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Notes to Accounts of Dredging Corporation Of India Ltd.

Mar 31, 2023

PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS

a) Provisions are recognized when the entity has a present obligation (legal or constructive) as a result of a
past event, it is probable that the Entity will be required to settle the obligation, and a reliable estimate can
be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end of the reporting period, taking into account
the risks and uncertainties surrounding the obligation.

b) Contingent Assets and Contingent liabilities are disclosed by way of notes.

14. TAX EXPENSES:

Provisions for income tax liability is made on operational income as per special provisions relating to shipping
companies under the Income Tax Act,1961 on the basis of deemed tonnage income of the company. Provision for
Income tax on non-operational income is made as per the provisions of the Income Tax Act 1961

For and on behalf of Board of Di rectors As per our Report of Even Date

For Rao & Kumar & Co
Chartered Accountants

-sd- :sd- , „ Firm Regn. No. 003089S

(Capt.S.Divakar)

(Dr. Madhaiyaan Angamuthu, IAS) Managing Director &

Chairman CEO (A/c)

:sd:

(CA.Guruprasad)

-sd- -sd- Partner

(K.Rajesh) (P.Chandra Kalabhinetri) Membership no. 215652

Chief Financial Officer(CFO) Company Secretary uDiN:

Place : Visakhapatnam
Date : 25-05-2023


Mar 31, 2022

Note:@The Company has invited tender for chartering of dredgers on cubic meters basis for part of the maintenance dredging of Mumbai Harbor Channel and Jawaharlal Nehru Port Channel for the year 2020-21 at Jawaharlal Nehru Port Mumbai. M/s.Van Oord India Pvt Limited was awarded the sub contract being L1 .The contract was to dredge and dump in designated location DS-3 approximately 20.01 million cubic metres of material in 7 months 2 weeks'' time .Total Contract value excluding GST was approximatelyRs.144.69 Cr.M/s.Van Oord India filed an Insolvency Petition CP No. (IB)-513/(ND)/2021 on 31st August,2021 before NCLT, Delhi claiming alleged outstanding paymentsRs.93.12Crore dues from DCIL pertaining to the contract. DCIL has filed its written statement countering M/s.Van Oord''s claims. Arguments are yet the commence. The matter is next fixed for arguments on 5th July, 2022.Informatively, The matter is under CBI investigation.

Notes:

1. As per the requirement of Schedule II to the Companies Act, 2013, where cost of a part of the asset is significant to the total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately for depreciation purpose. After careful examination, the company is of the view that none of the component part of the fixed asset is considered to be significant as compared to total cost of the asset except Dry Dock expenses (including Spares consumed) incurred for dredgers .Consequently, other than for Dry Dock expenses, the charging of depreciation for component parts was not required. Dry Dock expenses(including Spares consumed) are capitalized to the respective dredger and depreciated over a period of next dry-docking period from the date of capitalization based on IRS Certification.

2. The Company has elected not to apply the requirements of Ind AS 116 Leases to Short term leases of all assets that have a lease term of 12 months or less and lease for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense.

The Company (DCIL) carried out maintenance dredging with JNPA in the financial year 2019-20. During the year, DCIL executed part of dredging area on its own and some of the areas were dredged by subcontractor named M/s. International Seaport Dredging Pvt Ltd ( herein after called as ISDPL). DCIL received payments from JNPA as per the rates mentioned in the agreement. However, DCIL released payments to ISDPL as per the agreement between DCIL Vs. ISDPL. As there is difference in between JNPA rates to DCIL and DCIL rates to ISDPL, JNPA started recovering these amounts from subsequent invoices raised by the Company for an amount of Rs.20.65 crores.This amount is grouped under considered good.

Notes:

1. Cash and cash equivalents as at March 31, 2022, include restricted deposits of Rs.2560.00Lakhs (PY Rs. 2690.00 Lakhs), respectively. The restrictions are primarily on account of bank balances held as Bond redemption reserve deposits in Canara bank Rs.1555.00 lakhs (PY Rs.1585.00 lakhs) & for obtaining Standby Letter of credit for Dr-XIX & Dr-XX loan instalments..

2. Other Deposits maintained by the company with the banks comprise of time deposits which can be withdrawn by the company at any point without prior notice or penalty on the principal.

Explanation for change in Ratios more than 25% as compared to previoues year:

1. Current Ratio: The decrease in Current Ratio by 30.20% is mainly on account of increase in current liabilities as Bonds will be repayable on 28-03-2022 . Hence, classified under short Term Borrowings in FY2021-22.

2. Debt Service Coverage Ratio: The increase in Debt Service coverage Ratio by 50.13% is mainly on account of increase in EBITDA and reduction in Debt obligations as compared to previous year.

3.Inventory Turnover Ratio: The increase in Inventory Turnover Ratio by 46.12% is mainly on account of increase in Operational income and reduction in Inventory balances during the year as compared to previous year.

4.Interest Coverage Ratio : The increase in Interest Coverage Ratio by 1184.85% is mainley on account of increase in EBITA of Rs.12006.72 lakhs for FY 2021-22 as compared to previoues year EBITDA of Rs.-3120.75 Lakhs..

AIt includes - DCI subcontracted Part of the dredging works at Sethusamudram to M/s Mercator Lines Limited (MLL). Due to some contractual issues it was referred to Arbitration. The Arbitration Tribunal passed the award in favour of MLL for an amount of Rs.64.59Crs. DCI has filed appeal on the said awards before the London court and High Court of Delhi and the same was dismissed. Subsequently, MLL has filed Execution petition before the High Court of Delhi. DCI has filed its objections under Section 48 of the Arbitration and Conciliation Act, 1996 contesting award on the ground that the Award is contrary to the public policy of India and also on the ground that arbitral procedure was not in accordance with the agreement of parties, particularly LMAA Rules. This case is posted for hearing on 25/05/2022. DCI obtained Opinion from senior counsels stating that “we are of the view that DCI has an arguable case that the awards by the Hon''ble Arbitral Tribunal and confirmed by the commercial court in London are against the public policy of India and the same can be resisted from enforcement”

A. Risk Management: The Company''s objectives when managing capital are to safeguard the company''s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

B. Loan covenants: The Company has 2 ECB Loan Agreements with EXIM Bank and BNP Paribas Bank.

5. Financial management:

The Company has exposure to the Credit risk, Liquidity risk and Market risk. The Company''s Board of Directors has overall responsibility for the establishment and supervision of the Company''s risk management framework. The Board of Directors established the Risk Management Committee (RMC), which is responsible for developing and monitoring the Company''s risk management policies. The Audit Committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

A. Credit Risk: Credit risk is the risk of financial loss to the Company if a customer to a financial instrument fails to meet its contractual obligations. Company''s exposure to credit risk primarily arises on account of its Trade receivables. Trade receivables consist of a large number of customers spread across diverse geographical areas. A default on a trade receivable is considered when the customer fails to make contractual payments within the credit period. This credit period has been determined by considering the business environment in which the Company operates. The Company considers dealing with credit worthy customers and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The credit risk due to above is periodically monitored. Based on the periodical analyses, the credit risk is managed by continuous review and follow-up.

B. the Company provides for expected credit loss on trade receivables based on provision matrix. This matrix is a simplified basis of recognition of expected credit losses in case of trade receivables. The model uses historical credit loss experience for trade receivables i.e. this model uses aging analysis of trade receivables as at the reporting date and is based on the number of days that a trade receivables is past due. The aging has been done for bracket of 90 days over a period of last 3 years. Receivables that are more than 3 years old are considered uncollectible. Further, customers declaring bankruptcy or failing to engage in repayment plan with the Company, provisioning is made on case to case basis i.e. such customers do not form part of this impairment exercise and provided.

B. Liquidity Risk:

Prudent liquidity risk management refers to the management of the Company''s short term and long term funding and liquidity management requirements. The Company treasury maintains flexibility in funding by maintaining availability of funds under committed credit lines. Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

C. Market Risk:

Market risk is the risk that changes in market indicators such as foreign exchange rates, interest rates and commodity prices will affect the Company''s income or the value of its financial instruments. The Company''s activities mainly expose it to risks arising from changes in foreign exchange rate and interest rates.

D. Foreign currency Risk:

The Company incurs expenditure in foreign currencies, primarily with respect to EURO and certain other foreign currencies. Foreign currency risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (INR).

7. Fair Value Measurements:

I. Fair value hierarchy:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

II. Valuation technique used to determine fair value:

Specific valuation techniques used to value financial instruments include:

• The use of book values for investment in unlisted equity securities

• The fair value of the remaining financial instruments is determined using discounted cash flow analysis.

III. Valuation processes

The finance department of the Company performs the valuations of financial assets and liabilities wherever required for financial reporting purposes, including level 3 fair values.

10. Sethusamudram Dues (SCL): As per the minutes of the meeting of AS&FA committee held on 25.02.2019 w.r.t. outstanding dues from M/s Sethusamudram Corporation Ltd (SCL), it was recommended to release an amount of Rs. 136.72 Crs to DCI. Out of the said amount, an amount of Rs. 70.88Crs already released till date. AS&FA directed SCL to move a note seeking approval of cabinet for seeking Govt budgetary resources to release balance dues to DCI.

12. Disclosure on the Ind As 8/Prior Period Restatements: Prior period errors in respect of short consumption of stores Rs.(802.92)Lakhs/Reversal of excess liability of creditors of Rs.94.23laks and Short depreciation of Rs.(15.87) Lakhs are related to earlier years now restated Rs.(692.82)Lakhs to opening reserves of retained earnings under other equity.(Ref.Note.2.2)

13. Impact on account of Change in accounting policy:

The company had changed it''s Accounting policy to give better presentation of financial statements.

The impact of change of Accounting Policies with regard to dry dock expenditure and inventories (Stores and lubricants) considered on prospective basis from the current accounting period instead of retrospective basis due to impracticable to retrieve the data for earlier year.

• As per revised policy the Dry dock expenses an amount of Rs.40.50 Crore were capitalized and Rs.12.55Crore of depreciation charged to revenue during this year. Net impact on Current year PAT is Rs.27.95 Crore was high on account of revised policy or otherwise current year Profit after Tax would have been lowered by Rs.27.95 Crore.

• As per revised policy the Stores and lubes are charged to revenue on actual consumption basis. Hence, an amount of Rs.7.63Crore was shown in inventory or otherwise current year Profit after Tax would have been lowered by Rs.7.63Crore.

• Due to changes in above accounting policies, the current year profit impact was high to the amount of Rs.35.58 Crore.

14. Confirmations/Reconciliation of outstanding balance of trade payables, other payables and advances to suppliers are subject to confirmation/reconciliation and the same is under process.

15. Letters for confirmation of balance from customers has been sent as on 31-03-2022 and no Confirmations received from customers as on date.

The nature of services and its disclosure of timing of satisfaction of performance obligation is mentioned in Para 3(d) of Note No.23.Contract Assets in the balance sheet constitutes unbilled amounts to customers representing the Company''s right to consideration for the services transferred to date. Any amount previously recognised as Contract Assets is reclassified to trade receivables at the time it is invoiced to the customer.

Contract Liabilities in the balance sheet constitutes advance payments and billings in excess of revenue recognised. The Company expects to recognise such revenue in the subsequent financial years. There were no significant changes in contract assets and contract liabilities during the reporting period except amount as mentioned in the table and explanation given above.

Trade receivables as disclosed in note no 13 includes contract balances.

Under the payment terms generally applicable to the Company''s revenue generating activities, prepayments are received only to a limited extent. Typically, payment is due upon or after completion of the services. The Company generates revenue from dredging activities. Revenue from dredging and chartering of vessel is recognised over time, which is determined on a percentage of completion method. The Company has recognised revenue over a period of time basis following output method. Since, the Company can tracks the progress toward completion of the contract by measuring quantity dredged to quantity relative to total estimated quantity needed to satisfy the performance obligation, the percentage of dredging completion method/ straight-line basis over the period of the charter i.e. output method provide a faithful depiction of transfer of goods or services.

19. ADDITIONAL REGULATORY INFORAMTION:

a) Title deeds of all Immovable Properties are held on the name of the company:

b) The Company has not made revaluation of its Property, Plant and Equipments during the year.

c) Company has not granted any loan or Advance to Promoters, Directors , KMP and related parties:

d) There is no Benami Property held on the name of the company as on 31-03-2022.

e) Company is not declared as wilful defaulter by any bank or financial institutions or lenders during the year..

f) Relation with Stuck off Companies: Company is not made any transactions with companies stuck off under section 248 of the Companies Act, 2013.

g) Company has not Traded or Invested in Crypto currency or Virtual currency during the financial year 2021-22.

h) The Company does not have multiple layers of investments. hence, Restriction of number of layers Rules 2017 is not applicable.

i) There are no charges or satisfaction yet to be registered with Register of Companies beyond the statutory period as on 31-03-2022.

j) Undisclosed/unrecorded income has not been surrendered or disclosed as income during the year in the tax assessments as per Income tax Act,1961.

21. GENERAL

a) The Company is engaged in the business of dredging and therefore, has only one reportable segment in accordance with Ind AS 108 “Operating Segments”.

b) Income Tax appeals are pending for the Assessment years 2008-09 to 2018-19 before the Honourable High Court and Income Tax Authorities.

c) The Company filed an appeal and an application for stay before the Customs, Excise and Service Tax Appellate Tribunal against Commissionrates Orders confirming recovery of Rs.13292 Lakhs including interest and penalty towards irregular Cenvat credit availed during the period from June, 2005 to June, 2017. No provision has been made as the matter is pending before the tribunal.

d) Escalation claims (Labour / Material) have been preferred on the basis of latest available indices.

e) Disclosure requirements under Ind AS 19 on Employee benefits are given under Employee benefit obligations.


Mar 31, 2021

Notes:

As per the requirement of Schedule II to the Companies Act, 2013, where cost of a part of the asset is significant to the total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately for depreciation purpose. After careful examination, the company is of the view that none of the component part of the fixed asset is considered to be significant as compared to total cost of the asset except Dry Dock expenses incurred for dredgers which are less than 25 years in usage. Consequently, other than for Dry Dock expenses, the charging of depreciation for component parts was not required. Dry Dock expenses are capitalized to the respective dredger and depreciated over a period of 2.5 years from the date of capitalization based on management evaluation.

B. Loan covenants: The Company has 2 ECB Loan Agreements with EXIM Bank and BNP Paribas Bank 5. Financial management:

The Company has exposure to the Credit risk, Liquidity risk and Market risk. The Company''s Board of Directors has overall responsibility for the establishment and supervision of the Company''s risk management framework. The Board of Directors established the Risk Management Committee (RMC), which is responsible for developing and monitoring the Company''s risk management policies. The Audit Committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

A. Credit Risk:

Credit risk is the risk of financial loss to the Company if a customer to a financial instrument fails to meet its contractual obligations. Company''s exposure to credit risk primarily arises on account of its Trade receivables. Trade receivables consist of a large number of customers spread across diverse geographical areas. A default on a trade receivable is considered when the customer fails to make contractual payments within the credit period this credit period has been determined by considering the business environment in which the Company operates. The Company considers dealing with credit worthy customers and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The credit risk. due to above is periodically monitored. Based on the periodical analyses, the credit risk is managed by continuous review and follow-up.

B. the Company provides for expected credit loss on trade receivables based on provision matrix. This matrix is a simplified basis of recognition of expected credit losses in case of trade receivables. The model uses historical credit loss experience for trade receivables i.e. this model uses aging analysis of trade receivables as at the reporting date and is based on the number of days that a trade receivables is past due. The aging has been done for bracket of 90 days over a period of last 3 years. Receivables that are more than 3 years old are considered uncollectible. Further, customers declaring bankruptcy or failing to engage in repayment plan with the Company, provisioning is made on case to case basis i.e. such customers do not form part of this impairment exercise and provided

Prudent liquidity risk management refers to the management of the Company''s short term and long term funding and liquidity management requirements. The Company treasury maintains flexibility in funding by maintaining availability of funds under committed credit lines. Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

C. Market Risk:

Market risk is the risk that changes in market indicators such foreign exchange rates, interest rates and commodity prices will affect the Company''s income or the value of its financial instruments. The Company''s activities mainly expose it to risks arising from changes in foreign exchange rate and interest rates.

D. Foreign currency Risk:

The Company incurs expenditure in foreign currencies primarily with respect to EURO and certain other foreign currencies. Foreign currency risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the company''s functional currency (INR)

E. Foreign Currency risk exposure: The Company''s exposure to foreign currency risk at the end of the reporting period expressed in INR are as follows.

10. As per the minutes of the meeting of AS&FA committee held on 25.02.2019 w.r.t. outstanding dues from M/s Sethusamudram Corporation Ltd (SCL), it was recommended to release an amount of ? 136.72 Crs to DCI. Out of the said amount, an amount of ? 51 Crs already released till date. AS&FA directed SCL to move a note seeking approval of cabinet for seeking Govt budgetary resources to release balance dues to DCI.

11. Company''s normal operations have been impacted in a number of ways as Lockdown impeded conducting surveys. Lockdown imposed across the country, regimented deployment of manpower leading to shortages at the work sites and yards, inordinate delays in import of emergency Spares which are required to carry out the scheduled dry-docks, closure of workshops, lack of OEM support, logistic constraints and risk of virus infection in FY 2019 20 as well as 2020-21. It also imposed unusual delays in both Dry-docking / running repairs in yards, impeded conducting surveys. and resulted in postponement of securing new work orders. Some of the vessels became either non-operational or operating at suboptimal efficiencies in FY 2019 20 as well as 2020-21. Notwithstanding constraint, management has taken a number of measures and will continue to take best possible steps to keep the operations. A definitive assessment of the impact on business is highly dependent upon the circumstances as they evolve. The management is monitoring the situation closely.

12. Reconciliation of outstanding balance of trade payables, other payables and advances to suppliers are subject to reconciliation and the same is under process.

13. Letters for confirmation of balance from customers has been sent as on 31-03-2021 and no confirmations received from customers as on date.

14. During the year, company sold DR-VI for an amount of Rs.441 Lakhs excluding taxes and earned profit amounting to Rs. 426.85 Lakhs and the same was recognized in profit and loss account.

c) The Company filed an appeal and an application for stay before the Customs, Excise and Service Tax Appellate Tribunal against Commissionarate''s Orders confirming recovery of Rs.13061 Lakhs including interest and penalty towards irregular Cenvat credit availed during the period from June, 2005 to March, 2016. No provision has been made as the matter is pending before the tribunal.

d) Escalation claims (Labour / Material) have been preferred on the basis of latest available indices.

e) Disclosure requirements under Ind AS 19 on Employee benefits are given under Employee benefit obligations..

f) Company carried out physical stock verification during the year for the financial years 2019-20 & 2020-21 as company could not carried out physical stock verification for the f.y.2019-20 due to COVID. Accordingly company charged an amount of Rs.37.00 Crs to the profit and loss account on account of stock difference.

g) Capitalization of administrative office building was completed during the year. However company is pursuing the occupancy certificate to be given by the local authorities. Additionally, BOQ items yet to be finalized. Once receipt of finalization of BOQ quantities, then company can provide deprecation based on componentization which was specified in IND AS and the depreciation impact may not be material.


Mar 31, 2017

1. ACCOUNTING ESTIMATES:

The preparation of the financial statements in conformity with IndAS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

2. OPERATIONAL INCOME- REVENUE RECOGNITION:

a. Revenue is measured at the fair value of the consideration received or receivable and is reduced for allowances wherever applicable as per the contract.

b. Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract. The stage of completion of the contract is determined based on internal assessment/survey.

c. Claims preferred on customers for works/items not contemplated are considered as income on their acceptance.

3. OTHER INCOME:

a. Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the entity and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

b. Interest on Tax refunds are accounted on receipt basis.

4. OPERATIONAL EXPENSES:

a. All operational expenses are charged to revenue under accrual basis.

b. Insurance:

i. Final adjustments to insurance premium paid are considered in accounts on the basis of demands received

ii. Expenses on account of general average claims/damages to ships are written off in the year in which they are incurred.

iii. In respect of hull and machinery insurance claims, the claim is accounted as claims recoverable from underwriters on submission of average adjuster report to the underwriter under operational income. Necessary

adjustments are made to the claims recoverable account as and when the actual claims are received from the underwriters. In respect of other claims, the same are accounted for on realization /settlement of the same by the underwriters and is accounted under operational income.

5. DEPRECIATION:

a. Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method.

b. Freehold land is not depreciated.

c. Dry Dock Expenses:

i. Dry Dock Expenses incurred on Dredgers where estimated useful life of 25 years is completed is charged to the statement of Profit and Loss.

ii. Dry Dock Expenses incurred on Dredgers where estimated useful life of 25 years is not completed is capitalized to property plant and Equipment and depreciated as a separate component over its estimated useful life of 2.5 years.

d. The Company depreciates property, plant and equipment over their estimated useful lives using the straight-line method as per the useful life prescribed in schedule II of the Companies Act, 2013 except for the following categories of assets in which case the estimated useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support.

e. An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

f. Items of Fixed Assets whose cost does not exceed ''5000/- (Rupees five thousand) are capitalized and depreciated 100% during the year.

6. PROPERTY, PLANT & EQUIPMENT:

a. Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Entity’s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

b. Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses.

c. Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss.

d. Dry Dock Expenses: Dry Dock Expenses incurred on Dredgers where estimated useful life of 25 years is not completed is capitalized to property plant and Equipment.

e. Items of Fixed Assets whose cost does not exceed ''5,000/- (Rupees five thousand) are capitalized and depreciated 100% during the year.

f. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue in the balance sheet and transferred to profit or loss on systematic and rational basis over the useful lives of the related assets.

7. BORROWING COSTS:

a. As per the transitional provisions given in the notification issued by the Ministry of Corporate Affairs, Government of India dated 31st Mar, 2009 read with the notification dated 9th August,2012, the Company has opted for adjusting the exchange difference on the long term foreign currency monetary items to the cost of the assets acquired out of these foreign currency items.

b. Borrowing costs attributable to acquisition, construction or production of qualifying assets are capitalized as part of the cost of that asset, till the time the asset is put to use. Other borrowing costs are recognized as an expense in the period in which they are incurred.

8. FOREIGN CURRENCY TRANSACTIONS:

Transactions in foreign currency are recorded at exchange rates prevailing at the dates of the transactions. As per the notification issued by the Ministry of Corporate Affairs dated 31st Mar, 2009, the Company has opted for adjusting the exchange difference on the long term foreign currency monetary items to the cost of the assets acquired out of these foreign currency items. The Company has accordingly aligned its accounting policy based on the above notification. Exchange differences arising out of fluctuation in exchange rates on settlement/restatement at the period end are accounted based on the nature of transaction as under:

i. Short term foreign currency monetary assets and liabilities recognized in the profit and loss account.

ii. Long term foreign currency monetary liabilities used for acquisition of fixed assets: adjusted to the cost of the fixed assets and amortized over the remaining useful life of the asset.

9. INVENTORIES:

a. Stock of spares and stores is valued at lower of weighted average cost and net realizable value.

b. Spares are accounted for as per respective delivery/ shipment terms as material-in transit/ stock accounts, valued as per (a) above and are charged to revenue as and when consumed.

c. Stores and lubricants delivered to crafts during the year are charged to revenue.

10. FINANCIAL INSTRUMENTS:

Financial assets and financial liabilities are recognized when an entity becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

11 Initial Recognition:

The company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are not at fair value through profit or loss are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.

12. EMPLOYEE BENEFITS:

a. All short-term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b. Employee benefits under defined contribution plans comprising of Provident fund, post-retirement medical benefits (wef 01.01.2007) and pension contribution are recognized based on the undiscounted amount of obligations of the company to contribute to the plan.

c. Employee benefits under defined benefit plans comprising of gratuity, leave salary benefits are recognized based on the present value of defined benefit obligation which is computed on the basis of actuarial valuation using the projected unit credit method. Actuarial liability in excess of respective plan assets is recognized during the year. Actuarial gains and losses are recognized in the statement of Profit & Loss during the period in which they occur.

d. For defined retirement gratuity benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur.

e. Provision for Gratuity, Provident Fund, Post retirement Medical and Pension benefits is funded with separate Trusts formed for the purpose.

13. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS:

a. Provisions are recognized when the entity has a present obligation (legal or constructive) as a result of a past event, it is probable that the Entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

b. Contingent Assets and Contingent Liabilities are disclosed by way of notes.

14. TAX EXPENSES:

Provisions for income tax liability is made on operational income as per special provisions relating to shipping companies under the Income Tax Act,1961 on the basis of deemed tonnage income of the company. Provision for Income tax on non-operational income is made as per the provisions of the Income Tax Act 1961._


Mar 31, 2016

1. Buildings include Rs.3.37 lakh (previous year Rs.3.37 lakh) being the cost of two residential flats at Mumbai which are yet to be registered in the name of the Company.

2. As per the requirement of Schedule II to the Companies Act,2013, where cost of a part of the asset is significant to the total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately for depreciation purpose. Pursuant to this, the company changed its accounting policy during the QE 30/ 06/2015 broadly categorizing the component parts of dredgers into three items i.e.,, 1.Keel and Hull (60% of vessel ’s cost), 2.Plant and Machinery in salt and sea water environment (35% of vessel’s cost), 3.Elecrical /Electronic Equipment (5% of vessel’s cost).However , this was only a broad categorization but could not be componentized. After careful examination , the company is of the view that none of the component part of the fixed asset is considered to be significant as compared to total cost of the asset. Consequently , the charging of depreciation for component parts was not required. Accordingly, restored the last year’s accounting policy for charging depreciation for FY 2015-16 in the last quarter ending 31/03/2016.

3. CSD Dr XVIII had some inherent manufacturing defects and the production/output of the vessel was below the designed output. In view of the under performance of the vessel, the company invoked the performance guarantee for an amount of Rs.27.37Crs given by the builder and the company has taken action to remedy the defects at a cost of Rs.32 Crs. The vessel is expected to be back into operations by June,2016. The management has carried out the impairment test and noted that the value in use is in excess of the carrying cost and hence does not require any impairment provision.

As regards equity investment made in Sethusamudram Corporation Ltd (SCL) amounting to Rs. 3000 lakhs. The Management does not consider any diminution for the value of the investment and the same has been carried as at the end of 31st March, 2016 as the investee company’s (SCL) net worth is more than the equity capity as under:

National stock Exchange of India vide its letter no.NSE/LIST/8500 dated 26/12/2014 advised the company to restate the financial statements for FY 2012-13 suitably on the qualification raised by then statutory auditors of the Company. Aggrieved by the said directions, the Company filed review petition before SEBI vide Lr no.DCI/CS/E.1/2015 requesting to review and reconsider its directions in its letter . SEBI vide its dated 05/11/2015 has decided that the instant qualification has been addressed by the Company in the subsequent financial years and ensured that it is free from such qualification and accordingly it will be treated as adequate compliance with the requirement of SEBI’s directions in their letter dated 26/12/2014

5. GENERAL

a) Letters seeking confirmation of balances have been sent to Customers and replies from the Customers are awaited and as such could not be reconciled.

b) Commissioner (Appeals) Vide order no.S.N.P-5-360/CUS/ (ARS)/KPL (port)/2013 dated 30/06/2015 stated that the company is entitled to refund of the entire amount of Rs.1132.81 lakhs custom duty paid by the company. Aggrieved by this order, Assistant commissioner approached the CESTAT, Kolkata for stay of the commissioner orders dated 30/06/2015. CESTAT dismissed the stay petition filed by the department in favour of the company. The company has submitted all the documents for obtaining refund of the amount. This amount has been considered and shown under exceptional items in profit and loss account amounting to Rs.1110.15 lakhs and reduced residual value of Dr-Aquarius by Rs.22.66 lakhs.

c) The Company filed an appeal and an application for stay before the Customs, Excise and Service Tax Appellate Tribunal against Commission Rate’s Orders confirming recovery of‘ Rs.8755.24 lakhs towards irregular Cenvat credit availed during the period from June, 2005 to March, 2014 and imposing a penalty/interest of Rs.5421.87 lakhs. No provision has been made as the matter is pending before the tribunal.

d) Escalation Claims (Labour / Material) have been preferred on the basis of latest available indices.

e) Income Tax appeals are pending for the Assessment years 2009-10 to 2014-15 before the Income Tax Authorities.

f) Physical verification of inventory on board dredger has been carried out in respect of eight dredgers and the same is pending for verification in respect of eight dredgers. Necessary adjustments for surplus /deficit of the items will be made in the accounts soon after completion of physical verification of all the dredgers.

g) Disclosure requirements under AS 15 on Employee benefits are given hereunder.

Defined Contribution Plan (Rs. in lakhs)

Contribution to Defined Contribution Plan, recognized as expense for the year, is under: 2015-16 2014-15

Employer’s Contribution to Provident Fund (inclusive of Contribution to Pension Fund) 412.83 312

The contributions to employee’s provident fund benefits are made to a separate trust .The trust is exempted u/s 17 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. As per the conditions for grant of exemption, the Company shall make good the deficiency if any, in the interest rate declared by the trust as against the statutory rate declared by Gol. The provident fund contributions are accounted for on accrual basis.

The Company offers to its employees defined benefit plans in the form of Gratuity, Leave Encashment and Post-retirement Medical Benefits as given under.

Gratuity: This benefit accrues to employee on retirement/ resignation and is based on the number of years of service rendered by the employee. A separate trust is formed for gratuity, which is funded by the Company.

Leave Encashment: This benefit represents un-availed leave accruing to the credit of the employees accumulated and paid to shore and floating employees as per respective rules.


Mar 31, 2015

1. CONTINGENT LIABILITIES:

a . Letters of Credit 3.64 40.85

b. Claims made against the Company not acknowledged as debts 36712.58 18989.13

c . Estimated amount of contracts remaining to be executed on capital account and not provided for 7983.95 1960.51

d. Income Tax Demands received but disputed by the Company 5296.63 3587.00

e . Service Tax Demands received but disputed by the Company 3702.02 7517.12

2. GENERAL

a ) Letters seeking confirmation of balances have been sent to Customers and replies from the Customers are awaited and as such could not be reconciled.

b) The CEGAT issued orders during the year 2001-02 setting aside the earlier orders of the customs Department levying duty of Rs.1132.81 lakhs on the accessories and spares of Dr- Aquarius. The Department while accepting CEGAT order sanctioned the refund of Rs.1132.81 lakhs under section 27 (2) of Customs Act 1962, but ordered to credit the same to consumer welfare Fund. Aggrieved by this order DCI filed an appeal before CESTAT, Kolkata for issuance of necessary directions to the Department for refunding the Customs Duty. Necessary adjustments to capital cost of the dredger will be made on receipt of the refund. c ) The company filed an appeal and an application for stay before the customs, Excise and service Tax Appellate Tribunal against Commission rate's Orders confirming recovery of Rs.4127.51 lakhs towards irregular Cenvat credit availed during the period from june,2005 to March,2013 and imposing a penalty / interest of Rs. 3702.02 lakhs. No provision has been made as the matter is pending before the tribunal.

d) Escalation Claims (Labour / Material) have been preferred on the basis of latest available indices.

e ) Income Tax appeals are pending for the Assessment years 2006-07 to 2012-13 before the Income Tax Authorities. The disputed tax under protest is Rs.134.28 lakhs (Net) has not been paid since the company has given a request for adjustment with the refunds.

f ) During the year the Company received arbitration awards in its favour in respect of the following:

i) Disputes pertaining to capital dredging works in Paradeep Port and the net effect of the decision resulted in income of Rs.566.55 lakhs. ii) Disputes in the matter of capital dredging of flood channel (NDV) resulted in income of Rs.114.10 lakhs.

g) During the year, physical verification of inventory on board dredger have been carried out by the management and noticed surplus items of stock as compared to book value. Pending further analysis for quantifying the value of stock, the same have not been adjusted in the books of accounts.

h) During the year certain changes have been made in the accounting policies in respect of operational income, operational expenses, and inventories for the purpose of better clarity. These changes have no impact on the profit for the year.

i) Disclosure requirements under AS 15 on Employee benefits are given hereunder.

Defined Contribution Plan (Rs,in lakhs)

Contribution to Defined Contribution Plan, recognized as expense for the year, is under: 2014-15 2013-14

Employer's Contribution to Provident Fund (inclusive of Contribution to Pension Fund) 312 322

The contributions to employees provident fund benefits are made to a separate trust. The trust is exempted u/s 17 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. As per the conditions for grant of exemption, the Company shall make good the deficiency if any, in the interest rate declared by the trust as against the statutory rate declared by GoI.

The provident fund contributions are accounted for on accrual basis.

The Company offers to its employees defined benefit plans in the form of Gratuity, Leave Encashment and Post- retirement Medical Benefits as given under.

Gratuity: This benefit accrues to employee on retirement/ resignation and is based on the number of years of service rendered by the employee. A separate trust is formed for gratuity, which is funded by the Company. Leave Encashment: This benefit represents un-availed leave accruing to the credit of the employees accumulated and paid to shore and floating employees as per respective rules.

Post retirement Medical benefits: The Company is obtaining Medi-Claim Policy for an insurance coverage at the rate of Rs.one lakh per individual per annum. The medi-claim policy covers hospitalization, medical treatment and domiciliary medical treatment. The retired employees and his/her spouse are entitled to this policy subject to an annual payment of Rs.100 per head per annum. The balance annual premium payable towards the medi-claim policies is met by the Company.


Mar 31, 2014

Vide Notification No.46/2012.F.No.178/60/2012-(ITA.1)dated 6th Nov, 2012 Ministry of Finance , Govt.of India, authorised the Company to issue tax-free, seured, redeemable, non convertible bonds to an extent of Rs. 50000 lakhs. The company raised an amount of Rs. 5887.80 lakhs and the same has been utilized for second stage payment of Dr.XXI constructed by IHC Dredgers B.V, Netherlands during the year 2012-13 and commissioned during Feb,2014. The tenure of the bonds is 10 years. The coupon rate for category I, II, III and IV is 6.97% p.a and aditional coupon rate of 0.5% p.a for original allottees under category IV. The Bonds are fully secured by way of charge on DCI Back-hoe dredger.

Sethusamudram Corporation Ltd.(SCL), a Special Purpose Vehicle was incorporated on 06.12.2004 for developing the Sethusamudram Ship Channel Project with Government of India, Tuticorin Port Trust, Ennore Port Ltd., Visakhapatnam Port Trust, Chennai Port Trust, Dredging Corporation of India Ltd., Shipping Corporation of India Ltd and Paradip Port Trust as the shareholders. DCI invested in Equity share capital Rs. 3000 lakh (previous year Rs. 3000 lakh). The dredging work at Palk Strait was suspended from 16-07-2009. The Management does not consider any diminution in the value of the investment and the same has been carried at cost.

Pursuant to the company''s claims for woks executed in sethu project vide its letter No. DCI/LEGAL/SSCP/ARBITRATION/2012 dated 06/06/ 2012, the Ministry constituted a committee vide its letter no.PD/26014/2006-sethu Vol-IV dated 25/09/2013 to assess the actual amount due to DCI. As per the report the amount payble to DCI worked out to Rs. 30897 lakhs(Including installation of BLS on DrAquarius Rs. 3069 lakhs) and the matter is pending in the Ministry. In view of this, provision for doubtful debts has not been made in respect of receivables from SCL amounting to Rs. 8413.91 lakhs.

1. CONTINGENT LIABILITIES:

a. Letters of Credit 40.85 36.02

b. Claims made against the Company not 18989.13 5471.90 acknowledged as debts

c. Estimated amount of contracts remaining 1960.51 59068.58 to be executed on capital account and not provided for

d. Income Tax Demands received but disputed 3587.00 2871.85 by the Company

e. Service Tax Demands received but 7517.12 7310.17 disputed by the Company

2. GENERAL

a) Letters seeking confirmation of balances have been sent to Customers and replies from the Customers are awaited and as such could not be reconciled.

b) The CEGAT issued orders duing the year 2001-02 setting aside the earlier ordes of the customs Department levying duty of Rs. 1132.81 lakhs on the accessories and spares of Dr- Aquarius. The Department while accepting CEGAT order sanctioned the refund of Rs. 1132.81 lakhs under the section 27 (2) of customs Act 1962, but ordered to credit the same to consumer welfare Fund. Aggrieved by this orde DCI filed an appeal before CESTAT, Kolkata for issuance of necessary directions to the Department for refunding the Customs Duty. Necessay adjustments to capital cost of the dredger will be made on receipt of the refund.

c) The company filed an appeal and an application for stay before the customs, Excise and service Tax Appellate Tribunal against Commission rate''s Orders confirming recovery of Rs. 3835.10lakhs towards irregular Cenvat credit availed during the period from june,2005 to March,2010 and imposing a penalty / interest of Rs. 3682.02 lakhs. No provision has been made as the matter is pending before the tribunal.

d) Escalation Claims (Labour and Material) have been preferred on the basis of latest available indices.

e) Income Tax appeals are pending for the Assessment years 2006-07 to 2011-12 before the Income Tax Authorities. The disputed tax paid under protest is Rs. 1365.34lakhs (Net) has not been paid since the company has given a request for adjustment with the refunds.

f) Disclosure requirements under AS 15 on Employee benefits are given hereunder.

Defined Contribution Plan (Rs. in lakhs)

Contribution to Defined Contribution Plan, recognized as expense for the year, is under: 2013-14 2012-13 Employer''s Contribution to Provident Fund (inclusive of Contribution to Pension Fund) 322 348 The Company offers to its employees defined benefit plans in the form of Gratuity, Leave Encashment and Post-retirement Medical Benefits as given under.

Gratuity: This benefit accrues to employee on retirement/ resignation and is based on the number of years of service rendered by the employee. A separate trust is formed for gratuity, which is funded by the Company.

Leave Encashment: This benefit represents un-availed leave accruing to the credit of the employees accumulated and paid to shore and floating employees as per respective rules.

Post retirement Medical benefits: The Company is obtaining Medi-Claim Policy for an insurance coverage at the rate of ''one lakh per individual per annum. The medi-claim policy covers hospitalization, medical treatment and domiciliary medical treatment. The retired employees and his/her spouse are entitled to this policy subject to an annual payment of Rs. 100 per head per annum. The balance annual premium payable towards the medi-claim policies is met by the Company. During the year the Company paid a Premium of Rs. 17.53 lakh (inclusive of member''s contribution) (Rs. in Lakh)


Mar 31, 2012

Sethusamudram Corporation Ltd.(SCL), a Special Purpose Vehicle was incorporated on 06.1.2004 for developing the Sethusamudram Chaneel Project with Tuticorin Port Trust, Ennore Port Ltd., Visakhapatnam Port Trust, Chennai Port Trust, Dredging Corporation of India Ltd., Shipping Corporation of India Ltd., and Paradip Port Trust as the shareholders. DCI invested in Equity share capital Rs.3000 lakh (previous year Rs.3000 lakh). The dredging work at Palk Strait was suspended from 16-07-2009. The Management does not consider any dimunition in the value of the investment and the same has been carried at cost.

a) Trade receivables include Service Tax and education cess thereon amounting to Rs.5674 lakhs. The provision for bad debts is on net dredging charges (Rs.40819 lakh but not on entire Trade Receivables)

b) The Company vide its Letter No. DCI/Legal/SSCP/Arbitration/2012 dt. 06-06-2012 requested Ministry of Shipping (GOI), to appoint a sole Arbitrator under Clause 22 of the contract of realisation of its outstanding dues payable by Sethusamudram Corporation Ltd.

1. CONTINGENT LIABILITIES:

a. Letters of Credit 55.49 145.31

b. Claims made against the Company not acknowledged as debts 5300.15 4272.50

c. Estimated amount of contracts remaining to be executed on capital account and not provided for 107377.19 136854.18

d. IncomeTax Demands received but disputed by the Company 1577.10 1098.12

2. GENERAL

a) Letters seeking confirmation of balances have been sent to Customers and replies from the Customers are awaited and as such could not be reconciled.

b) The CEGAT issued orders during the year 2001-02 setting aside the earlier orders of the Customs Department levying duty of Rs.1132.81 lakhs on the accessories and spares of Dr-Aquarius. The Department while accepting CEGAT order sanctioned the refund of Rs.1132.81 Lakhs under 27 (2) of Customs Act 1962, but ordered to credit the same to Consumer Welfare Fund. Aggrieved by this order DCI filed an appeal before CESTAT, Kolkata for issuance of necessary directions to the Department for refunding the Customs Duty. Necessary adjustments to capital cost of the dredger will be made on receipt of the refund.

c) Escalation Claims for Labour and Material have been preferred on the basis of latest available indices.

d) The Company has suspended the works at Sethusamudram Project w.e.f 16-07-2009. The Company incurred an expenditure of Rs.92823 lakh in execution of Sethusamudram Project and in consideration received Rs.59270 lakh. The Company approached the Ministry for revision of price on the cost plus basis and the same is pending with the Ministry of Shipping (MoS).

e) Income Tax appeals are pending for the Assessment years 2006-07 to 2008-09 before the Income Tax Authorities. The disputed tax paid under protest is Rs.1577 lakhs as per the orders of Assessing Authority.

The Company offers to its employees defined benefit plans in the form of Gratuity, Leave Encashment and Post-retirement Medical Benefits as given under.

Gratuity: This benefit accrues to employee on retirement/ resignation and is based on the number of years of service rendered by the employee. A separate trust is formed for gratuity, which is funded by the Company.

Leave Encashment: This benefit represents un-availed leave accruing to the credit of the employees accumulated and paid to shore and floating employees as per respective rules.

Post retirement Medical benefits: The Company is obtaining Medi-Claim Policy for an insurance coverage at the rate of Rs.one lakh per individual per annum. The medi-claim policy covers hospitalization, medical treatment and domiciliary medical treatment. The retired employees and his/her spouse are entitled to this policy subject to an annual payment of Rs.100 per head per annum. The balance annual premium payable towards the medi-claim policies is met by the Company. During the year the Company paid a Premium of Rs.14.54 lakh (inclusive of member's contribution) (Rs.in Lakh)

f) Due to change in the Accounting Policy - Note XVII- 4(d) in respect of Insurance Claims, there is decrease in profit by Rs.29.33 lakh and due to change in accounting policy - Note -XVII 9 in respect of investments, there is no effect on profit.

g) Figures have been rounded off to decimals of lakh.

h) Figures for the previous year have been re-grouped/re-classified wherever necessary to conform to current year groupings.

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