Mar 31, 2018
I Summary of significant accounting policies
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
a) Current and non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification. Anassetis current when :
- It is expected to be realised or intended to be sold or consumed in normal operating cycle or
- It is held primarily for the purpose of trading or
- It is expected to be realised within twelve months after the reporting period, or
- It is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period All other assets are classified as non-current.
A liability is current when :
- It is expected to be settled in normal operating cycle or
- It is held primarily for the purpose of trading or
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for atleast twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
b) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
The specific recognition criteria described below must also be met before revenue is recognised.
i) Contract revenue (construction contracts)
Contract revenue and contract cost associated with the construction of road are recognised as revenue and expenses respectively by reference to the stage of completion of the projects at the balance sheet date. The stage of completion of project is determined by the proportion that contract cost incurred for work performed upto the balance sheet date bear to the estimated total contract costs. Where the outcome of the construction cannot be estimated reliably, revenue is recognised to the extent of the construction costs incurred if it is probable that they will be recoverable. If total cost is estimated to exceed total contract revenue, the Company provides for foreseeable loss. Contract revenue earned in excess of billing has been reflected as unbilled revenue and billing in excess of contract revenue has been reflected as unearned revenue.
Companyâs operations involve levying of value added tax (VAT)/GST on the construction work. Sales tax/VAT/ GST is not received by the Company on its own account.
ii) Operation and Maintenance income:
Revenue on Operation and Maintenance contracts are recognized over the period of the contract as per the terms of the contract.
iii) Developer fees & other advisory services:
Revenue on Developer Fees is recognized on an accrual basis.
iv) Interest income:
For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
v) Dividend income:
Dividend is recognised when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
vi) Finance and Other Income ( including remeasurement Income):
Finance income is accrued on a time proportion basis, by reference to the principal outstanding and the applicable EIR. Other income is accounted for on accrual basis. Where the receipt of income is uncertain, it is accounted for on receipt basis.
vii) Financial guarantee income:
Under Ind AS, financial guarantees given by the Company for its subsidiaries are initially recognised as a liability at fair value which is subsequently amortised as income to the Statement of Profit and Loss on a time proportion basis.
c) Property, Plant and Equipment (PPE):
i) Property, Plant and Equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost comprises of purchase price inclusive of taxes, commissioning expenses, etc. upto the date the asset is ready for its intended use.
ii) Significant spares which have a usage period in excess of one year are also considered as part of Property, Plant and Equipment and are depreciated over their useful life.
iii) Borrowing costs on Property, Plant and Equipments are capitalised when the relevant recognition criteria specified in Ind AS 23 Borrowing Costs is met.
iv) Decommissioning costs, if any, on Property, Plant and Equipment are estimated at their present value and capitalised as part of such assets.
v) Depreciation on all assets of the Company is charged on straight line basis over the useful life of assets at the rates and in the manner provided in Schedule II of the Companies Act 2013 for the proportionate period of use during the year. Depreciation on assets purchased /installed during the year is calculated on a pro-rata basis from the date of such purchase /installation.
vi) An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
vii) The residual values and useful lives of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
viii) Leasehold improvements is amortized on a straight line basis over the period of lease.
d) Intangible assets
i) Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
ii) The useful lives of intangible assets are assessed as either finite or indefinite.
iii) Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
(iv) Intangible Assets without finite life are tested for impairment at each Balance Sheet date and Impairment provision, if any are debited to profit and loss.
(v) Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.
e) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
f) Impairment of assets
Assets with an indefinite useful life and goodwill are not amortized/ depreciated and are tested annually for impairment. Assets subject to amortization/depreciation are tested for impairment provided that an event or change in circumstances indicates that their carrying amount might not be recoverable. An impairment loss is recognized in the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher between an assetâs fair value less sale costs and value in use. For the purposes of assessing impairment, assets are grouped together at the lowest level for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill for which impairment losses have been recognized are tested at each balance sheet date in the event that the loss has reversed.
g) Equity and mutual fund investment
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by instrument basis. The classification is made on initial recognition and is irrevocable. If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
Investment in subsidiaries, joint venture and associates are carred at Cost in separate financial Statement less impairment if any.
Current Investments :- Investments that are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments.
Current investments: are carried at fair value with the changes in fair value taken through the statement of Profit and Loss.
h) Inventories:
Inventories are valued at the lower of cost and net realisable value.
a) Stores and materials are valued at lower of cost and net realizable value. Net realizable value is the estimated selling price less estimated cost necessary to make the sale. The weighted average method of inventory valuation is used to determine the cost.
i) Taxes
i) Current Income Tax
The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
ii) Deferred Tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the standalone financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
iii) MAT Credit:
Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognises MAT credit available as a deferred tax asset only to the extent that there is reasonable certainty that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. The MAT credit to the extent there is reasonable certainty that the Company will utilise the credit is recognised in the Statement of profit and loss and corresponding debit is done to the Deferred Tax Asset as unused tax credit.
j) Leases
Operating lease:
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease. All other leases are operating lease. Operating lease payments, as per terms of the agreement, are recognised as an expense in the statement of profit and loss on a straight line basis in accordance with INDAS 17.â
k) Earnings per share
Earnings per share is calculated by dividing the net profit or loss before OCI for the year by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss before OCI for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
l) Provisions, Contingent Liabilities and Contingent Assets
i) Provisions
The Company recognizes a provision when: it has a present legal or constructive obligation as a result of past events; it is likely that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognized for future operating losses. Provisions are reviewed at each balance sheet and adjusted to reflect the current best estimates.
ii) Contingent liabilities and Contingent Assets
A contingent liability recognised in a business combination is initially measured at its fair value. Subsequently, it is measured at the higher of the amount that would be recognised in accordance with the requirements for provisions above or the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the requirements for revenue recognition.
A contingent assets is not recognised unless it becomes virtually certain that an inflow of economic benefits will arise. When an inflow of economic benefits is probable, contingent assets are disclosed in the financial statements. Contingent liabilities and contingent assets are reviewed at each balance sheet date.
m) Employee Benefits
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service.
Gratuity, a defined benefit obligation is provided on the basis of an actuarial valuation made at the end of each year/period on projected Unit Credit Method.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognised in profit or loss on the earlier of:
- The date of the plan amendment or curtailment, and
- The date that the Company recognises related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. n) Termination Benefits
Termination benefits are payable as a result of the companyâs decision to terminate employment before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The company recognizes these benefits when it has demonstrably undertaken to terminate current employeesâ employment in accordance with a formal detailed plan that cannot be withdrawn, or to provide severance indemnities as a result of an offer made to encourage voluntary redundancy. Benefits that will not be paid within 12 months of the balance sheet date are discounted to their present value.
o) Employee Share - based payment plans (âESOPâ)
The Company accounts for the benefits of Employee share based payment plan in accordance with IND AS 102 âShare Based Paymentsâ except for the ESOP granted before the transition date which are accounted as per the previous GAAP as provided in IND AS 101 first time adoption
p) Foreign Currencies
Transactions and Balances
Transactions in foreign currencies are initially recorded in reporting currency by the Company at spot rates at the date of transaction. The Companyâs functional currency and reporting currency is same i.e. INR.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
q) Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits in banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within bank borrowings in current liabilities on the balance sheet.
r) Fair Value Measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
s) Financial instruments A. Initial recognition
i) Financial Assets & Financial Liabilities
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, 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.
ii) Equity Instruments
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments which are issued for cash are recorded at the proceeds received, net of direct issue costs. Equity instruments which are issued for consideration other than cash are recorded at fair value of the equity instrument.
B Subsequent measurement
i) Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
ii) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model. Further, in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.
iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss.
iv) Financial liabilities at amortised cost
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit and loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these liabilities.
v) Financial liabilities at FVPL
Financial liabilities at FVPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation. Amortisation is recognised as finance income in the Statement of Profit and Loss.
C De-recognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
D Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
t) Dividend Distribution
Dividend distribution to the Companyâs equity holders is recognized as a liability in the Companyâs annual accounts in the year in which the dividends are approved by the Companyâs equity holders.
u) Exceptional Items
When items of income and expense within profit or loss from ordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such material items are disclosed separately as exceptional items.
v) Trade Payables
A payable is classified as a âtrade payableâ if it is in respect of the amount due on account of goods purchased or services received in the normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. These amounts are unsecured and are usually settled as per the payment terms stated in the contract. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the EIR method.
w) Trade Receivable
A receivable is classified as a âtrade receivableâ if it is in respect of the amount due on account of goods sold or services rendered in the normal course of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the EIR method, less provision for impairment.
Sep 30, 2014
A. Basis of preparation
The consolidated financial statements of the Company have been prepared
in accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the notifed accounting standards
by Companies (Accounting Standards) Rules, 2006,(as amended), and the
relevant provisions of the Companies Act, 1956 read with the General
Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate
Afairs in respect of Section 133 of the Companies Act, 2013 and General
Circular 8/2014 dated April 4, 2014 with respect to the said financial
statements. The consolidated financial statements have been prepared on
an accrual basis of accounting and under the historical cost
convention. The accounting policies are consistent with those used in
the previous period.
b. Principles of consolidation
i) Holding company and subsidiaries :
The consolidated financial statements comprise of the financial
statements of GAMMON INFRASTRUCTURE PROJECTS LIMITED ("the Company")
and its Subsidiary companies (the Company and its subsidiaries are
hereinafter referred to as ''the Group''). The consolidated financial
statements has been prepared on the following basis:
The financial statements of the Company and its subsidiary companies
have been combined on a line by line basis by adding the book values of
like items of assets, liabilities, income and expenses, after fully
eliminating intra-group balances, intra-group transactions and
unrealized profits or losses as per Accounting Standard - 21 (''AS-21'')
"Consolidated Financial Statements" notifed under the Companies
(Accounting Standards) Rules, 2006.
The consolidated financial statements have been prepared using uniform
policies for like transactions and other events in similar
circumstances and are presented to the extent possible in the same
manner as the Company''s separate financial statements.
The financial statements of the entities used for consolidation are
drawn upto the same reporting date as that of the Company i.e.
September 30, 2014.
The excess of cost of investments of the Group over its share of equity
in the subsidiary is recognised as goodwill. The excess of share of
equity of subsidiary over the cost of investments is recognised as
capital reserve.
ii) Interest in joint venture companies :
The Group''s interest in the joint ventures, in the nature of jointly
controlled entities are included in these consolidated financial
statements using the proportionate consolidation method as per the
Accounting Standard  27 (''AS-27'') "Financial Reporting of Interests in
Joint Ventures" notifed under the Companies (Accounting Standards)
Rules, 2006 (as amended). The Group combines its share of each of the
assets, liabilities, income and expenses of the joint venture with
similar items, on a line by line basis.
iii) Investments in associate companies :
Investments in associate companies are accounted under the equity
method as per the Accounting Standard  23 (''AS-23'') "Accounting for
Investments in Associates in Consolidated Financial Statements" notifed
under the Companies (Accounting Standards) Rules, 2006 (as amended).
Under the equity method, the investment in associates is carried in the
balance sheet at cost plus post acquisition changes in the Group''s
share of net assets of the associate. The statement of profit and loss
refects the Group''s share of the results of operations of the
associates.
The excess of the Group''s cost of investment over its share of net
assets in the associate on the date of acquisition of investment is
disclosed as goodwill. The excess of the Group''s share of net assets in
the associate over the cost of its investment is disclosed as capital
reserve. Goodwill / Capital Reserve is included/adjusted in the
carrying amount of the investment.
iv) The Build, Operate and Transfer (BOT)/Design, Build, Finance,
Operate and Transfer (DBFOT) contracts are governed by service
concession agreements with government authorities (grantor). Under
these agreements, the operator does not own the road, but gets "toll /
annuity collection rights" against the development and construction
services rendered. Since the development and construction revenue
earned by the operator is considered as exchanged with the grantor
against toll collection rights, profit from such contracts is considered
as realised.
Accordingly, BOT/DBFOT contracts awarded to group companies (operator),
where work is subcontracted to fellow subsidiaries/ holding companies,
the intra group transactions on BOT/DBFOT contracts and the profits
arising thereon are taken as realised and not eliminated.
v) Minority interest in the net assets of consolidated subsidiaries is
identified and presented in the consolidated balance sheet separately
from liabilities and equity of the company''s shareholders. Minority
interest in the net assets of consolidated subsidiaries consists of:
a) The amount of equity attributed to minority at the date on which
investment in a subsidiary relationship came into existence.
b) The minority share of movement in equity since the date parent
subsidiary relationship came into existence.
c) Minority interest share of net profit/(loss) of consolidated
subsidiaries for the year is identified and adjusted against the profit
after tax of the group.
2.1 Summary of other significant accounting policies
a. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that afect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could difer
from these estimates.
b. Revenue recognition
Revenue is recognised to the extent, that it is probable that the
economics benefits will fow to the Group and the revenue can be reliably
measured. The following Specific recognition criteria must also be met
before revenue is recognised.
i) Infrastructure development business :
Toll revenue from operations of tollable roads is recognised on usage
and recovery of the usage charge thereon.
The cash compensation due on account of multiple entries of cars has
been accounted on accrual basis as per the order of Government of
Kerala for which Supplementary Concession Agreement is being worked out
between the Government of Kerala, Greater Cochin Development Authority
and Cochin Bridge Infrastructure Company Limited (a Group company).
The annuity income earned from Build, Operate, Transfer (''BOT'')
projects is recognised on a time basis over the period during which the
annuity is earned. Revenues from bonus and other claims are recognised
upon acceptance from customer / counterparty.
Revenue by way of berth hire charges, dust suppression charges, cargo
handling charges, plot rent, wharfage, barge freight, other charges
etc. are recognised on an accrual basis and is billed as per the terms
of the contract with the customers at the rates approved by Tarif
Authority for Marine Ports (TAMP) as the related services are
performed.
Other operating income is recognised on an accrual basis.
ii) Operations and maintenance revenues :
Revenue on Operations & Maintenance (O & M) contracts are recognised
over the period of the contract as per the terms of the contract.
iii) Construction contract revenues :
Revenue from construction contracts is recognised on the basis of
percentage completion method. The percentage of work completed is
determined by the expenditure incurred on the job till date to the
total expected expenditure of the contract.
Construction contracts are progressively evaluated at the end of each
accounting period. On contracts under execution which have reasonably
progressed, profit is recognised by evaluation of the percentage of work
completed at the end of the accounting period. Foreseeable losses on
contract are fully provided for in the respective accounting period.
iv) Interest income :
Interest Income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
v) Dividend income :
Dividend is recognised when the shareholders'' right to receive payment
is established by the balance sheet date.
c. Tangible assets
Tangible assets are stated at cost net of accumulated depreciation and
accumulated impairment losses, if any. Cost comprises the purchase
price and any attributable cost of bringing the asset to its working
condition of its intended use. The costs comprises of the purchase
price, borrowings costs if capitalisation criteria are met and directly
attributable costs of bringing the asset to its working condition for
the intended use. Any trade discounts and rebates are deducted in
arriving at the cost of the tangible asset. Any subsequent expenses
related to a tangible asset is added to its book value only if it
increases the future benefits from the existing asset beyond its
previously assessed standard of performance. All other day to day
repairs and maintenance expenditure and the cost of replacing parts,
are charged to the statement of profit and loss for the period during
which such expenses are incurred.
Depreciation on tangible fixed assets is provided on the Straight Line
Method (''SLM'') at the rates and in the manner laid down in Schedule XIV
of the Companies Act, 1956 or the rates based on the estimated useful
lives of the fixed assets, whichever is higher. Depreciation on tangible
fixed assets purchased / installed during the year/ period is calculated
on a pro-rata basis from the date of such purchase / installation.
Gains or losses arising from derecognition of tangible fixed assets are
measured as the diference between the net disposal proceeds and the
carrying amount of the asset and are recognised in the statement of
profit and loss when the asset is derecognised.
d. Intangible assets and Intangible assets under development
Intangible assets are stated at cost of construction less accumulated
amortised amount and accumulated impairment losses, if any. Costs
include direct costs of construction of the project and costs
incidental and related to the construction activity. Costs incidental
to the construction activity, including fnancing costs on borrowings
attributable to construction of the project road, have been capitalised
to the project road till the date of completion of construction. Such
assets include self constructed assets under the BOT (Annuity) scheme,
concession rights in respect of tollable roads, etc.
Intangible assets comprising project road, project port and project
bridge are amortised on a straight line basis, from the date they are
put to use, over the balance period of the Contract. The amortisation
period and the amortisation method are reviewed at each financial year
end. Concession rights are amortised on the pro-rata basis of actual
tollable trafc volume for the period over the total projected tollable
trafc volume over the toll periods granted for the project. The
projections for the total trafc volume are based on the report of
independent professionals for this purpose. The volume of the trafc is
reviewed on periodic intervals for its consistency and appropriateness.
If the right to collect toll being amortised is revised on account of
the material change in the projected trafc volume arising out of the
periodic review, the amortisation would be revised accordingly.
Intangible assets also comprise of rights of Operations and Maintenance
(''O&M'') and an amount paid to Mumbai Port Trust towards upfront fees
for construction and operation of an ofshore terminal (License Fees
Intangible). The O&M intangible results in income stream for the Group
for a period of 14 years. The rights are therefore amortised over the
period of 14 years on straight line basis. The license fees intangible
asset being rights of O&M are amortised over the period of the
subsistence of its rights commencing from the date the project becomes
operational.
Gains or losses arising from derecognition of an intangible asset are
measured as the diference between the net disposal proceeds and the
carrying amount of the asset and are recognised in the statement of
profit and loss when the asset is derecognised.
Intangible asset under development is stated at cost of development
less accumulated impairment losses, if any. Costs include direct costs
of development of the project road and costs incidental and related to
the development activity. Costs incidental to the development activity,
including fnancing costs on borrowings attributable to development of
the project road, are capitalised to the project road till the date of
completion of development.
e. Impairment
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Group
estimates the asset''s recoverable amount. An asset''s recoverable amount
is the higher of an asset''s or cash-generating unit''s (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that refects current market assessments of the time value
of money and the risks Specific to the asset. In determining net selling
price, recent market transactions are taken into account, if available.
If no such transactions can be identified, an appropriate valuation
model is used.
The Group comprises of companies which are each engaged in developing a
project facility. On creating these facilities the said companies
establish a right to charge the users of the project development
facility. The project development costs are recovered by these
companies from the users of the project facilities through toll or are
compensated by the grantor through annuities. For testing the
impairment of the project facility developed, these companies conduct
impairment tests based on detailed discounted cash flows annually. The
period of the cash fow are from the date, the project was awarded to
the date, the project has to be handed over to the grantor.
Impairment losses of operations, including impairment on inventories,
are recognised in the statement of profit and loss, except for
previously revalued tangible fixed assets, where the revaluation was
taken to revaluation reserve. In this case, the impairment is also
recognised in the revaluation reserve up to the amount of any previous
revaluation.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
f. Investments
Investments that are readily realisable and intended to be held for not
more than a year are classifed as current investments. All other
investments are classifed as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognise a decline other than temporary
in the value of long term investments.
On disposal of an investment, the diference between the carrying amount
and the net disposal proceeds is charged to the statement of profit and
loss.
g. Inventories
Stores and consumables are valued at lower of cost and net realisable
value and is determined using the weighted average method. Net
realisable value is the estimated selling price less estimated cost
necessary to make the sale.
Work in progress on construction contracts refects value of material
inputs and expenses incurred on contracts including estimated profits in
evaluated contracts.
h. Borrowing costs
Borrowing cost includes interest, amortisation of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
diferences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs that are directly attributable to the acquisition,
construction or production of an asset that takes a substantial period
of time to get ready for its intended use are capitalised. Other
borrowing costs are recognised as expenditure in the period in which
they are incurred.
i. Provision for taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the Group
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised directly in equity is
recognised in equity and not in the statement of profit and loss.
Deferred income taxes refects the impact of current year timing
diferences between taxable income and accounting income for the year
and reversal of timing diferences of earlier years. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets
and deferred tax liabilities are ofset, if a legally enforceable right
exists to set-of current tax assets against current tax liabilities and
the deferred tax assets and the deferred tax liabilities related to the
taxes on income levied by same governing taxation laws and to the same
taxable entity. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that sufcient future taxable income
will be available against which such deferred tax assets can be
realised. In situations where the Group has unabsorbed depreciation or
carry forward tax losses, all deferred tax assets are recognised only
if there is virtual certainty supported by convincing evidence that
they can be realised against future taxable profits.
In the situations where any company within the Group is entitled to a
tax holiday under the Income-tax Act, 1961 enacted in India or tax laws
prevailing in the respective tax jurisdictions where it operates, no
deferred tax (asset or liability) is recognised in respect of timing
diferences which reverse during the tax holiday period, to the extent
the said company''s gross total income is subject to the deduction
during the tax holiday period. Deferred tax in respect of timing
diferences which reverse after the tax holiday period is recognised in
the year in which the timing diferences originate. However, the said
company restricts recognition of deferred tax assets to the extent that
it has become reasonably certain or virtually certain, as the case may
be, that sufcient future taxable income will be available against which
such deferred tax assets can be realised. For recognition of deferred
taxes, the timing diferences which originate frst are considered to
reverse frst.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Group recognises MAT credit
available as an asset only to the extent that there is convincing
evidence that the Group will pay normal income tax during the specified
period, i.e., the period for which MAT credit is allowed to be carried
forward. In the year in which the Group recognizes MAT credit as an
asset in accordance with the Guidance Note on Accounting for Credit
Available in respect of Minimum Alternative Tax under the Income-tax
Act, 1961, the said asset is created by way of credit to the statement
of profit and loss and shown as "MAT Credit Entitlement." The Group
reviews the "MAT credit entitlement" asset at each reporting date and
writes down the asset to the extent the Group does not have convincing
evidence that it will pay normal tax during the specified period.
j. Foreign currency translation
Initial recognition :
Foreign currency transactions are recorded in the reporting currency by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the
transaction.
Conversion :
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; non-monetary items which are carried at
fair value or other similar valuation denominated in a foreign currency
are reported using the exchange rates that existed when the values were
determined.
Exchange diferences :
Exchange diferences arising on the settlement of monetary items or on
reporting the Group''s monetary items at rates diferent from those at
which they were initially recorded during the period, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise except those arising from investments
in non-integral operations.
k. Preliminary and share issue expenses
Preliminary and share issue expenses (net of taxes) incurred are
charged to the security premium account, if available, or to the
statement of profit and loss.
l. Operating lease
Leases where the lessor efectively retains substantially all the risks
and benefits of ownership of the leased term are classifed as operating
leases. Operating lease payments are recognised as an expense in the
statement of profit and loss on a straight line basis over the lease
term.
m. Earnings per share
Basic and diluted earnings per share are calculated by dividing the net
profit or loss for the period attributable to equity shareholders by the
weighted average number of equity shares outstanding during the period.
Partly paid shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a
fully paid equity share during the reporting period. The weighted
number of equity shares are adjusted for events such as bonus issue,
bonus element in the rights issue, share split and reverse share split
(consolidation of shares) that have changed the number of equity shares
outstanding, without corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the efects of all dilutive potential equity shares.
n. Employee benefits
Retirement benefits in the form of Provident Fund is a Defined
contribution scheme. The contributions are charged to the statement of
profit and loss for the year when the contributions are due. The Group
has no obligation, other than the contribution payable to the provident
fund.
The Group operates only one Defined benefit plan for its employees i.e.
gratuity liability. The costs of providing this benefit are determined
on the basis of actuarial valuation at the each year end. Actuarial
valuation is carried out using the projected unit credit method.
Actuarial gains and losses of the Defined benefit plan are recognised in
full in the period in which they occur in the statement of profit and
loss.
Accumulated leave, which is expected to be utilised within the next
twelve months, is treated as short-term employee benefit. The Group
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The Group treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year end. Actuarial gains and losses of the Defined benefit plan are
recognised in full in the period in which they occur in the statement
of profit and loss and are not deferred.
o. Employee share based payments (''ESOP'')
The Group uses the intrinsic value (excess of the share price on the
date of grant over the exercise price) method of accounting prescribed
by the Guidance Note (''GN'') on ''Accounting for employee share-based
payments'' issued by the Institute of Chartered Accountants of India
(''ICAI'') (''the guidance note'') to account for its Employee Stock Option
Scheme (the ''ESOP'' Scheme) read with SEBI (Employees stock option
scheme or Employees Stock Purchase) Guidelines,1999. Compensation
expense is amortised over the vesting period of the option on SLM
basis.
p. Grants received
The Group on receipt of construction grant, received as equity support
from grantors, accounts the same as capital reserves. The grant related
to operations not forming part of equity support is credited to the
statement of the profit and Loss on a pro-rata basis in the year when
the same is due and receivable and when the related costs are incurred.
q. Deferred payment liability
The deferred payment liability represents the cash payout (Negative
grant) payable to the grantor as per the terms of the Contract at the
end of the concession period is added to the cost of respective asset.
The said deferred payment liability does not carry any interest
thereon.
r. Minority interest
Minority interest comprises of amount of equity attributable to the
minority shareholders at the date on which investments are made by the
Group and further movements in their share in the equity, subsequent to
the date of the investments.
s. Segment reporting
Identifcation of segments :
Business segments have been identified on the basis of the nature of
services, the risk return profle of individual business, the
organisational structure and the internal reporting system of the
Group.
t. Provisions
A provision is recognised when the Group has a present obligation as a
result of past event; it is probable that an outflow of resources will
be required to settle the obligation, in respect of which a reliable
estimate can be made of the amount of obligation. Provisions are not
discounted to its present value and are determined based on best
estimate required to settle the obligation at the reporting date. These
are reviewed at each reporting date and adjusted to refect the current
best estimates.
u. Cash and cash equivalents
Cash and cash equivalents comprise of cash at bank and in hand and
short-term investments with an original maturity of three months or
less.
v. Contingent liability
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain events beyond the control of
the Group or a present obligation that is not recognised because it is
not probable that an outflow of resources will be required to settle an
obligation. A contingent liability also arises in extremely rare cases
where there is a liability that cannot be recognised because it cannot
be measured reliably. The Group does not recognise a contingent
liability but discloses its existence in the financial statements.
w. Measurement of EBITDA
The Group measures EBITDA on the basis of profit/(loss) from continuing
operations. In the measurement, the Company does not include
depreciation and amortization expense, finance costs and tax expense.
3 The consolidated financial statements comprise the financial statements
of Gammon Infrastructure Projects Limited (''GIPL'') (the holding
company), its subsidiary companies, joint ventures and associates
consolidated on the basis of the relevant accounting standards as
discussed in note 2b above.
b. Joint venture entities :
The following jointly controlled entities have been considered applying
AS-27 on the basis of audited accounts (except stated otherwise) for
the period ended September 30, 2014.
b. Terms / rights attached to equity shares :
The Company has only one class of shares referred to as equity shares
having a par value of Rs. 2 per share. Each holder of equity shares is
entitled to one vote per share.
In the event of liquidation of the Company, the equity share holders
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.
c. Bonus equity shares :
The Company had issued bonus shares in the year ended March 2013 to the
shareholders other than the promoter group in the ratio of 1:34 (with
the fractions being rounded-of to the next higher whole number)
aggregating to 5,262,820 equity shares of Rs. 2 each as fully paid by
utilising securities premium account aggregating to Rs. 10,525,640 /-
d. qualified Institutional Placement :
The Company has issued 204,174,286 equity shares in the current period
under the qualified Institutional Placement (QIP) issue. The face value
of these shares are Rs. 2 each and these were issued at a premium of Rs.
10.68 per share.
a. Capital grant :
Capital grant includes group''s share of grant received by two SPVs of
the Group, from NHAI and the Government of Andhra Pradesh in the nature
of equity support of the grantor.
b. Employees stock options (''ESOP'') :
During the previous financial period the Company has instituted an ESOP
Scheme "GIPL ESOP 2013", approved by the shareholders vide their
resolution dated September 20, 2013, as per which the Board of
Directors of the Company granted 6,160,000 equity-settled stock options
to the eligible employees. Pursuant to the ESOP Scheme each options
entitles an employee to subscribe to 1 equity share of Rs. 2 each of the
Company at an exercise price of Rs. 2 per share upon expiry of the
respective vesting period which ranges from one to four years
commencing from October 1, 2014. Upto September 30, 2014, 1,050,000
options were forfeited / lapsed and balance 5,110,000 options are
outstanding.
a. The above term loans from banks and financial institutions are
primarily taken by various project executing entities of the Group for
the execution of the projects. These loans are secured by a frst
mortgage and charge on all the movable properties, immovable
properties, tangible assets, intangible assets, future receivables and
all bank accounts (including escrow bank accounts) save and except the
project assets of each individual borrowing company in the Group.
Further in few of the SPVs a corporate guarantee of GIPL is given
guaranteeing the repayment of the secured obligations in the event of
termination of the Concession Agreement pursuant to occurrence of any
Concessionaire Default during the construction period, which shall
stand discharged upon occurrence of the CoD.
b. Loans from others are secured by frst charge on proceeds/
receivables to be received from the National Highways Authority of
India (NHAI) towards annuities to be received for the period between
the Scheduled Commercial Operation Date and the actual Commercial
Operations Date (COD) and securitisation of income from operation and
maintenance of road projects.
c. As on September 30, 2014, the Group has defaulted in principal
repayment of term loan to its lenders amounting to Rs. 642,148,470 and
towards payment of interest amounting to Rs. 231,353,450. Post the
balance sheet date the Group has paid Rs. 274,500,000 towards the
principal repayment and Rs. 10,300,000 towards interest.
d. Interest rates :
The above mentioned long-term loans from banks and financial institution
carry an interest rate which is at a spread above/below the bank''s base
rate or bank prime lending rate or G-sec rate or at a negotiated rate.
The spread ranges from 50 to 300 basis points. In case of a consortium
of lenders the rate applicable is the highest rate charged by any one
member of the consortium thereof.
Loans from others, carries interest rates in the range of 12% p.a. to
15% p.a.
f. Unsecured intercorporate loan from minority shareholder :
The repayment of the same is due on March 31, 2015 and hence has been
shown under ''Other current liabilities'' in Schedule 12.
g. Pledge of shares :
The equity shares held by the Company and / or GIL in a subsidiary and
/or joint venture company of the Group are pledged with respective
lenders or consortium of lenders for the individual secured loan
availed by the said subsidiary and / or joint venture company from
their respective lenders or consortium of lenders.
The change in the balances between September 30, 2014 and December 31,
2013 represent addition /reduction of pledge during the current period.
h. An undertaking has been given to a financial institution by few of
the subsidiaries of the Group as a support for the Rupee Term Loan
(RTL) of Rs. 3,100,000,000 (Previous period Rs. 3,100,000,000) extended to
GIPL that these subsidiaries shall not raise any further funds till the
loan is outstanding. The balance outstanding as at September 30, 2014
is Rs. 542,500,000.
Few of the SPVs have unabsorbed depreciation as per tax returns which
is available for set of against taxable income. These SPVs have
recognised the deferred tax asset credit estimating its future taxable
income which satisfes the test of virtual certainty supported by
convincing evidence for recognising the deferred tax asset on the
unabsorbed depreciation as per the tax returns. The deferred tax asset
recognised amounts to Rs. 1,680,730,829 (Previous period : Rs. 603,409,151)
on the unabsorbed depreciation as per the tax returns available for set
of from future taxable income.
The Central Board of Direct Taxes (CBDT), vide circular no. 09/2014
dated 23rd April 2014, has clarifed that the cost of construction on
development of infrastructure facility of roads/ highways under BOT
projects is allowable as a deduction by amortizing and claiming the
same as allowable business expenditure under the Income Tax Act. The
amortization allowable is to be computed at the rate, which ensures
that the whole of the cost incurred on creation of infrastructural
facility of road/ highways is amortized evenly over the period of
concessionaire agreement after excluding the time taken for creation of
such facility. The deferred tax asset and liability are computed after
considering this circular.
* Received from a joint venture against bank guarantee issued from
GIPL''s limits.
a. As per the terms of the concession agreement between MNEL and NHAI,
MNEL is required to make a cash payout (''Negative Grant'') of Rs.
1,200,000,000 in the last year of the concession period. The same is
capitalised as toll concession rights and is represented as deferred
payment liability in the financial statements.
b. VGRPPL has commenced toll operations from September 1, 2014, being
the appointed date as per the terms of the concession agreement for the
project. As per the terms of the said agreement VGRPPL is required to
pay an amount of Rs. 575,700,000 as additional concession fee on an
annual basis which is to be increased by an annual escalation factor
upto the end of the concession period. It has recognized the total
additional concession fees payable over the concession period as a part
of Intangible Assets - ''Toll Collection rights'' and is amortising it
over the period of the concession agreement in terms of Schedule XIV of
the Companies Act 1956 for BOT contracts and a corresponding obligation
has been recorded as Deferred payment liabilities under Long term
liabilities.
a. Gratuity :
Under the gratuity plan, every employee who has completed atleast five
years of service gets a gratuity on departure @ 15 days of last drawn
salary for each completed year of service. The schemes of all the Group
companies except for the one joint venture SPV is unfunded.
One of subsidiaries which had achieved all milestones as required under
Letter of Arrangement (LOA) for the purpose of the coal linkage for its
thermal power project in Nagpur. However Western Coal Fields Limited
(WCL) had raised an issue that change of the status from Partnership
Firm to a company amounts to "Assignment" which is prohibited as per
LOA. The company has represented the matter to Standing Linkage
Committee, which has upheld the contention of WCL. However the company
approached the High Court for an interpretation in this regard and
pending its decision in the matter the court has stayed the matter and
directed that no action be taken till further orders. The company
expects a favorable response on the same.
c. Some of the eligible SPVs'' of the Group have availed the tax holiday
period under section 80 IA of the Income-tax Act, 1962. As such the
eligible SPVs'' Group during this period of tax holiday have to pay the
Minimum Alternate Tax (''MAT'') based on the profits as per their profits
in the financial statements during the tax holiday period. The MAT paid
by these SPVs during the said tax holiday period is available for
adjustment against the normal tax payable by the said SPVs after the
tax holiday period.
a. The Group undertakes various projects on build-operate-transfer
basis as per the service concession agreements with the government
authorities. During the current period, expenses on construction
activity and developer fees incurred by the operator on the project
with the Group were considered as exchanged with the grantor against
toll collection / annuity rights from such agreements and therefore the
revenue from such contracts were considered realised by the Group and
not eliminated for consolidation under AS-21 Consolidated Financial
Statements. The revenue during the current year from such contracts are
not eliminated to the extent of Rs. 503,538,281 (Previous period : Rs.
350,969,229).
b. During the current period, one of the SPV had received bunched up
annuity amounting to Rs. 673,444,444 (Previous period : Rs. 223,125,683) on
account of the delay caused not on account of the SPV. The SPV has
amortised the intangible asset proportionately for the portion related
to the bunched up annuity.
c. During the current period, one of the road project SPV has started
generating revenue from September 1, 2014. The project is under
implementation however, the SPV as per the License Agreement signed
with NHAI has a right to collect the user fees from the vehicles using
the road. The total revenue collected during the current period was Rs.
60,653,810 (Previous period Rs. Nil).
Dec 31, 2013
1. Corporate Information
The Company is an infrastructure development company formed primarily
to develop, invest in and manage various initiatives in the
infrastructure sector. It is presently engaged in the development of
various infrastructure projects in sectors like transportation, energy
and urban infrastructure through several special purpose vehicles
("SPVs"). It is also engaged in carrying out operation and maintenance
("O&M") activities for the transportation sector projects.
2. Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the notified accounting standards by the Companies
(Accounting Standards) Rules 2006 (as amended) and the relevant
provisions of the Companies Act, 1956 which as per a clarification
issued by the Ministry of Corporate Affairs would continue to apply
under Section 133 of The Companies Act 2013. The financial statements
have been prepared under the historical cost convention, on an accrual
basis of accounting.
The classification of assets and liabilities of the Company is done into
current and non-current based on the criterion specified in the Revised
Schedule VI notified under the Companies Act, 1956.
The accounting policies adopted in the preparation of financial
statements are consistent with those used in the previous year.
2.1 Summary of significant accounting policies
a. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon management''s best
knowledge of current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes requiring a
material adjustment to the carrying amount of assets or liabilities in
future periods.
b. Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must also
be met before revenue is recognised:
Operation and Maintenance income:
Revenue on Operation and Maintenance contracts are recognized over the
period of the contract as per the terms of the contract.
Developer fees & other advisory services:
Revenue on Developer Fees is recognized on an accrual basis.
Construction contract revenues :
Revenue from construction contracts represents work certified up to and
after taking into consideration the actual cost incurred and profit
evaluated by adopting the percentage of the work completion method of
accounting. The percentage of work completed is determined by the
expenditure incurred on the job till date to the total expected
expenditure of the contract.
Construction contracts are progressively evaluated at the end of each
accounting period. On contracts under execution which have reasonably
progressed, profit is recognised by evaluation of the percentage of work
completed at the end of the accounting period.
Foreseeable losses are fully provided for in the respective accounting
period.
Interest income:
Interest Income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Dividend income:
Dividend is recognised when the shareholders'' right to receive payment
is established by the balance sheet date.
c. Fixed Assets and depreciation
Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition of its
intended use. Borrowing costs relating to acquisition of fxed assets
which take a substantial period of time to get ready for its intended
use are also included to the extent they relate to the period till such
assets are ready to be put to use.
Depreciation on Fixed Assets is provided on the Straight Line Method
(''SLM'') using the rates arrived at based on the useful lives estimated
by the management, or those prescribed under the Schedule XIV of the
Companies Act, 1956 whichever is higher. Depreciation on assets
purchased /installed during the year is calculated on a pro-rata basis
from the date of such purchase / installation.
Intangible assets are rights of Operations and Maintenance (''O&M'')
which results in an O&M income stream for the Company for a period of
14 years. The rights are therefore amortised over the period of 14
years on SLM basis.
Leasehold improvements is amortized on a straight line basis over the
period of lease.
d. Impairment
The carrying amounts of all assets are reviewed at each balance sheet
date if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset''s net selling price and
value in use. In assessing value in use, the estimated future cash fows
are discounted to their present value using a pretax discount rate that
reflects current market assessments of the time value of money and the
risks specific to the asset.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
The test for impairment is done on an annual basis on the intangible
asset, irrespective of the indicators for impairment.
e. Investments
Investments that are readily realizable and intended to be held for not
more than one year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long-term investments. Current investments are carried at
lower of cost and fair value determined on an individual investment
basis. Long-term investments are carried at cost. However, provision
for diminution in value is made to recognise a decline other than
temporary in the value of long term investments.
f. Inventories
a) Stores and materials are valued at lower of cost and net realizable
value. Net realizable value is the estimated selling price less
estimated cost necessary to make the sale. The weighted average method
of inventory valuation is used to determine the cost.
b) Work in progress on construction contracts reflects value of material
inputs and expenses incurred on contracts including estimated profits in
evaluated jobs.
g. Provision for Taxation
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets
and deferred tax liabilities are offset, if a legally enforceable right
exists to set-of current tax assets against current tax liabilities and
the deferred tax assets and the deferred tax liabilities related to the
taxes on income levied by same governing taxation laws. Deferred tax
assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available against
which such deferred tax assets can be realised. In situations where the
Company has unabsorbed depreciation or carry forward tax losses, all
deferred tax assets are recognised only if there is virtual certainty
supported by convincing evidence that they can be realised against
future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
h. Operating Lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term are classifed as operating
leases. Operating lease payments are recognized as an expense in the
statement of Profit and Loss on a straight line basis over the lease
term.
i. Earnings per share
Basic and diluted earnings per share are calculated by dividing the net
profit or loss for the year attributed to equity shareholders by the
weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
j. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources will
be required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present
value and are determined based on best estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to reflect the current best estimates.
Contingent Liabilities are not recognised but disclosed in notes to
accounts. Contingent assets are neither recognised nor disclosed in
financial statements.
k. Share Issue Expenses
Share Issue Expenses (net of tax benefits) are charged to the Securities
Premium Account, if available, or to the Statement of Proft and Loss.
l. Employee Benefits
Retirement benefits in the form of Provident Fund is a defined
contribution scheme and contributions are charged to the Statement of
Profit and Loss for the year when the contributions are due.
Gratuity liability, a defined benefit obligation, is provided for on the
basis of, an actuarial valuation on projected unit credit method, made
at the end of each financial year.
Accumulated leave, which is expected to be utilized within the next
twelve months, is treated as short term employee benefit. The Company
treats accumulated leave expected to be carried forward beyond twelve
months, as long term employee benefit for measurement purposes. Such
long term compensated absences are provided for based on the actuarial
valuation on projected unit credit method made at the end of each
financial year.
Actuarial gains/losses are immediately taken to Statement of Profit and
Loss and are not deferred.
m. Employee Share  based payment plans (''ESOP'')
The Company uses the intrinsic value (excess of the net realizable
value on the date of grant over the exercise price) method of
accounting prescribed by the Guidance Note (''GN'') on ''Accounting for
employee share-based payments'' issued by the Institute of Chartered
Accountants of India (''ICAI'') (''the guidance note'') to account for its
Employee Stock Option Scheme read with SEBI (Employees stock option
scheme or Employees Stock Purchase) Guidelines,1999. Compensation
expense is amortised over the vesting period of the option on SLM
basis.
n. Foreign currency translation Initial recognition :
Foreign currency transactions are recorded in the reporting currency by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the
transaction.
Conversion :
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; non-monetary items which are carried at
fair value or other similar valuation denominated in a foreign currency
are reported using the exchange rates that existed when the values were
determined.
Exchange differences :
Exchange differences arising on the settlement of monetary items or on
reporting company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise.
0. Cash and cash equivalents
Cash and cash equivalents in the Cash Flow Statement comprise cash at
bank and in hand and short-term investments with an original maturity
of three months or less.
p. Borrowing costs
Borrowing costs that are directly attributable to the acquisition,
construction or production of an asset that takes a substantial period
of time to get ready for its intended use are capitalized. Other
borrowing costs are recognised as expenditure in the period in which
they are incurred.
q. Measurement of Earnings before interest, tax, depreciation and
ammortisation (EBITDA)
The company measures EBITDA on the basis of profit/ (loss) from
continuing operations. In its measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense.
b) 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 shareholders are entitled to dividend in the proportion of
their shareholding.
I In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after payment of all external liabilities. The distribution will be in
proportion to the number of equity shares held by the shareholders.
c) The Company had issued bonus shares in the previous year to the
shareholders other than the promoter group in the ratio of 1:34 (with
the fractions being rounded-of to the next higher whole number)
aggregating to 5,262,820 equity shares of Rs. 2 each as fully paid by
utilising securities premium account aggregating to Rs. 10,525,640 /-.
f) Shares reserved under options to be given.
5,320,000 (previous year : 1,146,670) equity shares have been reserved
for issue as ESOP. For further details refer note 4.1
Mar 31, 2013
A. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities at the date of
the financial statements and the results of operations during the
reporting period end. Although these estimates are based upon
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amount of assets or
liabilities in future periods.
b. Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
Operation and Maintenance income:
Revenue on Operation and Maintenance contracts are recognized over the
period of the contract as per the terms of the contract.
Developer fees & other advisory services:
Revenue on Developer Fees is recognized on an accrual basis.
Construction contract revenues :
Revenue from construction contracts is recognised on the basis of
percentage completion method. The percentage of work completed is
determined by the expenditure incurred on the job till date to the
total expected expenditure of the contract.
Construction contracts are progressively evaluated at the end of each
accounting period. On contracts under execution which have reasonably
progressed, profit is recognised by evaluation of the percentage of
work completed at the end of the accounting period. Foreseeable losses
are fully provided for in the respective accounting period.
Interest income:
Interest Income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Dividend income:
Dividend is recognised when the shareholders'' right to receive payment
is established by the balance sheet date.
c. Fixed Assets and depreciation
Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition of its
intended use. Borrowing costs relating to acquisition of fixed assets
which take a substantial period of time to get ready for its intended
use are also included to the extent they relate to the period till such
assets are ready to be put to use.
Depreciation on Fixed Assets is provided on the Straight Line Method
(ÂSLM'') using the rates arrived at based on the useful lives estimated
by the management, or those prescribed under the Schedule XIV of the
Companies Act, 1956 whichever is higher. Depreciation on assets
purchased /installed during the year is calculated on a pro-rata basis
from the date of such purchase / installation.
Intangible assets are rights of Operations and Maintenance (ÂO&M'')
which results in an O&M income stream for the Company for a period of
14 years. The rights are therefore amortised over the period of 14
years on SLM basis.
d. Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pretax discount rate that reflects
current market assessments of the time value of money and the risks
specific to the asset.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
The test for impairment is done on an annual basis on the intangible
asset, irrespective of the indicators for impairment.
e. Investments
Investments that are readily realisable and intended to be held for not
more than one year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long-term investments. Current investments are carried at
lower of cost and fair value determined on an individual investment
basis. Long-term investments are carried at cost. However, provision
for diminution in value is made to recognise a decline other than
temporary in the value of long term investments.
f. Inventories
a) Stores and materials are valued at lower of cost and net realizable
value. Net realizable value is the estimated selling price less
estimated cost necessary to make the sale. The weighted average method
of inventory valuation is used to determine the cost.
b) Work in progress on construction contracts reflects value of
material inputs and expenses incurred on contracts including estimated
profits in evaluated jobs.
g. Provision for Taxation
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets
and deferred tax liabilities are offset, if a legally enforceable right
exists to set-off current tax assets against current tax liabilities
and the deferred tax assets and the deferred tax liabilities related to
the taxes on income levied by same governing taxation laws. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. In situations
where the Company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
h. Operating Lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of Profit and Loss on a straight line basis over the
lease term.
i. Earnings per share
Basic and diluted earnings per share are calculated by dividing the net
profit or loss for the year attributed to equity shareholders by the
weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
j. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
Contingent Liabilities are not recognised but disclosed in notes to
accounts. Contingent assets are neither recognised nor disclosed in
financial statements.
k. Share Issue Expenses
Share Issue Expenses (net of tax benefits) are charged to the
Securities Premium Account, if available, or to the Statement of Profit
and Loss.
l. Employee Benefits
Retirement benefits in the form of Provident Fund is a defined
contribution scheme and contributions are charged to the Statement of
Profit and Loss for the year when the contributions are due.
Gratuity liability, a defined benefit obligation, is provided for on
the basis of, an actuarial valuation on projected unit credit method,
made at the end of each financial year.
Accumulated leave, which is expected to be utilised within the next
twelve months, is treated as short term employee benefit. The Company
treats accumulated leave expected to be carried forward beyond twelve
months, as long term employee benefit for measurement purposes. Such
long term compensated absences are provided for based on the actuarial
valuation on projected unit credit method made at the end of each
financial year.
Actuarial gains/losses are immediately taken to Statement of Profit and
Loss and are not deferred.
m. Employee Share - based payment plans (ÂESOP'')
The Company uses the intrinsic value (excess of the share price on the
date of grant over the exercise price) method of accounting prescribed
by the Guidance Note (ÂGN'') on ÂAccounting for employee share-based
payments'' issued by the Institute of Chartered Accountants of India
(ÂICAI'') (Âthe guidance note'') to account for its Employee Stock Option
Scheme (the ÂESOP'' Scheme) read with SEBI (Employees stock option
scheme or Employees Stock Purchase) Guidelines,1999. Compensation
expense is amortised over the vesting period of the option on SLM
basis.
n. Foreign currency translation
Initial recognition :
Foreign currency transactions are recorded in the reporting currency by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the
transaction.
Conversion :
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; non-monetary items which are carried at
fair value or other similar valuation denominated in a foreign currency
are reported using the exchange rates that existed when the values were
determined.
Exchange differences :
Exchange differences arising on the settlement of monetary items or on
reporting company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise.
o. Cash and cash equivalents
Cash and cash equivalents in the Cash Flow Statement comprise cash at
bank and in hand and short-term investments with an original maturity
of three months or less.
p. Measurement of Earnings before interest, tax, depreciation and
ammortization (EBITDA)
The company measures EBITDA on the basis of profit/ (loss) from
continuing operations. In its measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense.
Mar 31, 2012
A. Change in accounting policy
Dividend on investment in subsidiary companies
Till the year ended March 31, 2011, the Company, in accordance with the
pre-revised Schedule VI, recognised dividend declared by subsidiary
companies after the reporting date in the year's statement of profit
and loss if such dividend pertained to the period ending on or before
the reporting date. The Revised Schedule VI, applicable for financial
years commencing on or after April 1, 2011, does not contain this
requirement. Hence, to comply with AS 9 Revenue Recognition, the
Company has changed its accounting policy for recognition of dividend
income from subsidiary companies. In accordance with the revised
policy, the Company recognizes dividend as income only when the right
to receive the same is established by the reporting date.
The change in policy did not have any impact on the financial
statements for the year ended March 31, 2011 or 2012.
Method of inventory valuation
During the year, the Company has changed the method of valuation of
inventory from 'FIFO' to Weighted average method. Due to this change
the profit for the year has been lower by Rs. 5,339.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities at the date of
the financial statements and the results of operations during the
reporting period end. Although these estimates are based upon
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amount of assets or
liabilities in future periods.
c. Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised:
Operation and maintenance income:
Revenue on Operation and Maintenance contracts are recognised over the
period of the contract as per the terms of the contract. Developer
fees:
Revenue on Developer Fees is recognised on an accrual basis.
Interest income:
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Dividend income:
Dividend is recognised when the shareholders' right to receive payment
is established by the balance sheet date.
d. Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition of its
intended use. Borrowing costs relating to acquisition of fixed assets
which take a substantial period of time to get ready for its intended
use are also included to the extent they relate to the period till such
assets are ready to be put to use.
Depreciation on Fixed Assets is provided on the Straight Line Method
('SLM') using the rates arrived at based on the useful lives estimated
by the management, or those prescribed under the Schedule XIV of the
Companies Act, 1956. Depreciation on assets purchased /installed during
the year is calculated on a pro-rata basis from the date of such
purchase / installation.
Intangible assets are rights of Operations and Maintenance ('O&M')
which results in an O&M income stream for the Company for a period of
14 years. The rights are therefore amortised over the period of 14
years on SLM basis.
e. Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognised wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
The test for impairment is done on an annual basis on the intangible
asset, irrespective of the indicators for impairment.
f. Investments
Investments that are readily realisable and intended to be held for not
more than one year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long-term investments. Current investments are carried at
lower of cost and fair value determined on an individual investment
basis. Long-term investments are carried at cost. However, provision
for diminution in value is made to recognise a decline other than
temporary in the value of long term investments.
g. Inventories
Stores and materials are valued at lower of cost and net realizable
value. Net realizable value is the estimated selling price less
estimated cost necessary to make the sale. The weighted average method
of inventory valuation is used to determine the cost.
h. Provision for taxation
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets
and deferred tax liabilities are offset, if a legally enforceable right
exists to set-off current tax assets against current tax liabilities
and the deferred tax assets and the deferred tax liabilities related to
the taxes on income levied by same governing taxation laws. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. In situations
where the Company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
i. Operating lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term are classified as
operating leases. Operating lease payments are recognised as an expense
in the statement of Profit and Loss on a straight line basis over the
lease term.
j. Earnings per share
Basic and diluted earnings per share are calculated by dividing the net
profit or loss for the year attributed to equity shareholders by the
weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
k. Provisions, contingent liabilities and contingent assets
A provision is recognised when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
Contingent liabilities are not recognised but disclosed in notes to
accounts. Contingent assets are neither recognised nor disclosed in
financial statements.
l. Share issue expenses
Share issue expenses (net of tax benefits) are charged to the
securities premium account, if available, or to the Statement of Profit
and Loss.
m. Employee benefits
Retirement benefits in the form of Provident Fund is a defined
contribution scheme and contributions are charged to the Statement of
Profit and Loss for the year when the contributions are due.
Gratuity liability, a defined benefit obligation, is provided for on
the basis of, an actuarial valuation on projected unit credit method,
made at the end of each financial year.
Accumulated leave, which is expected to be utilised within the next
tweleve months, is treated as short term employee benefit. The Company
treats accumulated leave expected to be carried forward beyond tweleve
months, as long term employee benefit for measurement purposes. Such
long term compensated absenses are provided for based on the actuarial
valuation on projected unit credit method made at the end of each
financial year.
Actuarial gains/losses are immediately taken to Statement of Profit and
Loss and are not deferred.
n. Employee share - based payment plans ('ESOP')
The Company uses the intrinsic value (excess of the share price on the
date of grant over the exercise price) method of accounting prescribed
by the Guidance Note ('GN') on 'Accounting for employee share-based
payments' issued by the Institute of Chartered Accountants of India
('ICAI') ('the guidance note') to account for its Employee Stock Option
Scheme (the 'ESOP' Scheme) read with SEBI (Employees Stock Option
Scheme or Employees Stock Purchase) Guidelines,1999. Compensation
expense is amortised over the vesting period of the option on SLM
basis.
o. Foreign currency translation Initial recognition:
Foreign currency transactions are recorded in the reporting currency by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the
transaction.
Conversion:
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; non-monetary items which are carried at
fair value or other similar valuation denominated in a foreign currency
are reported using the exchange rates that existed when the values were
determined.
Exchange differences:
Exchange differences arising on the settlement of monetary items or on
reporting company's monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise except those arising from investments
in non-integral operations.
p. Cash and cash equivalents
Cash and cash equivalents in the Cash Flow Statement comprise cash at
bank and in hand and short-term investments with an original maturity
of three months or less.
q. Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the Statement of Profit and Loss. The company
measures EBITDA on the basis of profit/ (loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense.
Mar 31, 2011
BASIS OF PREPARATION
The financial statements have been prepared to comply in all material
respects with the notified accounting standards by the Companies
(Accounting Standards] Rules 2006 las amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention, on an accrual basis
of accounting. The accounting policies discussed more fully below, are
consistent with those used in the previous year.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent' liabilities at the date of
the financial statements and the results of operations during the
reporting period end. Although these estimates are based upon
management's best knowledge of current events and actions, actual
results could differ from these estimates.
a] Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Revenue on Operation and Maintenance contracts are recognized over the
period of the contract as per the terms of the contract.
Revenue from construction contracts is recognized on the basis of
percentage completion method. The percentage of work completed is
determined by the expenditure incurred on the job till each review date
to the total expected expenditure of the contract.
Construction contracts are progressively evaluated at the end of each
accounting period. On contracts under execution which have reasonably
progressed, profit is recognized by evaluation of the percentage of
work completed at the end of the accounting period, whereas,
foreseeable tosses are fully provided for in the respective accounting
period.
Revenue on Developer Fees is recognized on the accrual basis,
Interest Income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Dividend is recognised when the shareholders' right to receive payment
is established by the balance sheet date. Dividend from subsidiaries
is recognised even if same is declared after the balance sheet date but
pertains to period on or before the date of balance sheet as per the
requirement of Schedule VI of the Companies Act, 1956.
b) Fixed Assets and depreciation
Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition of its
intended use. Borrowing costs relating to acquisition of fixed assets
which take a substantial period of time to get ready for its intended
use are also included to the extent they relate to the period till such
assets are ready to be put to use.
Depreciation on Fixed Assets is provided on the Straight Line Method
t'SLMl at the rates and in the manner laid down in Schedule XIVof the
Companies Act, 1956. Depreciation on assets purchased/ installed during
the year is calculated on a pro-rata basis from the date of such
purchase / installation.
Intangible assets are rights of Operations and Maintenance ('O&M')
which results in an O&M income stream for the Company for a period of
14 years. The rights are therefore amortised over the period of 14
years on SLM basis.
c) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
d) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. AH other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise
a decline other than temporary in the value of long term investments.
e) Inventories
Stores and materials are valued at lower of cost and net realizable
value. Net realizable value is the estimated selling price less
estimated cost necessary to make the sale. The FIFO method of inventory
valuation is used to determine the cost.
f) Provision for Taxation
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets
and deferred tax liabilities are offset, if a legally enforceable right
exists to set-off current tax assets against current tax liabilities
and the deferred tax assets and the deferred tax liabilities related to
the taxes on income levied by same governing taxation laws. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. In situations
where the Company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of'deferred tax assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
g) Operating Lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight line basis over the lease
term.
h) Earnings per share
Basic and diluted earnings per share are calculated by dividing the net
profit or loss for the year attributed to equity shareholders by the
weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
i) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates Contingent Liabilities are not recognised but disclosed in
notes to accounts. Contingent assets are neither recognised nor
disclosed in financial statements.
j) Share Issue Expenses
Share Issue Expenses are charged off to the Security Premium Account,
if available, or to the Profit and Loss Account.
k) Employee Benefits
Retirement benefits in the form of Provident Fund is a defined
contribution scheme and contributions are charged to the Profit and
Loss Account for the year when the contributions are due.
Gratuity liability, a defined benefit obligation, is provided for on
the basis of, an actuarial valuation on projected unit credit method,
made at the end of each financial year,
Leave encashment liability is recognised on the basis of an actuarial
valuation on projected unit credit method made at the end of each
financial year
Actuarial gains/losses are immediately taken to Profit and Loss account
and are not deferred.
1) Employee Share - based payment plans 1'ESOP')
The Company uses the intrinsic value (excess of the share price on the
date of grant over the exercise price] method of accounting prescribed
by the Guidance Note CGN'I on Accounting for employee share-based
payments' issued by the Institute of Chartered Accountants of India
1'ICAI') I'the guidance note') to account for its Employee Stock Option
Scheme (the 'ESOP' Scheme) read with SEBI (Employees stock option
scheme or Employees Stock Purchase) Guidelines,1999 Compensation
expense is amortised over the vesting period of the option on SLM
basis.
m) Foreign currency translation
FOREIGN CURRENCY TRANSACTIONS
Initial recognition :
Foreign currency transactions are recorded in the reporting currency by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date ol the
transaction.
Conversion :
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; non-monetary items which are carried at
fair value or other similar valuation denominated in a foreign currency
are reported using the exchange rates that existed when the values were
determined.
Exchange differences :
Exchange differences arising on the settlement of monetary items or on
reporting company's monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise except those arising from investments
in non- integral operations.
n) Cash and cash equivalents
Cash and cash equivalents in the Cash Flow Statement comprise cash at
bank and in hand and short-term investments with an original maturity
of three months or less.
Mar 31, 2010
Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the notified accounting standards by the Companies
(Accounting Standards) Rules 2006 (as amended). and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention, on an accrual basis
of accounting. The accounting policies discussed more fully below, are
consistent with those used in the previous year.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon managementÃs best
knowledge of current events and actions, actual results could differ
from these estimates.
a) Revenue Recognition
Revenue on Operation and Maintenance contracts are recognized over the
period of the contract as per the terms of the contract.
Revenue from construction contracts is recognized on the basis of
percentage completion method. The percentage of work completed is
determined by the expenditure incurred on the job till each review date
to the total expected expenditure of the contract.
Construction contracts are progressively evaluated at the end of each
accounting period. On contracts under execution which have reasonably
progressed, profit is recognized by evaluation of the percentage of
work completed at the end of the accounting period, whereas,
foreseeable losses are fully provided for in the respective accounting
period.
Revenue on Developer Fees is recognized on the accrual basis.
Interest Income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Dividend is recognised when the shareholdersà right to receive payment
is established by the balance sheet date. Dividend from subsidiaries
is recognised even if same is declared after the balance sheet date but
pertains to period on or before the date of balance sheet as per the
requirement of Schedule VI of the Companies Act, 1956.
b) Fixed Assets and depreciation
Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition of its
intended use. Borrowing costs relating to acquisition of fixed assets
which take a substantial period of time to get ready for its intended
use are also included to the extent they relate to the period till such
assets are ready to be put to use.
Depreciation on Fixed Assets is provided on the Straight Line Method
(SLMÃ) at the rates and in the manner laid down in Schedule XIV of the
Companies Act, 1956. Depreciation on assets purchased /installed during
the year/ period is calculated on a pro-rata basis from the date of
such purchase / installation.
Intangible assets are rights of Operations and Maintenance (O&MÃ)
which results in an O&M income stream for the Company for a period of
14 years. The rights are therefore amortised over the period of 14
years on SLM basis.
c) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assetÃs net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
d) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise
a decline other than temporary in the value of long term investments.
e) Inventories
Stores and materials are valued at lower of cost or net realizable
value. Net realizable value is the estimated selling price less
estimated cost necessary to make the sale. The FIFO method of inventory
valuation is used to determine the cost.
f) Provision for Taxation
Tax expense comprises of current, deferred and fringe benefit tax.
Current income tax and fringe benefit tax is measured at the amount
expected to be paid to the tax authorities in accordance with the
Indian Income Tax Act.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets
are recognised only to the extent that there is reasonable certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realised. In situations where the
Company has unabsorbed depreciation or carry forward tax losses, all
deferred tax assets are recognised only if there is virtual certainty
supported by convincing evidence that they can be realised against
future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
Fringe Benefit Tax has been abolished.
g) Operating Lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight line basis over the lease
term.
h) Earnings per share
Basic and diluted earnings per share are calculated by dividing the net
profit for the year attributed to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
i) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
Contingent Liabilities are not recognised but disclosed in notes to
accounts. Contingent assets are neither recognised nor recorded in
financial statements.
j) Share Issue Expenses
Share Issue Expenses after 1st April, 2004 are charged off to the
Security Premium Account, if available, or to the Profit and Loss
Account.
k) Employee Benefits
Retirement benefits in the form of provident fund is a defined
contribution scheme and contributions are charged to the Profit and
Loss Account for the year when the contributions are due.
Gratuity liability, a defined benefit obligation, is provided for on
the basis of, an actuarial valuation on projected unit credit method,
made at the end of each financial year.
Leave encashment liability is recognised on the basis of an actuarial
valuation on projected unit credit method made at the end of each
financial year.
Actuarial gains/losses are immediately taken to profit and loss account
and are not deferred.
l) Employee Share à based payment plans (ESOPÃ)
The Company uses the intrinsic value (excess of the share price on the
date of grant over the exercise price) method of accounting prescribed
by the Guidance Note (GNÃ) on Accounting for employee share-based
paymentsà issued by the Institute of Chartered Accountants of India
(ICAIÃ) (the guidance noteÃ) to account for its Employee Stock Option
Scheme (the ESOPÃ Scheme) read with SEBI (Employees stock option
scheme or Employees Stock Purchase) Guidelines,1999. Compensation
expense is amortised over the vesting period of the option on SLM
basis.
m) Foreign currency translation
Foreign currency transactions
Initial recognition :
Foreign currency transactions are recorded in the reporting currency by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the
transaction.
Conversion :
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; non-monetary items which are carried at
fair value or other similar valuation denominated in a foreign currency
are reported using the exchange rates that existed when the values were
determined.
Exchange differences :
Exchange differences arising on the settlement of monetary items or on
reporting companyÃs monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise except those arising from investments
in non-integral operations.
n) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.