65% to Libor plus 0.80%.

b. Overdue interest of Rs.36.27 lakhs on the aforesaid loan (disclosed in the note. 10 "other current liabilites") has been paid subsequently.

c. Demand loans and cash credit and working capital facilites in Indian rupees are secured by hypothecaton of stocks and book debts of the Company, both present and future, hypothecaton of certain Specific plant and machinery, furniture/ fixtures & ofce equipments and also the mortgage of Company''s land situated at Mouje Dhanot, Gujarat and Pirancheri Village, Tamil Nadu. These loans are additonally secured by the guarantees of three promoter directors of the Company and corporate guarantee of SPM Engineers Ltd. The demand loans and cash credit and working capital facilites carry interest Rs.13.50% to 16.25% p.a.

d. Loans from bodies corporate carry interest Rs.12%p.a to 18% p.a.



5. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF-

(Rs. In Lakhs)

Particulars As at As at March 31, 2014 March 31, 2013

Claims against the Company not acknowledged as debts 1,070.72 1,704.54

Claims towards liquidated damages not acknowledged as debts by the Company

Against the above, debts of the like amounts are withheld by the customers. 7,049.47 6,242.42

However, the Company expects no liability to accrue on account of these claims.

Disputed demands

(a) Income Tax # - -

(b) Excise/Service Tax* 75.77 75.77

(c) Sales Tax/VAT* 10,752.60 6,432.92

(d) Guarantees

Performance Guarantees, given on behalf of Subsidiaries & Joint Ventures 5,579.12 3,130.60

Corporate Guarantees given to Banks for financial assistance extended to Subsidiaries and other bodies corporate 42,420.00 34,840.00

* In respect of above cases, based on favourable decisions in similar cases/legal opinions taken by the Company /discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the acton will succeed and accordingly no provision for liability has been made in the financial statements.

# Refer Note no. 39.

6. The Company has operatng leases for ofce premises that are renewable on a periodic basis and are cancellable by giving a Notice period ranging from one month to three months. There is no escalaton clause in the lease agreements. There are no restrictons imposed by lease arrangements. There are no subleases. There are no contngent rents.

The amount of rent expenses included in the Statement of Profit and Loss towards operatng leases aggregate to Rs. 293.17 lakhs (previous year Rs. 397.40 lakhs).

7. RELATED PARTIES

(a) Partculars of related partes where control exists

Subsidiary Companies

Subhash Kabini Power Corporaton Limited

SPML Industries Limited

SPML Energy Limited

SPML Infrastructure Limited

SPM Holding Pte. Limited

Binwa Power Corporaton Private Ltd

Awa Power Company Private Limited

IQU Power Company Private Ltd

Neogal Power Company Private Ltd

Luni Power Company Private Limited

Tons Valley Power Company Private Limited

Rupin Tons Power Company Private Limited

Utarkashi Tons Hydro Power Private Limited

Delhi Waste Management Ltd

Add Urban Enviro Ltd

Add Energy Management Co. Private Limited (Formerly SPML Semitech India Private.

Limited) w.e.f March 31, 2014

Madurai Municipal Waste Processing Co. Private. Limited

SPML Utlites Limited

Allahabad Waste Processing Co. Limited

Mathura Nagar Waste Processing Co. Private Limited

Mizoram Power Development Corporaton Limited

Bhilwara Jaipur Toll Road Private Limited

PT Sanmat Natural Resources

Aurangabad City Water Utlity Co. Limited (became associate w.e.f December 31, 2013)

Mizoram Infrastructure Development Co. Limited (w.e.f 25th March, 2014)

SPML Infraprojects Limited (w.e.f 25th February, 2014)

SPML Infra Developers Limited (w.e.f 24th February, 2014)

Bhagalpur Electricity Distributon Com P Ltd (w.e.f 29th May, 2013)

SJA Developers Private Limited

Synergy Promoters Private Ltd

(b) Other Related Partes with whom transactons have taken place during the year

Associates Companies

HHydro Comp Enterprises (India) Limited

Doon Valley Waste Management Private Limited

Jamshedpur Waste Processing Company Private Limited

Pondicherry Port Limited

Mizoram Mineral Development Corporaton Limited

SPML Bhiwandi Water Supply Infra Limited

SPML Bhiwandi Water Supply Management Limited

Aurangabad Jal Supply Soluton Private Limited

ADD Realty Limited

Aurangabad City Water Utlity Co. Limited (w.e.f 31st December, 2013)

Central Zone Water Services Private Limited (w.e.f 23rd November, 2013)

Joint Ventures

SPML-CISC JV

SPML - Simplex JV

SPML-HCIL JV

OM Metals Consortum JV

Siddharth- Mahaveer SPML –JV

KBL-SPML JV

Malviya Nagar Water Services Private Limited

"MVV Water Utlity Private Limited

(Through a Subsidiary)"

Gurha Thermal Power Co. Ltd

SUEZ -SPML JV

Key Management Personnel (kMP)

Mr. Subhash Chand Sethi Mr. Sushil Kumar Sethi Mr. Deepak Sethi

(c) Relatves of key Management PersonneL

Mrs. Maina Devi Sethi Mother of Chairman and Managing Director

Mrs. Preet Devi Sethi Wife of Anil Kumar Sethi

Mrs. Suman Sethi Wife of Chairman

Mr. Abhinandan Sethi Son of Chairman

Mrs. Sandhya Rani Sethi Wife of Managing Director

Mr. Rishabh Sethi Son of Managing Director

Enterprises owned by kMP''s or their relatves or whether the kMP''s have significantly infuence

Arihant Leasing & Holding Co. Limited

Rishabh Commercial Private Limited

Risabh Fire Management Private Limited

Abhinandan Enterprise Private Limited

Subhash Systems Private Limited

Internatonal Constructon Limited

SPM Engineers Limited

Zoom Industrial Services Limited

Meena Homes Limited

20Th Century Engineering Limited

Subhash Power Company Limited

SPML India Limited

Subhash Internatonal Private Limited

Sonal Agencies Private Limited

Add Eco Enviro Limited

Sanmat Power Company Private Limited

Meena Holdings Limited

Vidya Edutech Private Limited

Add Technologies (India) Limited

Sushil Kumar Sethi & Sons (HUF)

Pondicherry Special Economic Zone Company Limited

Sanmat Corporate Investments Private Limited

Bharat Hydro Power Corporaton

Sanmat Infra Projects (P) Limited

Om Metal-SPML Infra Project Private Limited

Acropolis Propertes Private Limited

Oxive Environmental Management Private Limited

Dia Infarlog Ltd

8. According to the Company, constructon actvity is a service actvity and therefore, in terms of para 5(ii)(c) of General Instructons for Preparaton of Statement of Profit And Loss as per Revised Schedule VI to the Companies Act, 1956, the gross income determined from constructon actvity has been given in the Note No. 19.

9. The following amount are due from subsidiaries, associates and companies in which directors are interested as on the balance sheet date:

10. (a) Gratuity plan (AS 15 Revised)

The Company has a Defined benefit gratuity plan. Every employee who has completed five years or more of service is enttled to Gratuity on terms not less favourable than the provisions of The Payment of Gratuity Act, 1972. The scheme is unfunded. The following table summaries the components of net benefit expenses recognised in the Statement of Profit and Loss and amounts recognized in the balance sheet:

11. The Company has claimed income tax benefits of Rs. 28,380.19 lakhs (Rs. 27,894.44 lakhs upto March 31, 2013) approx. having tax impact of Rs. 8,197.86 lakhs (upto March 31, 2013: Rs. 8,034.45 lakhs) including Rs. 163.41 lakhs (March 31, 2013 : Rs 552.41 lakhs) for the year under secton 80IA of the Income Tax Act, 1961, on constructon contracts for certain infrastructure projects executed on behalf of various departments / agencies of diferent State Governments during the financial years 2003-04 onwards. In the tax assessments for the financial years upto 2010-11, the above claims were initally disallowed by the Tax Authorites, but the appellate authority during the previous year allowed the aforesaid claims for the years 2005-2006 to 2009-2010. Accordingly, the Company feels that all such claims under Secton 80IA would be allowed for subsequent years also. The Company''s writ with the Honourable Calcuta High Court, challenging the validity of the retrospectve amendment in Secton 80IA, which, as per legal opinion obtained by the Company, is ultra vires to the main secton of the Income Tax Act, 1961, however, remains pending disposal. In view of the above 80IA deductons, the Company is not carrying MAT credit in the books.

12. Trade payables aggregatng Rs 2,622.40 lakhs (previous year Rs. 2,390.15 lakhs) consistng of numerous balances being unclaimed/unmoved since long (mostly more than three years) have been writen back during the year as the management believes that these amounts are no longer payable.

13(a). During the year, one of the client of the Company has completely foreclosed the contract which was partally of added in previous financial year. Pending initaton of the arbitraton, the management, based on the fact of the case is confdent to recover the receivables and net book value of fixed assets of Rs 1,904 lakhs and Rs. 1,608 lakhs respectvely.

14(b). In respect of above Contract, the Company on a prudent basis, has writen of an amount of Rs 3035.48 lakhs during the year, representng unbilled work in progress and other receivables in view of uncertainty as regards to its ultmate collecton.

15. In respect of a project, during the year, the Company on a prudent basis, has writen-of an amount of Rs 1,283.76 lakhs representng work in progress in view of uncertainty as regards its ultmate collecton.

16. Segment informaton

The Company is engaged in constructon actvites in India. Consequently, it has one reportable business segment i.e. "Constructon" and one reportable geographical segment i.e. "India".

17. The Company has recognised income of Rs. 12,520.34 lakhs during the year arising out of arbitraton awards pronounced in favour of the Company (including Rs. 10,952.02 lakhs in respect of arbitraton awards pronounced in earlier years) and Rs.2,902.94 lakhs as interest thereon upto March 31,2014, and also the arbitraton award of Rs 3,028.30 lakhs recognized in the previous year, both remaining outstanding as on March 31, 2014. Against these awards, the customers have preferred appeals in the jurisdictonal courts and the legal proceedings are going on. Pending the outcome of the said legal proceedings, the above amounts are being carried forward as receivable as the management believes that the final outcome of the appeals would be in favour of the Company based on the facts of the respectve cases and it is confdent to recover the aforesaid claims in full.

18. Trade receivables aggregatng Rs. 2,135.12 lakhs (previous year Rs 2,601.13 lakhs) are under arbitraton proceedings. The management is confdent that based on the facts of the respectve cases; there is no uncertainty as regards their realizaton.

19(a). The Company has entered into certain transactons aggregatng Rs.35.55 lakhs in the previous year requiring Central Government prior approval under Secton 297 of the Companies Act, 1956. The Company is in the process of filling necessary applicatons for obtaining the said approval.

20(b). The Company has entered into an EPC contract with a Joint Venture during the year, which requires prior approval of Central Government under secton 297 of The Companies Act, 1956. The Company has applied with appropriate authority for obtaining the requisite approval.

21(c). The Company has entered into an EPC contract with a Joint Venture, which requires prior approval under secton 297 of the Companies Act, 1956. In view of non-approval of the applicaton fled by the Company in this regard by the Central Government, the Company is now in the process of fling for compounding of ofences under the relevant provisions of the Companies Act. During the year, the Company has recognised revenue of Rs. 1,532.02 lakhs, having approximate Profit of Rs. 146.47 lakhs, from this contract.

22. In respect of a project, based on the representaton made by the Company to its customer, it has considered additonal price increase impact of Rs.5,250 lakhs (Rs.4,816.61 lakhs upto March 31, 2013) in the contract value for billing to be made subsequent to March 31, 2014, considering Extension of Time (EOT) for the entre contract. The management is confdent that EOT for the entre contract will be granted by the customer based on similar decisions taken in some other contracts and also based on the merits of the case.

23. During the year, based on technical and legal evaluaton, the Company has revised the contract value of a project to bring it in line with the agreement signed with the client, which was not considered earlier. Consequently, sales for the year include an amount of Rs. 4,198 lakhs on account of the aforesaid revision in the contract value.

24. The Board of Directors of the Company has approved the transfer of Company''s investments of the carrying value of Rs.18,322.41 lakhs in certain subsidiaries, associates and a joint venture, pertaining to waste, energy and power to its wholly owned subsidiaries; SPML Infra Projects Ltd and SPML Infra Developers Ltd. respectvely, at their respectve carrying values as part of its strategy to focus on improving the performance of the aforesaid businesses.

25. The Company has received approval from the Central government dated June 2, 2013 for payment of remuneraton to managerial person, notwithstanding the limit laid down in sub-secton (3) of secton 309 and the overall limit of 11% of the net Profit as laid down in sub secton (1) of secton 198 of Companies Act 1956.

26. Figures in bracket represent the previous year numbers and have been regrouped / rearranged wherever considered necessary.


Mar 31, 2013

1. RELATED PARTIES

(a) Particulars of related parties where control exist

Subsidiary Companies Subhash Kabini Power Corporation Limited

SPML Industries Limited

SPML Energy Limited

SPML Infrastructure Limited

SPM Holdings Pte. Ltd.

Binwa Power Corporation (P) Limited

Awa Power Company (P) Limited

IQU Power Company (P) Limited

Neogal Power Company (P) Limited.

Luni Power Company (P) Limited

Tons Valley Power Company (P) Limited

Rupin Tons Power Company (P) Limited

Uttarkashi Tons Hydro Power (P) Limited

Delhi Waste Management Limited

ADD Urban Enviro Ltd

Madurai Municipal Waste Processing Co. (P) Ltd.

SPML Utilities Ltd.

Allahabad Waste Processing Co. Ltd.

Mathura Nagar Waste Processing Co. Pvt. Ltd.

Mizoram Power Development Corporation Ltd.

Bhilwara Jaipur Toll Road Private Limited

PT Sanmati Natural Resources

Aurangabad City Water Utility Co. Ltd

SJA Developers Private Limited (w.e.f 1st September, 2012)

Synergy Promoters Private Limited (w.e.f 1st September, 2012)

SPML Bhiwandi Water Supply Infra Ltd. ( up to 25th March 2013)

SPML Bhiwandi Water Supply Management Ltd. (up to 25th March 2013)

(b) Other Related Parties with whom transactions have taken place during the year

Associate companies Pondicherry Port Limited

Hydrocomp Enterprises (India) Limited

Doon Valley Waste Management Private Limited

Jamshedpur Waste Processing Company Pvt. Ltd. (w.e.f 1st August, 2012)

Mizoram Mineral Development Corporation Ltd.

SPML Bhiwandi Water Supply Infra Ltd. (w.e.f 26th March 2013)

SPML Bhiwandi Water Supply Management Ltd. (w.e.f 26th March 2013)

Aurangabad Jal Supply Solution Pvt. Ltd. (w.e.f 1st January, 2013)

ADD Realty Ltd.

Insituform Pipelines Rehabilitation Private Limited (upto 31st December, 2012)

Joint Ventures SPML - CISC JV

SPML - Simplex JV

SPML - HCIL JV

Om Metal Consortium

SPML - Degroment JV

Siddartha - Mahavir - SPML JV

KBL - SPML JV

MVV Water Utility Pvt. Ltd (w.e.f 12th September, 2013) (through a subsidiary company)

Malviya Nagar Water Services Pvt. Ltd. (w.e.f 19th September, 2012)

Key Management

Personnel (KMP)

Mr. Anil Kumar Sethi - Chairman (upto 28th May, 2012)

Mr. Subhash Chand Sethi - Chairman (w.e.f. 29th May, 2012)

Mr. Sushil Kumar Sethi - Managing Director

Mr. Deepak Sethi - Director

Mr. P. C. Sethi Father of Chairman, Vice Chairman and Managing Director

Mrs. Maina Devi Sethi Mother of Chairman, Vice Chairman and Managing Director

Mrs. Preeti Devi Sethi Wife of Anil Kumar Sethi (Chairman till 28th May, 2012)

Mrs. Vineetha Sethi Wife of Director

Mrs. Suman Sethi Wife of Chairman

Mr. Harshavardhan Sethi Son of Chairman

Mr. Abhinandan Sethi Son of Chairman

Mrs. Sandhya Rani Sethi Wife of Managing Director

Mr. Rishabh Sethi Son of Managing Director

Enterprises owned by KMPs or their relatives or whether the KMP''s have significant influence

Arihant Leasing and Holdings Ltd.

Rishabh Commercial Pvt. Ltd.

Rishabh Fire Management Pvt. Ltd

Abhinandan Enterprise Pvt. Ltd.

Subhash Systems Pvt. Ltd.

International Constructions Ltd.

SPM Engineers Ltd.

Zoom Industrial Services Ltd.

20th Century Engineering Ltd.

Subhash Power Company Ltd.

SPML India Ltd.

SubhashYurim Textiles Ltd.

Subhash International Pvt. Ltd.

Sonal Agencies Pvt Ltd.

ADD Eco Enviro Ltd.

Sanmati Power Company Pvt. Ltd.

Meena Holdings Ltd.

SPML Semitech India Pvt. Ltd.

VidyaEdutech Pvt. Ltd.

ADD Technologies (India) Ltd.

Sushil Kumar Sethi & Sons (HUF)

Poonam Chand Sethi (HUF)

Subhash Chand Sethi (HUF)

Anil Kumar Sethi & Sons (HUF)

Breeze Commodeal (P) Ltd.

Pondicherry SEZ Company Pvt. Ltd.

Sanmati Corporate Investments Pvt. Ltd.

Sanmati Infra Projects (P) Ltd.

Om Metal SPML Infra Project Pvt Limited

Acropolis Properties (P) Ltd.

2. According to the Company, construction activity is a service activity and therefore, in terms of para 5(ii)(c) of General Instructions for Preparation of Statement of Profit and Loss as per Revised Schedule VI to the Companies Act, 1956, the gross income determined from construction activity has been given in the Note No. 19.

3. The Company has claimed income tax benefits of Rs. 27,894.44 lakhs (Rs. 26,191.83 lakhs upto March 31, 2012) approx. having tax impact of Rs. 8,034.45 lakhs (March 31, 2012: Rs. 7,482.04 lakhs) including Rs. 552.41 lakhs (March 31, 2012 : Rs 574.40 lakhs) for the year, approx. under section 80IA of the Income Tax Act, 1961, on construction contracts for certain infrastructure projects executed on behalf of various departments / agencies of different State Governments during the financial years 2003-04 onwards. In the tax assessments for the financial years upto 2008-09, the above claims were initially disallowed by the Tax Authorities, but the appellate authorities during the year have allowed the aforesaid claims for the years 2005-2006 to 2008-2009. Accordingly, the Company feels that all such claims under Section 80IA would be allowed for subsequent years also. The Company''s writ with the Honorable Calcutta High Court, challenging the validity of the retrospective amendment in Section 80IA, which, as per legal opinion obtained by the Company, is ultra vires to the main section of the Income Tax Act, 1961, however, remains pending disposal.

4. Minimum Alternate Tax entitlement aggregating Rs. 2,322.99 lakhs (Rs. 2,051.67 lakhs upto March 31, 2012) (including Rs. 271.32 lakhs (March 31, 2012: Rs. 286.56 lakhs) for the year) has not been recognized in these accounts since the Company does not have convincing evidence that it would have sufficient taxable profits within the specified period in future to claim the above entitlements.

5. Trade payables aggregating Rs. 2,390.15 lakhs (Rs. 412.73 lakhs) consisting of numerous balances being unclaimed / unmoved since long (mostly more than three years) have been written back during the year as the management believes that these amounts are no longer payable.

6. During an earlier year, one of the clients of the Company had partially terminated a part of the contract with consequential damages. The Company has challenged the said termination in the Hon''ble Supreme Court. However, as a matter of prudence, the Company has revised the contract value and contract cost, as per the management''s best estimate and the expected loss has been duly provided for in the accounts. The Company has also lodged counter claims on the client and it does not expect any further loss arising out of such termination.

7. SPML CISC JV, a joint venture entity (JV) has foreclosed its underlying project. The JV has receivable in its books towards claims against the client as awarded by the arbitrator. Although the said client has disputed the award, yet the Company is confident of recovery of its investment in the JV.

8. Segment information

The Company is engaged in construction activities in India. Consequently, it has one reportable business segment i.e. "Construction" and one reportable geographical segment i.e. "India".

9. Pursuant to a settlement reached with the Insituform group, the Company has exited during the year from the Insituform Joint Venture together with a commitment to sell its shares in the associate Company, namely, Insituform Pipeline Rehabilitation Private Limited (IPRPL) at a nominal value and remission of receivables from Insituform JV. As a result, the shares of IPRPL have been sold by the Company to Insituform group for Rs. 0.01 lakhs resulting into a loss of Rs. 1,098.67 lakhs and also the receivables of Rs. 1,173.46 lakhs from Insituform group have been written off in the accounts.

10. Arbitration claims of Rs. 6,624.71 lakhs awarded in two cases in favor of the Company (including Rs. 3,596.41 lakhs awarded in an earlier year) have been recognized as income in these accounts, as the management feels that these awards have reached their finality, and it is confident to recover these arbitration claims in full.

11. Trade receivables aggregating Rs. 2,601.13 lakhs (Rs. 3,562.48 lakhs) are under arbitration proceedings. The management is confident that based on the facts of the respective cases; there is no uncertainty as regards their realization.

12. Materials at site includes stock of trading goods aggregating Rs. 451 lakhs (Rs.Nil)

13. The Company has entered into certain transactions aggregating Rs. 35.55 lakhs during the year requiring Central Government prior approval under Section 297 of the Companies Act, 1956. The Company is in the process of filing necessary applications for obtaining the said approval.

14. Figures in bracket represent the previous year numbers and have been regrouped / rearranged wherever considered necessary


Mar 31, 2012

A. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The amount of per share dividend recognised as distributions to equity shareholders was Rs. Nil ( Rs. 0.50)

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 the shareholders.

1.1 Security and repayment terms in respect of term loans from banks

a. Term loan of Rs. 60.76 lacs carries interest @ 13.75 % p.a and is repayable by June 2012 along with interest thereon. The said loan is secured against hypothecation of construction equipments purchased against such loans and personal guarantees of three promoter directors of the Company .

b. Term loan of Rs. 5,000 lacs carries interest @ 11 % p.a. and is repayable in sixteen quarterly installments of Rs. 312.50 lakhs each along with interest thereon by March 2016. The said loan is secured against a subservient charge on all the fixed assets and current assets (both present and future) of the Company and also by the personal guarantee of a Promoter Director of the Company.

c. Term loan of Rs. 4,166.67 lacs carries interest @ 11.25 % p.a. and is repayable in ten quarterly installments of Rs. 416.67 lakhs each along with interest thereon by 27th August 2014. The said loan is secured against an exclusive charge over the Company's landed property located at Gurgaon.

1.2 Deferred payment credits from banks and other Financial Institutions are Secured against hypothecation of Vehicles/ Construction equipments purchased against such loans and are repayable in equated monthly installments carrying interest rate ranging from 10% to 12%.

2. DEFERRED TAX LIABILITIES ( NET)

In terms of Accounting Standard - 22, net deferred tax asset (DTA) of Rs. 119.18 lakhs (DTA of Rs.395.40 lakhs) has been recognized in the accounts during the year and consequently the net Deferred Tax Liabilities ( DTL) as at 31st March, 2012 stands at Rs. 905.91 lakhs (Rs. 1,025.15 lakhs).

3.1 Cash Credit in foreign currency and buyer's credit are secured by hypothecation of stocks and book debts of the Company, both present and future, and also by hypothecation of certain specific plant and machinery, furniture/fixtures & office equipments.

3.2 Demand loans and cash credit and working capital facilities in Indian rupees are secured by hypothecation of stocks and book debts of the Company, both present and future, and hypothecation of certain specific plant and machinery, furniture/ fixtures & office equipments and also the mortgage of Company's land situated at Mouje Dhanot, Gujarat and pirancheri village , Tamil Nadu. These loans are additionally secured by the guarantees of three promoter directors of the Company and corporate guarantee of SPM Engineers Ltd.

4. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF

(Rs. In Lakhs)

Claims against the Company not acknowledged as debts 2,398.96 2,439.64

Claims towards liquidated damages not acknowledged as debts by the Company Against the above, debts of the like amount are withheld by the customers.

Particees 2011-12 2011-12

However, the Company expects no liability to accrue on account of these claims. 7,247.34 8,389.19

Outstanding bank guarantees and letters of credit (including Rs.3,178.81 lakhs (Rs. 3,104.39 lakhs)

for joint ventures) 119,505.56 118,987.16

Disputed demands*

(a) Income Tax 3,130.99 1,979.74

(b) Excise/ Service Tax 75.77 75.77

(c) Sales Tax / VAT 2,803.95 2,609.94

Corporate guarantees given for Subsidiaries and other body corporate** 42,593.00 27,069.00

** Includes Rs. 900.00 lakhs (Rs. 900.00 lakhs) in relation to which the original title deeds of the property situated at 8/2, Ulsoor Road, Bangalore are lying with

Guwahati High Court as security on behalf of Bharat Hydro Corporation Limited.

* In respect of above cases based on favourable decisions in similar cases/legal opinions taken by the Company/discussions with the solicitors etc., the management is of the opinion that it is possible, but not probable, that the action will succeed and accordingly no provision for any liability has been made in the financial statements.

5. The Company has operating leases for office premises that are renewable on a periodic basis and are cancelable by giving a notice period ranging from one month to three months. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases. There are no contingent rents.

The amount of rent expenses included in the Statement of Profit and Loss towards operating Leases aggregate to Rs. 640.11 lakhs (Rs. 631.62 lakhs).

* Include losses pertaining to earlier years and considered as prior period items in the accounts. Refer note no.25.

** Based on provisional Balance Sheet as certified and furnished by the management.

Capital Expenditure Commitments and Contingent Liabilities of the Joint Ventures -Rs. 60.63 lakhs (Nil).

Note: The above table does not include the amounts pertaining to a joint venture where the Company has renounced its risk and reward in the joint venture through supplementary agreement in favour of the joint venture partner for a specified consideration which has been accounted for upfront as Company's share of profit in the joint venture. Total such consideration recognized during the year is Rs. 267.54 lakhs (Rs. Nil).

7. According to the Company, construction activity is a service activity and therefore, in terms of para 5(ii)(c) of General Instructions for Preparation of Statement Of Profit And Loss of Schedule VI to the Companies Act, 1956, the gross income determined from construction activity has been given in the notes no. 19.

8. During the year, the Company has accounted for arbitration awards in respect of two projects, which were although awarded in its favour in earlier years, yet the validity thereof was challenged by the client in the Hon'ble Supreme Court, which has been quashed by the apex court on the grounds of expiry of limitation period. In terms of the award ordered by the arbitrator, the Company has recognized a sum of Rs. 1,238.92 lakhs which includes Rs. 696.01 lakhs towards interest and Rs. 542.91 lakhs towards loss of profit and compensation for extra work carried out by the Company, included under interest and other operating revenue respectively in the Statement of Profit & Loss.

9. The following amounts are due from subsidiaries, associates and Companies in which directors are interested as on the balance sheet date:

10. (a) Gratuity plans (AS 15 Revised)

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the provisions of The Payment of Gratuity Act, 1972. The scheme is unfunded.

The following table summaries the components of net benefit expenses recognized in the Statement of Profit & Loss and the amounts recognized in the balance sheet:

11. The Company has claimed income tax benefits of Rs. 26,191.83 lakhs (Rs. 24,421.43 lakhs upto March 31, 2011) approx. having tax impact of Rs. 1,482.04 lakhs including Rs. 514.40 lakhs for the year, approx. under section 80IA of the Income Tax Act, 1961, on construction contracts for certain infrastructure projects executed on behalf of various departments / agencies of different State Governments during the financial years 2003-04 onwards. The tax assessments for the financial years upto 2008-09 are completed and the above claims have been disallowed by the Tax Authorities, in view of the retrospective amendment in Section 80IA vide the Finance Act '2010, against which the Company has filed appeals with the appellate authority. The Company has filed a writ with the Honorable Calcutta High Court, which has been admitted as well, challenging the validity of above retrospective amendment, which, as per legal opinion obtained by the Company, is ultra vires to the main section of the Income Tax Act, 1961. Pending disposal of the above writ by the High Court, no provision for income tax and interest thereon, amounting to Rs. 3,130.99 lakhs as demanded by the tax authorities, in this regard, has been made in the accounts and the same has been disclosed as contingent liability vide note no.21.

12. During the previous year, one of the client of the Company had prematurely terminated a part of the contract with consequential damages. The Company has challenged the said termination in the Hon'ble Supreme Court. However, as a matter of prudence, the Company has revised the contract value and contract cost, as per the management's best estimate and the expected loss has been duly provided for in the accounts. The Company has also lodged counter claims on the client and it does not expect any further loss arising out of such termination.

13. SPML CISC JV, a joint venture entity (JV) has foreclosed its underlying project. The JV has receivable in its books towards claims against the client as awarded by the arbitrator. Although the said client has disputed the award, yet the Company is confident of recovery of its investment in the JV.

14. SEGMENT INFORMATION

Business Segment: The business segments have been identified on the basis of the activities undertaken by the Company. Accordingly, the Company has identified 'Construction', 'Trading' and 'Wind Power' as the business segments.

Construction - Consists of execution of turnkey projects Wind Power - Consists of electricity generated from wind farms Trading - Consists of sale of unused construction material

15. Till the year ended 31st March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. 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 financial statements. However, it significantly impacts presentatio and disclosures made in the financial statements, particularly presentation of balance sheet.

 
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