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Notes to Accounts of Garden Reach Shipbuilders & Engineers Ltd.
Mar 31, 2025
(u) Provision, Contingent Liabilities and Contingent Assets
i. Provisions for legal claims, warranties, discounts and
returns are recognised when the Company has a present
legal or constructive obligation as a result of past events,
it is probable that an outflow of resources will be required
to settle the obligation and the amount can be reliably
estimated. Provisions are not recognised for future
operating losses. However, a provision is recognised if the
Company has a contract that is onerous.
ii. Provision for guarantee liability in respect of delivered ships
is made on the basis of actuarial estimates. Such provision
for all other products is made, as applicable, on the basis of
management estimates.
iii. Contingent Assets are not recognised but disclosed in the
Financial Statements when economic inflow is probable.
iv. Contingent Liabilities are not recognised but are disclosed
in the notes.
v. Provisions are measured at the present value of
management''s best estimate of the expenditure required
to settle the present obligation at the end of the reporting
period on the basis as detailed below. The discount rate
used to determine the present value is a pre-tax rate that
reflects current market assessments of the time value of
money and the risks specific to the liability. The increase in
the provision due to the passage of time is recognised as
interest expense.
A. In non-tax civil cases
In the case of non-tax civil cases, creation of accounting
provision is considered on a review of status of
each case as on the reporting date and provision, if
required, is made in the accounts on the basis given
below:
a. In the arbitration cases where the Company has
not contested or does not intend to contest the
adverse outcome of arbitral award, the liability
is not treated as contingent and full provision is
considered.
b. Where an adverse award/ decision is given by
the arbitrator or by the trial court and an appeal
is preferred by the Company or intended to be
preferred, provision is made as follows:-
i. After the claim is disposed of by the
Arbitrator - 25% of the amount in dispute.
ii. After the claim is disposed of by Higher
Appeal Court - 50% of the amount in
dispute, until disposal by the final appeal
court. Revision petition, larger bench of
the same court is considered as part of the
relevant appeal process in the said court.
c. Full provision of the disputed claim is considered
in the case of an award/ decision where the
Company does not proceed to contest the
appellate award.
d. No provision is made in case of demands raised
by Government department/ statutory authority/
by Commissioner or Tribunal set up by such
Government department/ statutory authority
if the said demand is contested within the set¬
up of such Government department/ statutory
authority and there is likelihood of deletion of
demand in appeal based on legal opinion/latest
judgement in favour of the Company.
B. In taxation cases
In the matter of taxation cases, the claimed amount
is considered as contingent liability and no provision
is considered if the decision up to Appeal stage goes
against the Company and if the Company contests or
intends to contest such decision before the Appellate
Tribunal or decision of High Court/Supreme Court in
similar cases is against the Company.
Where the decision of Appellate tribunal is against the
Company, full provision of the amount in dispute is
made irrespective of whether the Company contests
such decision at any higher forum.
The preparation of Financial Statements in accordance with Ind - AS
requires use of estimates and assumptions for some items, which
might have an effect on their recognition and measurement in the
Balance Sheet and Statement of Profit and Loss. The actual amount
realised may differ from these estimates. Accounting estimates
could change from period to period. Actual results could differ
from those estimates. Appropriate changes in estimates are made
as the management becomes aware of changes in circumstances
surrounding the estimates. Differences between the actual results and
estimates are recognised in the period in which the results are known/
materialised and, if material, their effects are disclosed in the notes to
the Financial Statements.
Estimates and assumptions are required in particular for:
i. Estimated useful life of Property, Plant and Equipment
(PPE):
Determination of the estimated useful life of PPE and the
assessment as to which components of the cost may be
capitalized. Useful life of PPE is based on the life prescribed in
Schedule II to the Companies Act, 2013. In cases, where the
useful life is different from that prescribed in Schedule II, it is
based on technical advice, taking into account the nature of the
asset, estimated usage and operating conditions of the asset, past
history of replacement and maintenance support. Assumptions
also need to be made, when the Company assesses, whether an
asset may be capitalised and which components of the cost of
the asset may be capitalised.
ii. Recognition and measurement of defined benefit
obligations:
The obligation arising from the defined benefit plan is
determined on the basis of actuarial assumptions. Key actuarial
assumptions include discount rate, trends in salary escalation and
vested future benefits and life expectancy. The discount rate is
determined with reference to market yields at the end of the
reporting period on the government securities. The period to
maturity of the underlying securities corresponds to the probable
maturity of the post-employment benefit obligations.
iii. Recognition of Deferred Tax Assets:
Deferred tax asset is recognised for all the deductible temporary
differences to the extent it is probable that taxable profit will be
available against which the deductible temporary difference can
be utilised. The management assumes that taxable profits will be
available while recognising deferred tax assets.
iv. Recognition and measurement of other provisions:
The recognition and measurement of other provisions are based
on the assessment of the probability of an outflow of resources,
and on past experience and circumstances known at the balance
sheet date. The actual outflow of resources at a future date may
therefore vary from the figure included in other provisions.
v. Discounting of long-term financial liabilities
All financial liabilities are measured at fair value on initial
recognition. In case of financial liabilities, which are required to
be subsequently measured at amortised cost, interest is accrued
using the effective interest rate method.
Ministry of Corporate Affairs (MCA) notifies new standards or
amendments to the existing standards under companies (Indian
Accounting Standards) rules as issued from time to time. On 12th
August 2024, Ministry of Corporate Affairs (MCA) announced the
notification of Indian Accounting Standard (Ind AS) 117, Insurance
Contract and on 09th September, 2024, the MCA introduced the
companies (Indian Accounting Standards) Second Amendment Rules,
2024 effective from 01st April 2024. The Impact of the same has been
reviewed by the Company and provided as below:
Ind AS 117 - Insurance Contracts - This standard sets out principles
for accounting for Insurance contracts, which means entities applying
this standard will no longer rely on previous accounting practices
such as Ind AS 115 (Revenue from Contracts with Customers) or Ind
AS 109 (Financial Instruments), unless there is a specific exemption
provided by Ind AS 117. However, The Company being not an issuer
of "Insurance Contracts", the standards stand not applicable for the
Company.
Ind AS 116 - Leases - The Amendment specifically address the
accounting for sale and leaseback transactions under Ind AS 116. A
sale and leaseback transaction is a financial arrangement in which an
entity (the seller-lessee) sells an asset to another entity (the buyer-
lessor) and subsequently rents the same asset back. The Company do
not have such transactions and accordingly, there is no impact on its
financial statements.
* The extension of delivery date of Naval Surface Gun with Ammunition is under consideration of competent authority of the Navy. Since, such
approval is awaited, Liquidated Damages (LD) of '' 480 lakh in respect of performance obligation already completed and revenue in respect
of which has already been recognised is treated as contingent liability. In respect of performance obligation for the balance portion as on
the reporting date, LD has not been considered since corresponding revenue is not recognized.
(a) Contingent liability on account of Sales Tax amount to '' 506.83 lakh (31 March, 2024''506.83 lakh) towards assessment dues and demand
for the years 2007-08. This amount has not been acknowledged as debts and accordingly not provided for in the Accounts as the demand
is under appeal before West bengal Sales Tax Appellate Tribunal.
(b) Contingent liability on account of income tax amounts to '' 1683.57 Lakh (31 March, 2023 : 1633.19 Lakh) towards , Arbitrary increase by
the Income Tax Authority in taxable income based on Form 26AS for AY 2009-10 - '' 1674.96 Lakh, and disallowance of 80G rebate - '' 8.61
Lakh for AY 2017-18. Above disputes have not been acknowledged as debt and accordingly not provided for in the Accounts as all the issues
are under first stage of appeal.
(c) Contingent liability on account of GST amounts to '' 216.70 Lakh (31 March, 2024 : 266.52 Lakh) towards, dispute for FY 2018-19
pertaining to demand of taxes & interest mainly on account of arbitary mismatch of ITC. Above dispute has not been acknowledged as
debt and accordingly not provided for in the Accounts as all the issues are under first stage of appeal. Dispute for FY 2017-18 amounting to
'' 266.52 Lakh pertaining to demand of interest for arbitary late payment has been settled in GST Amnesty Scheme u/s 128A and demand
has been vacated, hence the contingent liability of '' 266.52 Lakh is withdrawn.
(d) Contingent liability on account of Custom Duty amounts to '' 401.51 Lakh (Including Interest) towards, demand from Directorate of Revenue
Intelligence, Kakinada Sub-Regional Unit for short payment of custom duty on import drawings. Damand raised by DRI, stating that the
imports i.e., "Batch 1 & 2 drawings for 1000 M3 TSH Dredger (Yard 2121) for use in Export Dredging ship" does not fall under the criteria
of availing benefit of "NIL" custom duty. Couter justifications are being made to DRI. Hence, above demand have not been acknowledge as
debt and accordignly not provided in the Accounts.
(e) The amounts shown under Contingent Liabilities represent the best possible estimates arrived at on the basis of available information.
The uncertainties and timing of the cash flows are dependent on the outcome of the different legal processes which have been invoked
by the Company or the claimants as the case may be and therefore cannot be estimated accurately. The Company does not expect any
reimbursement in respect of above Contingent Liabilities.
In the opinion of the Management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair
chances of successful outcome of appeals made by Company.
Note 31: Employee benefit obligations
(i) Leave obligations
The leave obligations cover the Company''s liability for sick and earned leave.
Based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within
the next 12 months. Accordingly, leave obligation of '' 492.83 Lakh (31 March, 2024''697.71 Lakh) is presented as current and remaining
amount is presented as non current. The leave obligation is an unfunded plan, the Company makes contributions to scheme maintained by
Life Insurance Corporation of India (LIC).
(ii) Post-employment obligations
(a) Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous
service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees
last drawn basic salary (including dearness allowance) per month computed proportionately for 15 days salary (reckoning 26 days for
a month) multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to
recognised funds in India.
Based on actuarial valuation, a provision is recognised in full for the projected obligation over and above the funds held in scheme.
(b) Post-retirement medical scheme
The Company operates post-retirement medical benefit scheme. The plan is an unfunded plan. Based on actuarial valuation, a provision
is recognised in full for the projected obligation.
Apart from the above, post retirement medical benefits to the superannuated employees are, defined contribution schemes and
premium of '' 1,236.36 Lakh (31 March, 2024: '' 1,332.60 Lakh) paid to an Insurance Company. There are no other obligations to
employees other than the contribution payable to the Insurance Company.
(c) Provident fund
The exempt provident fund set up by the Company is a defined benefit plan under IND AS 19 Employee benefits.
Provident Fund for eligible employees is managed by the Company through a trust in line with the Provident Fund and Miscellaneous
Provision Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the
employees and employer @ 12% of basic salary (including Dearness Allowance) together with the interest accumulated thereon are
payable to employees at the time of separation from the Company or retirement whichever is earlier. The benefits vests immediately
on rendering of the services by the employee. The contribution is charged to Statement of Profit and Loss of the year when the
contributions to the respective funds are due in accordance with relevant statute .
Employer''s contribution to Provident Fund & Family Pension fund is '' 1,935.36 Lakh for the year 2024-25 ('' 2,100.86 Lakh for the year
2023-24).
The minimum interest rate payable by the trust to the beneficiaries every year is notified by the Government. The Company has an
obligation to make good the shortfall ,if any, between the return from the investments of the trust (including investment risk fall) and
the notified interest rate.
The Company has obtained report on the determination and disclosure of interest rate Guarantee, valuation of Assets & Liabilities as
per Ind AS 19 of Employees Benefits relating to Exempt Provident Fund of GRSE for the period ended 31 March, 2025.
From FY 2020-21 the Company has changed its Accounting policy regarding classification of Provident Fund contribution from Defined
Contribution plan to Defined benefit plan. This change in Accounting policy was applied and observed that the net assets available
for the benefits are in excess in comparison to the present value of retirement benefits. Hence, there is no impact on accounts of the
Company during the current year.
(iii) Defined Contribution Plan:
Superannuation Pension Fund:
The Pension Scheme is administered by a Trust. The Company has transferred an amount of '' 457.79 Lakh for officers and non-unionised
supervisiors to LIC towards employer''s contribution for the year 2024-25 ('' 512.70 Lakh for the year 2023-24).
The pension scheme for unionised employees has been introduced w.e.f. 01 January 2012. An amount of '' 509.33 Lakh has been transferred
to LIC for the year 2024-25 ('' 583.28 Lakh for the year 2023-24 ) towards employer''s contribution for operatives and office assistants.
National pension System has been introduced in GRSE w.e.f December 2024 for those employees who have opted NPS in place of existing
Superannuation Pension Scheme. HDFC is the Pension Fund Manager for the first year. An amount of '' 131.20 Lakh has been transferred
to HDFC towards employers contribution.
Note 31: Employee benefit obligations (Contd.)
(viii) Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:
Investment risk:
The defined benefit plans (except Provident Fund) are funded with insurance companies of India. The Company does not have any liberty to
manage the funds provided to insurance companies.
The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the Government of India
bonds. If the return on plan asset is below this rate, it will create a plan deficit.
Interest risk:
A decrease in the interest rate on plan assets will increase the plan liability.
Life expectancy:
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both
during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.
Salary growth risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the
salary of the plan participants will increase the plan liability.
(ix) Defined benefit liability and employer contributions
Expected contributions to post-employment benefit plans for the year ending 31 March, 2026 are '' 2,217.31 Lakh.
The weighted average duration of the defined benefit obligation (gratuity) is 8 years and Post-retirement medical benefits is 7 years. The
expected maturity analysis of undiscounted gratuity and post-retirement medical benefits are as follows:
(i) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised
and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide
an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the
three levels prescribed under the Indian accounting standard.
(A) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial
loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) including deposits with banks and
financial institutions, foreign exchange transactions and other financial instruments.
(i) Trade receivables and contract assets
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to
customer credit risk management. Trade receivables are non-interest bearing and are generally carrying no credit terms. Outstanding
customer receivables are regularly monitored. Trade receivables are primarily from Navy (owned by Govt. of India), hence the credit
risk is considered low. Further, the Company receives advance against orders which also mitigates the credit risk. For ageing of trade
receivables please refer note 10(a).
(ii) Financial instruments and deposits
Credit risk from balances with banks and financial institutions is managed by the Company in accordance with the Company''s policy.
Investment of surplus funds are made in accordance with DPE Guidelines on investment of surplus funds of the Company. The limits
are set to minimise the concentration of risks and to mitigate financial loss through counterparty''s potential failure to make payments.
The Company''s maximum exposure to credit risk for the components of the Balance Sheet at 31 March, 2025 and 31 March, 2024 is
the carrying amounts as illustrated in Note 6 (b), Note 10 (b) and Note 10 (c ).
Note 34: Financial Risk Management (Contd.)
(B) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by
delivering cash or another financial asset.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an
adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the underlying business, the Company
maintains sufficient cash and liquid investments available to meet its obligations.
The Company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these,
monitoring balance sheet liquidity ratios against internal and external regulatory requirements, if any.
Maturities of financial liabilities
The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all
financial liabilities.
The amounts disclosed in the table are the contractual undiscounted and re-scheduled cash flows. Balances due within 12 months equal to
their carrying balances as the impact of discounting is not significant.
(C) Market risk
Foreign currency risk
The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Company is exposed to foreign currency risk since it imports components from foreign vendors. Also, the Company exports some of it''s
ships to foreign buyers and is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from
future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency
(i.e. ''). The outflow on account of imports and payments in foreign currency is mostly reimbursable from the buyers. The risk in case of
export is measured through a forecast of highly probable foreign currency cash flows.
Foreign currency risk exposure
The Company''s exposure to foreign currency risk at the end of the reporting period expressed in INR (foreign currency amount multiplied by
closing rate), are as follows:
Note 39: Russian (USSR) deferred State Credit
An inter-governmental agreement between Russian Federation and Government of India was reached for restructuring of Russian deferred state
credit in Ruble in connection with procurement.
As per the said agreement, the outstanding debt in Ruble as on 01.04.1992 was converted to Indian Rupees at the difference in Rupee-Ruble
exchange rate between 01.04.1990 and 01.04.1992 and such amount of exchange rate difference was rescheduled by Government of India
under a deferred Rupee payment arrangement payable over 45 years till 2037. These rescheduled payments are also reimbursable by Indian Navy.
Such amount is accordingly held as Foreign Suppliers Deferred Credit as at 31 March, 2025 and aggregated to '' 903.84 Lakh (Undiscounted
amount being '' 1,591.81 Lakh) [31 March, 2024: '' 911.93 Lakh (Undiscounted amount being '' 1,668.94 Lakh)].
Note 40:
(a) The Company follows a general practice of undertaking physical verification of all the fixed assets in a phased manner in a block of three
years. In the current year, such physical verification has been done in the GRSE''s Rajabagan Dockyard (RBD) Unit, 61 Park Unit, GRSE Bhavan,
Corporate Planning, Corporate Communication & Business Development Dept. and Commercial Shipbuilding dept. Discrepancies found have
been appropriately dealt in the Accounts.
(b) The 62 acres of land for setting up the Diesel Engine Plant at Ranchi was obtained free of cost from Heavy Engineering Corporation Ltd.,
Ranchi (HEC) in 1966 as a part of industrialization drive at the behest of MoD, Govt. of India and Govt. of Bihar. GRSE is in uninterrupted
possession of the land since then and has created permanent structures thereon (title deed is with HEC, Ranchi). Various assets of the Diesel
Engine Plant, Ranchi having book value of Rs. 1,509.65 Lakh (original value '' 3,756.92 Lakh) as on 31 March, 2025 have been installed
/ placed on the said premises. Ignoring the right of GRSE in the said land, the then Govt. of Bihar executed a Deed of Conveyance in
favour of HEC in February, 1996. Later, HEC vide a letter of 07 August, 1999 raised a claim for a 30-year lease effective from 01.04.1996
of '' 1,488 Lakh as onetime premium and a sum of '' 148.8 Lakh p.a. being 10% of the said premium as annual lease rent which GRSE
repudiated. During April, 2013, HEC unilaterally referred the disputes to PMA, DPE, Govt. of India for arbitration and subsequently inter alia
prayed before PMA for directing GRSE to enter into lease agreement for totally baseless, frivolous and absurd lease rent and premium with
interest for further period and to declare GRSE as "unauthorized occupant" etc. GRSE raised preliminary objection regarding maintainability
and sustainability of the alleged reference of HEC and rejection of claim as the same are not sustainable on facts as well as in law. The
matter was under adjudication before Smt. Zoya Hadke, Sole Arbitrator, PMA who after hearing both the parties at length, vide Order dated
30.6.2015 held that in absence of any agreement between the parties, the Arbitral Forum lacks jurisdiction to settle the dispute and rejected
the reference of HEC. Accordingly, the arbitration matter stood disposed off. No appeal filed by HEC.
GRSE has also filed a Civil Suit (TS 117 of 2014) in March, 2014 before a competent Civil Court at Ranchi, HEC and the Govt. of Jharkhand
being the defendants, with prayer for declaration by the Court that GRSE has acquired irrevocable licence coupled with interest in the subject
land by setting up Diesel Engine Plant permanently thereon free of cost in accordance with the law of the land and for permanent injunction
restraining HEC from interfering with the possession of land by GRSE and running industry thereon. Hearing of the case is in progress.
HEC has filed an Application under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 before the Estate Officer appointed
under the said Act by HEC, for eviction of GRSE alleging as ''unauthorised occupant'' from the said land occupied by DEP Unit of GRSE. [Case
no. P.P. ACT/REV/201801 dated 28.4.2018]
GRSE has filed a Writ Petition [being WP ( C ) No. 3359 of 2018] before the Hon''ble Jharkhand High Court praying for ''declaration'' that
summary proceeding before the Estate Officer under the Public Premises (Eviction of Unauthorised Occupants) Act is not maintainable
involving intricate and complicated questions of law pertaining to title, right, interest and possession to the land and moreover, competent
civil court at Ranchi is already adjudicating the matter on the self-same cause of action. The High Court on 14.08.2018 directed HEC to file
Opposition and not to evict GRSE from the said land. Meanwhile, upon approach by HEC, process to find out various possibilities to arrive at
amicable settlement has been initiated.
In view of the above an amount of '' 5,803.20 Lakh (Previous year '' 5,654.40 Lakh) without interest has been considered as contingent
liability not acknowledged as debt.
Note 41:
Letters seeking confirmation of balances in the accounts as at 31 December, 2024 of sundry creditors were sent to vendors. On the basis of replies
received from certain vendors, adjustments wherever necessary have been made in the Accounts.
Note 42:
(a) The Company has sent letters seeking confirmations of balances in respect of its Debtors Though no response has been received from the
debtors, in the opinion of the Company, the balances have realisable values equal to the amount as stated in the books in the ordinary course
of business, unless otherwise stated.
b) The amounts received from customers are mainly received in respect of ship division, customers being Indian Navy and Indian Coast Guards.
In respect of other divisions, advance from customers are received mainly from Government Departments.
With introduction of Indian Accounting Standard (Ind AS 116) effective from 01.04.2019, the Company has adopted the same using retrospective
transition method.
The actual lease rentals paid which were hitherto recognised as expense are now accounted as reduction in lease liability.
During the year, Rent and transport charges under other expenses, for the rent paid for lease hold land of '' 55.20 Lakh (FY 2023-24: '' 60.19 Lakh)
and vehicle of '' 127.28 Lakh (FY 2023-24: '' 110.21 Lakh) has been adjusted with corresponding lease liability. Finance cost includes unwinding
of Interest on lease rent paid of '' 79.84 Lakh (FY 2023-24: '' 85.41 Lakh) and depreciation & amortisation expenses include amortisation of RoU
Assets of '' 123.70 Lakh (FY 2023-24: '' 116.93 Lakh).
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by
the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded
in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).
The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or
indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries
Note 52:
Figures for the previous year have been regrouped/rearranged wherever necessary to correspond to those of the current year. Amounts and other
disclosures for the preceding year are included as an integral part of the current year financial statement and are to be read in relation to the
amounts and other disclosures relating to the current year.
Note 53:
The financial statements are authorised for issue by the Board of Directors on 13th May, 2025.
In terms of our report of even date For and on behalf of the Board of
For Guha Nandi & Co. Cmde. P R Hari, IN (Retd.),
Chartered Accountants Chairman & Managing Director
Firm''s Registration No - 302039E DIN - 08591411
Sd/-
(CA Dipak Kumar Shee) R.K Dash
Partner Director (Finance) & CFO
Membership No. 061728 DIN - 0851 1344
Place of Signature: Kolkata S. Mahapatra
Date: 13th day of May, 2025 Company Secretary
ACS 10992
Mar 31, 2024
(u) Provision, Contingent Liabilities and Contingent Assets
i. Provisions for legal claims, warranties, discounts and returns are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. However, a provision is recognised if the Company has a contract that is onerous.
ii. Provision for guarantee liability in respect of delivered ships is made on the basis of actuarial estimates. Such provision for all other products is made, as applicable, on the basis of management estimates.
iii. Contingent Assets are not recognised but disclosed in the Financial Statements when economic inflow is probable.
iv. Contingent Liabilities are not recognised but are disclosed in the notes.
v. Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period on the basis as detailed below. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
A. In non-tax civil cases
In the case of non-tax civil cases, creation of accounting provision is considered on a review of status of each case as on the reporting date and provision, if required, is made in the accounts on the basis given below:
a. In the arbitration cases where the Company has not contested or does not intend to contest the adverse outcome of arbitral award, the liability is not treated as contingent and full provision is considered.
b. Where an adverse award/ decision is given by the arbitrator or by the trial court and an appeal is preferred by the Company or intended to be preferred, provision is made as follows:
i. After the claim is disposed of by the Arbitrator - 25% of the amount in dispute.
ii. After the claim is disposed of by Higher Appeal Court - 50% of the amount in dispute, until disposal by the final appeal court. Revision petition, larger bench of the same court is considered as part of the relevant appeal process in the said court.
c. Full provision of the disputed claim is considered in the case of an award/ decision where the Company does not proceed to contest the appellate award.
d. No provision is made in case of demands raised by Government department/ statutory authority/ by Commissioner or Tribunal set up by such Government department/ statutory authority if the said demand is contested within the setup of such Government department/ statutory authority and there is likelihood of deletion of demand in appeal based on legal opinion/latest judgement in favour of the Company.
B. In taxation cases
In the matter of taxation cases, the claimed amount is considered as contingent liability and no provision is considered if the decision up to Appeal stage goes against the Company and if the Company contests or intends to contest such decision before the Appellate Tribunal or decision of High Court/Supreme Court in similar cases is against the Company.
However, where the decision of Appellate tribunal is against the Company, full provision of the amount in
dispute is made irrespective of whether the Company contests such decision at any higher forum.
Note 2: Critical Estimates and Judgments:
The preparation of Financial Statements in accordance with Ind - AS requires use of estimates and assumptions for some items, which might have an effect on their recognition and measurement in the Balance Sheet and Statement of Profit and Loss. The actual amount realised may differ from these estimates. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the management becomes aware of changes in circumstances surrounding the estimates. Differences between the actual results and estimates are recognised in the period in which the results are known/ materialised and, if material, their effects are disclosed in the notes to the Financial Statements.
Estimates and assumptions are required in particular for:
i. Estimated useful life of Property, Plant and Equipment (PPE):
Determination of the estimated useful life of PPE and the assessment as to which components of the cost may be capitalized. Useful life of PPE is based on the life prescribed in Schedule II to the Companies Act, 2013. In cases, where the useful life is different from that prescribed in Schedule II, it is based on technical advice, taking into account the nature of the asset, estimated usage and operating conditions of the asset, past history of replacement and maintenance support. Assumptions also need to be made, when the Company assesses, whether an asset may be capitalised and which components of the cost of the asset may be capitalised.
ii. Recognition and measurement of defined benefit obligations:
The obligation arising from the defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation and vested future benefits and life expectancy. The discount rate is determined with reference to market yields at the end of the reporting period on the government bonds. The period to maturity of the underlying bonds corresponds to the probable maturity of the post-employment benefit obligations.
iii. Recognition of Deferred Tax Assets:
A Deferred tax asset is recognised for all the deductible temporary differences to the extent it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. The management assumes that taxable profits will be available while recognising deferred tax assets.
iv. Recognition and measurement of other provisions:
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore vary from the figure included in other provisions.
v. Discounting of long-term financial liabilities
All financial liabilities are measured at fair value on initial recognition. In case of financial liabilities, which are required to be subsequently measured at amortised cost, interest is accrued using the effective interest rate method.
Note 31: Employee benefit obligations
(i) Leave obligations
The leave obligations cover the Company''s liability for sick and earned leave.
Based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. Accordingly, leave obligation of '' 697.71 Lakh (31 March, 2023''659.73 Lakh) is presented as current and remaining amount is presented as non current. The leave obligation is an unfunded plan, the Company makes contributions to scheme maintained by Life Insurance Corporation of India (LIC).
(ii) Post-employment obligations
(a) Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary (including dearness allowance) per month computed proportionately for 15 days salary (reckoning 26 days for a month) multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.
Based on actuarial valuation, a provision is recognised in full for the projected obligation over and above the funds held in scheme.
(b) Post-retirement medical scheme
The Company operates post-retirement medical benefit scheme. The plan is an unfunded plan. Based on actuarial valuation, a provision is recognised in full for the projected obligation.
Apart from the above, post retirement medical benefits to the superannuated employees are, defined contribution schemes and premium of '' 1,332.60 Lakh (31 March, 2023: '' 1,131.09 Lakh) paid to an Insurance Company. There are no other obligations to employees other than the contribution payable to the Insurance Company.
(c) Provident fund
The exempt provident fund set up by the Company is a defined benefit plan under IND AS 19 Employee benefits.
Provident Fund for eligible employees is managed by the Company through a trust in line with the Provident Fund and Miscellaneous Provision Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employees and employer @ 12% of basic salary (including Dearness Allowance) together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement whichever is earlier. The benefits vests immediately on rendering of the services by the employee. The contribution is charged to Statement of Profit and Loss of the year when the contributions to the respective funds are due in accordance with relevant statute.
Employer''s contribution to Provident Fund & Family Pension fund is '' 2,100.86 Lakh for the year 2023-24 (''1,838.00 Lakh for the year 2022-23).
Note 31: Employee benefit obligations (Contd.)
The minimum interest rate payable by the trust to the beneficiaries every year is notified by the Government. The Company has an obligation to make good the shortfall ,if any, between the return from the investments of the trust (including investment risk fall) and the notified interest rate.
The Company has obtained report on the determination and disclosure of interest rate Guarantee, valuation of Assets & Liabilities as per Ind AS 19 of Employees Benefits relating to Exempt Provident Fund of GRSE for the period ended 31 March, 2024.
(iii) Defined Contribution Plan:
Superannuation Pension Fund:
The Pension Scheme is administered by a Trust. The Company has transferred an amount of '' 512.70 Lakh for officers and non-unionised supervisiors to LIC towards employer''s contribution for the year 2023-24 ('' 479.19 Lakh for the year 2022-23).
The pension scheme for unionised employees has been introduced w.e.f. 01 January 2012. An amount of '' 583.28 Lakh has been transferred to LIC for the year 2023-24 (''741.24 Lakh (incl. arrear) for the year 2022-23) towards employer''s contribution for operatives and office assistants.
(viii) Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below: Investment risk:
The defined benefit plans (except Provident Fund) are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies.
The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.
Interest risk:
A decrease in the interest rate on plan assets will increase the plan liability.
Life expectancy:
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.
Salary growth risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.
(ix) Defined benefit liability and employer contributions
Expected contributions to post-employment benefit plans for the year ending 31 March, 2025 are '' 1,969.37 Lakh.
The weighted average duration of the defined benefit obligation (gratuity) is 12 years (31 March, 2023 - 12 years) and Post-retirement medical benefits is 40 years (31 March, 2023 - 40 years). The expected maturity analysis of undiscounted gratuity and post-retirement medical benefits are as follows:
(i) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the Indian accounting standard.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
(i) Trade receivables and contract assets
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying no credit terms. Outstanding customer receivables are regularly monitored. Trade receivables are primarily from Navy (owned by Govt. of India), hence the credit risk is considered low. Further, the Company receives advance against orders which also mitigates the credit risk. For ageing of trade receivables please refer note 10(b).
(ii) Financial instruments and deposits
Credit risk from balances with banks and financial institutions is managed by the Company in accordance with the Company''s policy. Investment of surplus funds are made in accordance with DPE Guidelines on investment of surplus funds of the Company. The limits are set to minimise the concentration of risks and to mitigate financial loss through counterparty''s potential failure to make payments.
The Company''s maximum exposure to credit risk for the components of the Balance Sheet at 31 March, 2024 and 31 March, 2023 is the carrying amounts as illustrated in Note 6 (b),Note 10 (a),Note 10 (c) and Note 10 (d).
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the underlying business, the Company maintains sufficient cash and liquid investments available to meet its obligations.
The Company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements, if any.
Maturities of financial liabilities
The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all financial liabilities.
(C) Market risk
Foreign currency risk
The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Company is exposed to foreign currency risk since it imports components from foreign vendors. Also, the Company exports some of it''s ships to foreign buyers and is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (i.e. ''). The outflow on account of imports and payments in foreign currency is mostly reimbursable from the buyers. The risk in case of export is measured through a forecast of highly probable foreign currency cash flows.
Note 39: Russian (USSR) deferred State Credit
An inter-governmental agreement between Russian Federation and Government of India was reached for restructuring of Russian deferred state credit in Ruble in connection with procurement.
As per the said agreement, the outstanding debt in Ruble as on 01.04.1992 was converted to Indian Rupees at the difference in Rupee-Ruble exchange rate between 01.04.1990 and 01.04.1992 and such amount of exchange rate difference was rescheduled by Government of India under a deferred Rupee payment arrangement payable over 45 years till 2037. These rescheduled payments are also reimbursable by Indian Navy. Such amount is accordingly held as Foreign Suppliers Deferred Credit as at 31 March, 2024 and aggregated to '' 911.93 Lakh (Undiscounted amount being '' 1,668.94 Lakh) [31 March, 2023: '' 945.73 Lakh (Undiscounted amount being '' 1,797.32 Lakh)].
Note 40:
(a) The Company follows a general practice of undertaking physical verification of all the fixed assets in a phased manner in a block of three years. In the current year, such physical verification has been done in the GRSE''s Fitting Out Jetty Unit, Taratala Unit and Central Design Office. Discrepancies found have been appropriately dealt in the Accounts.
(b) The 62 acres of land for setting up the Diesel Engine Plant at Ranchi was obtained free of cost from Heavy Engineering Corporation Ltd., Ranchi (HEC) in 1966 as a part of industrialization drive at the behest of MoD, Govt. of India and Govt. of Bihar. GRSE is in uninterrupted possession of the land since then and has created permanent structures thereon (title deed is with HEC, Ranchi). Various assets of the Diesel Engine Plant, Ranchi having book value of Rs. 1,055.38 Lakh (original value '' 3,287.13 Lakh) as on 31 March, 2024 have been installed / placed on the said premises. Ignoring the right of GRSE in the said land, the then Govt. of Bihar executed a Deed of Conveyance in favour of HEC in February, 1996. Later, HEC vide a letter of 07 August, 1999 raised a claim for a 30 year lease effective from 01.04.1996 of '' 1488 Lakh as onetime premium and a sum of '' 148.8 Lakh p.a. being 10% of the said premium as annual lease rent which GRSE repudiated. During April, 2013, HEC unilaterally referred the disputes to PMA, DPE, Govt. of India for arbitration and subsequently inter alia prayed before PMA for directing GRSE to enter into lease agreement for totally baseless, frivolous and absurd lease rent and premium with interest for further period and to declare GRSE as "unauthorized occupant" etc. GRSE raised preliminary objection regarding maintainability and sustainability of the alleged reference of HEC and rejection of claim as the same are not sustainable on facts as well as in law. The matter was under adjudication before Smt. Zoya Hadke, Sole Arbitrator, PMA who after hearing both the parties at length, vide Order dated 30.6.2015 held that in absence of any agreement between the parties, the Arbitral Forum lacks jurisdiction to settle the dispute and rejected the reference of HEC. Accordingly, the arbitration matter stood disposed off. No appeal filed by HEC.
GRSE has also filed a Civil Suit (TS 117 of 2014) in March, 2014 before a competent Civil Court at Ranchi, HEC and the Govt. of Jharkhand being the defendants, with prayer for declaration by the Court that GRSE has acquired irrevocable licence coupled with interest in the subject land by setting up Diesel Engine Plant permanently thereon free of cost in accordance with the law of the land and for permanent injunction restraining HEC from interfering with the possession of land by GRSE and running industry thereon. Hearing of the case is in progress.
HEC has filed an Application under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 before the Estate Officer appointed under the said Act by HEC, for eviction of GRSE alleging as ''unauthorised occupant'' from the said land occupied by DEP Unit of GRSE. [Case no. P.P. ACT/REV/201801 dated 28.4.2018]
GRSE has filed a Writ Petition [being WP ( C ) No. 3359 of 2018] before the Hon''ble Jharkhand High Court praying for ''declaration'' that summary proceeding before the Estate Officer under the Public Premises (Eviction of Unauthorised Occupants) Act is not maintainable involving intricate and complicated questions of law pertaining to title, right, interest and possession to the land and moreover, competent civil court at Ranchi is already adjudicating the matter on the self-same cause of action. The High Court on 14.08.2018 directed HEC to file Opposition and not to evict GRSE from the said land. Meanwhile, upon approach by HEC, process to find out various possibilities to arrive at amicable settlement has been initiated.
In view of the above an amount of '' 5,654.40 Lakh (Previous year '' 5,505.60 Lakh) without interest has been considered as contingent liability not acknowledged as debt.
Note 41:
Letters seeking confirmation of balances in the accounts as at 31 December, 2023 of sundry creditors were sent to vendors. On the basis of replies received from certain vendors, adjustments wherever necessary have been made in the Accounts.
Note 42:
(a) The Company has sent letters seeking confirmations of balances in respect of its Debtors Though no response has been received from the debtors, in the opinion of the Company, the balances have realisable values equal to the amount as stated in the books in the ordinary course of business, unless otherwise stated.
(b) The amounts received from customers are mainly received in respect of ship division, customers being Indian Navy and Indian Coast Guards. In respect of other divisions, advance from customers are received mainly from Government Departments.
Note 49:
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
Note 51:
Figures for the previous year have been regrouped/rearranged wherever necessary to correspond to those of the current year. Amounts and other disclosures for the preceding year are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosures relating to the current year.
Note 52:
The financial statements are authorised for issue by the Board of Directors on 22nd May, 2024.
In terms of our report of even date. For and on behalf of the Board of Directors
Sd/-
For Guha Nandi & Co. Cmde Hari PR, IN (Retd.)
Chartered Accountants Chairman & Managing Director
Firm''s Registration No - 302039E DIN - 08591411
Sd/- Sd/-
(CA Dr. B.S. Kundu) R.K Dash
Partner Director (Finance) & CFO
Membership No. 051221 DIN - 08511344
Sd/-
S. Mahapatra
Place of Signature: Kolkata Company Secretary
Date: 22nd day of May, 2024 ACS 10992
Mar 31, 2023
(i) Current year deductions includes adjustment for scrapping of assets valued '' 80.22 Lakh (Deemed Cost '' 324.36 Lakh), retirement of assets valued '' 7.66 Lakh (Deemed cost '' 86.76 Lakh). Further it also includes assets valued '' 7.58 Lakh (Deemed Cost '' 28.95 Lakh) retired and sold during the year 2022-23. Scrapping of assets and retirement of assets in FY 2021-22 were '' 27.91 Lakh (Deemed Cost '' 66.08 Lakh) and '' 7.00 Lakh (Deemed Cost '' 35.05 Lakh) respectively.Further, previous year deductions includes assets valued '' 53.68 Lakh (Deemed Cost '' 146.53 Lakh) retired and sold during the year 2021-22.
(ii) Jointly funded assets - Plant & Machinery as at 31 March 2023 of '' 649.76 Lakh ('' 875.95 Lakh as at 31 March, 2022) also includes Electrical installation of New Dry Dock valued '' 70.01 Lakh (31 March, 2022: '' 199.03 Lakh).
(iii) Property, plant and equipment as at 31 March 2023 include Modern Hull Shop, a New Dry Dock, Inclined Berth, Paint cell and other miscellaneous facilities which have
been created under modernisation of infrastructure development. These assets have been jointly funded by the Indian Navy to the tune of '' 32,325.77 Lakh (original
cost).
(iv) Assets as at 31 March, 2023 exclusively funded by Navy (original Cost) not included in Property, plant and equipment is '' 801.23 Lakh. (31 March, 2022: '' 801.23 Lakh).
(v) Land of 61, Garden Reach Road,Kolkata is owned by Government of India, Ministry of Defence.
(vi) Building as at 31 March 2023 includes '' 95.96 Lakh (original cost) (31 March, 2022: '' 95.96 Lakh) being one third share of the Company in Delhi Shipyard House. The
building is jointly held by Garden Reach Shipbuilders and Engineers Limited, Mazagon Dock Shipyard Limited and Goa Shipyard Limited.
Terms and rights attached to equity shares
Equity shares have a par value of '' 10/- (31 March, 2022: '' 10/-). They entitle the holder to participate in dividends, and to share in the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held.
Every holder of equity shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Nature and purpose of other reserves:
Note:
(i) Pursuant to Section 69 of The Companies Act, 2013 the Company has transferred a sum equal to the nominal value of the shares so purchased to the capital redemption reserve account out of free reserves of the Company.
The capital redemption reserve is not in nature of free reserve.
(ii) General reserve is primarily created to comply with the requirements of section 123(1) of the Companies Act, 2013. This is a free reserve and can be utilised for any general purpose like issue of bonus shares, payment of dividend, buy back of shares etc.
Guarantee repairs
Provision is made for estimated warranty claims in respect of ships and other products delivered which are still under warranty at the end of the reporting period. Management estimates the related provision for future warranty claims in respect of delivered ships based on the actuarial report which takes into consideration the historical warranty claim information as well as recent trends that might suggest that past cost information may differ from future claims. The assumptions made in the current period are consistent with those in the prior year. Factors that could impact the estimated claim information include the success of the Company''s productivity and quality initiatives.
For provision with respect to other products management estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts.
Provision for Onerous Contract
Company has supplied one FPV ship (Yard 2118) in current financial year towards meeting the contractual obligation with Indian Coast guard in lieu of one ship delivered in the year 2020-21 to Government of Seychelles as per contract with GOS dated 03rd February 2021 by diverting one ship of the FPV Contract entered with Indian Coast Guard. Onerous loss against supply of the ship was booked in the year 2020-21 and the provision has been adjusted against revenue recognised over the period.
In view of delivery of yard 2118 in current financial year, balance unajusted provision of onerous loss of '' 783.32 Lakh (PY : '' 393.68 lakh) has been adjusted in current year.
Further, in current financial year in respect to two contracts for construction and supply of vessels to Guyana and Bangladesh total estimated completion cost is expected to exceed realizable value to the extent of '' 647.56 Lakh out of which '' 368.49 Lakh adjusted in current year against cost incurred till date and accordingly revenue recognised of the above contracts. Balance '' 279.07 Lakh has been shown under Miscellaneous expenses in Note 26.
Movement of onerous loss liability is reflected under "Movement of Provision".
Other Provisions
Other Provisions represent employee related provisions based on the management''s assessment.
(a) Contingent Liability on account of Sales Tax amounts to '' 506.83 Lakh (31 March, 2022 '' 506.83 Lakh) towards assessment dues and demand for the year 2007-08. All these amounts have not been acknowledged as debts and accordingly not provided for in the Accounts as all the demands are under different stage of appeal.
(b) Contingent liability on account of income tax amounts to '' 1,633.19 Lakh (31 March, 2022 : '' 1,635.11 Lakh) towards, Arbitrary increase by the Income Tax Authority in taxable income based on Form 26AS for AY 2009-10 - '' 1,624.58 Lakh, and disallowance of 80G rebate -'' 8.61 Lakh for AY 2017-18. Disallowance of provision for liquidated damages - '' 1.92 Lakh for AY 2014-15 has been disposed in favour of GRSE, hence the contingent liability of '' 1.92 Lakh is withdrawn. Above disputes have not been acknowledged as debt and accordingly not provided for in the Accounts as all the issues are under first stage of appeal.
(c) Dispute on account of GST amounts to '' 142.17 Lakh (31 March, 2022 NIL) towards demand for excess refund of ITC (Input Tax Credit) by the revenue authorities due to inverted duty structure, for the period Jun 20 to Sept 20 (FY 2020-21). This amount has not been acknowledged as debts and accordingly not provided for in the Accounts as the demand is under first stage of appeal before Addl Commissioner, LTU. Additionaly this will not have any impact on charge to the accounts, since ITC will be recredited if payment is required to be made.
(d) The amounts shown under Contingent Liabilities represent the best possible estimates arrived at on the basis of available information. The uncertainties and timing of the cash flows are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be estimated accurately. The Company does not expect any reimbursement in respect of above Contingent Liabilities.
In the opinion of the Management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals made by Company.
(B) Contingent Assets
(i) AS per settlement agreement dated 23 November, 2022 between CIWTCL, Kolkata and GRSE, an amount of '' 165.64 Lakh have been received from CIWTCL. Out of this, '' 106.59 Lakh received towards reimbursement of recovery done by Central Excise Authority have been adjusted against other receivable and balance of '' 59.10 Lakh towards ground rent accounted as Other Income.
Note 32: Employee benefit obligations (i) Leave obligations
The leave obligations cover the Company''s liability for sick and earned leave.
Based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. Accordingly, leave obligation of Rs. 659.73 Lakh (31 March, 2022 Rs. 588.77 Lakh) is presented as current and remaining amount is presented as non current. The leave obligation is an unfunded plan, the Company makes contributions to scheme maintained by Life Insurance Corporation of India (LIC).
Based on actuarial valuation, a provision is recognised in full for the projected obligation over and above the funds held in scheme.
(ii) Post-employment obligations
(a) Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary (including dearness allowance) per month computed proportionately for 15 days salary (reckoning 26 days for a month) multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.
Based on actuarial valuation, a provision is recognised in full for the projected obligation over and above the funds held in scheme.
(b) Post-retirement medical scheme
The Company operates post-retirement medical benefit scheme. The plan is an unfunded plan. Based on actuarial valuation, a provision is recognised in full for the projected obligation.
Apart from above, post retirement medical benefits to the superannuated employees are defined contribution schemes and premium of '' 1,131.09 Lakh (31 March, 2022: '' 720.31 Lakh) paid to Insurance Company. There are no other obligations to employees other than the contribution payable to the Insurance Company.
(c) Provident fund
The exempt provident fund set up by the Company is a defined benefit plan under IND AS 19 Employee benefits.
Provident Fund for eligible employees is managed by the Company through a trust in line with the Provident Fund and Miscellaneous Provision Act,1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employees and employer @12% of basic salary (including Dearness Allowance) together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement whichever is earlier. The benefits vests immediately on rendering of the services by the employee. The contribution is charged to Statement of Profit and Loss of the year when the contributions to the respective funds are due in accordance with relevant statute .
Employer''s contribution to Provident Fund & Family Pension fund is '' 1,838.00 Lakh for the year 2022-23 ('' 1,737.98 Lakh for the year 2021-22).
The minimum interest rate payable by the trust to the beneficiaries every year is notified by the Government. The Company has an obligation to make good the shortfall ,if any, between the return from the investments of the trust (including investment risk fall) and the notified interest rate.
The Company has obtained report on the determination and disclosure of interest rate Guarantee, valuation of Assets & Liabilities as per Ind AS 19 of Employees Benefits relating to Exempt Provident Fund of GRSE for the period ended 31st March 2023.
From FY 2020-21 the Company has changed its Accounting policy regarding classification of Provident Fund contribution from Defined Contribution plan to Defined benefit plan. This change in Accounting policy was applied and observed that the net assets available for the benefits are in excess in comparison to the present value of retirement benefits.
(iii) Defined Contribution Plan:
Superannuation Pension Fund:
The Pension Scheme is administered by a Trust. The Company has transferred an amount of '' 479.19 Lakh for officers and non-unionised supervisiors to LIC towards employer''s contribution for the year 2022-23 ('' 454.81 Lakh for the year 2021-22).
The pension scheme for unionised employees has been introduced w.e.f. 01 January 2012. An amount of '' 741.24 Lakh (incl. arrear) has been transferred to LIC for the year 2022-23 ('' 371.47 Lakh for the year 2021-22 ) towards employer''s contribution for operatives and office assistants.
(vii) The major categories of plan assets
The defined benefit plans (except Provident Fund) are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies. Thus, the composition of each major category of plan assets has not been disclosed.
(viii) Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below: Investment risk:
The defined benefit plans (except Provident Fund) are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies.
The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.
Interest risk:
A decrease in the interest rate on plan assets will increase the plan liability.
Life expectancy:
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.
Salary growth risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.
(ix) Defined benefit liability and employer contributions
Expected contributions to post-employment benefit plans for the year ending 31 March, 2024 are '' 1,800 Lakh.
The weighted average duration of the defined benefit obligation (gratuity) is 12 years (31 March, 2022 - 1 1 years) and Post-retirement medical benefits is 40 years (31 March, 2022 - 38 years). The expected maturity analysis of undiscounted gratuity and post-retirement medical benefits are as follows:
The carrying amounts of trade receivables, trade payables and cash and cash equivalents are considered to be the same as their fair values.
The fair values for financial instruments were calculated based on cash flows discounted using Marginal Cost of Funds based Lending Rate (MCLR) of State Bank of India on the reporting date for the same maturity. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.
(A) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
(i) Trade receivables and contract assets
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying no credit terms. Outstanding customer receivables are regularly monitored. Trade receivables are primarily from Navy (owned by Govt. of India), hence the credit risk is considered low. Further, the Company receives advance against orders which also mitigates the credit risk. For ageing of trade receivables please refer note 10(b).
(ii) Financial instruments and deposits
Credit risk from balances with banks and financial institutions is managed by the Company in accordance with the Company''s policy. Investment of surplus funds are made in accordance with DPE Guidelines on investment of surplus funds of the Company. The limits are set to minimise the concentration of risks and to mitigate financial loss through counterparty''s potential failure to make payments.
The Company''s maximum exposure to credit risk for the components of the Balance Sheet at 31 March, 2023 and 31 March, 2022 is the carrying amounts as illustrated in Note 6 (b),Note 10 (a),Note 10 (c) and Note 10 (d).
(B) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the underlying business, the Company maintains sufficient cash and liquid investments available to meet its obligation.
The Company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements, if any.
Maturities of financial liabilities
The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all financial liabilities.
The amounts disclosed in the table are the contractual undiscounted and re-scheduled cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
(C) Market risk
Foreign currency risk
The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Company is exposed to foreign currency risk since it imports components from foreign vendors. Also, the Company exports some of it''s ships to foreign buyers and is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (''). The outflow on account of imports and payments in foreign currency is mostly reimbursable from the buyers. The risk in case of export is measured through a forecast of highly probable foreign currency cash flows.
An inter-governmental agreement between Russian Federation and Government of India was reached for restructuring of Russian deferred state credit in Ruble in connection with procurement.
As per the said agreement, the outstanding debt in Rouble as on 01.04.1992 was converted to Indian Rupees at the difference in Rupee-Ruble exchange rate between 01.04.1990 and 01.04.1992 and such amount of exchange rate difference was rescheduled by Government of India under a deferred Rupee payment arrangement payable over 45 years till 2037. These rescheduled payments are also reimbursable by Indian Navy. Such amount is accordingly held as Foreign Suppliers Deferred Credit as at 31 March, 2023 and aggregated to '' 945.73 Lakh (Undiscounted amount being '' 1,797.32 Lakh) [31 March, 2022: '' 942.88 Lakh (Undiscounted amount being '' 1,859.47 Lakh)].
Note 41:
(a) The Company follows a general practice of undertaking physical verification of all the fixed assets in a phased manner in a block of three years. In the current year, such physical verification has been done in the GRSE Main Works, Baranagar Unit, GRSE Bhavan. Discrepancies found have been appropriately dealt with in the Accounts.
(b) The 62 acres of land for setting up the Diesel Engine Plant at Ranchi was obtained free of cost from Heavy Engineering Corporation Ltd., Ranchi (HEC) in 1966 as a part of industrialization drive at the behest of MoD, Govt. of India and Govt. of Bihar. GRSE is in uninterrupted possession of the land since then and has created permanent structures thereon (title deed is with HEC, Ranchi). Various assets of the Diesel Engine Plant, Ranchi having book value of '' 1,055.57 Lakh (original value '' 3,207.53 Lakh) as on 31 March, 2023 have been installed / placed on the said premises. Ignoring the right of GRSE in the said land, the then Govt. of Bihar executed a Deed of Conveyance in favour of HEC in February, 1996. Later, HEC vide a letter of 07 August, 1999 raised a claim for a 30 year lease effective from 01.04.1996 of '' 1,488 Lakh as onetime premium and a sum of '' 148.8 Lakh p.a. being 10% of the said premium as annual lease rent which GRSE repudiated. During April, 2013, HEC unilaterally referred the disputes to PMA, DPE, Govt. of India for arbitration and subsequently inter alia prayed before PMA for directing GRSE to enter into lease agreement for totally baseless, frivolous and absurd lease rent and premium with interest for further period and to declare GRSE as "unauthorized occupant" etc. GRSE raised preliminary objection regarding maintainability and sustainability of the alleged reference of HEC and rejection of claim as the same are not sustainable on facts as well as in law. The matter was under adjudication before Smt. Zoya Hadke, Sole Arbitrator, PMA who after hearing both the parties at length, vide Order dated 30.6.2015 held that in absence of any agreement between the parties, the Arbitral Forum lacks jurisdiction to settle the dispute and rejected the reference of HEC. Accordingly, the arbitration matter stood disposed off. No appeal filed by HEC.
GRSE has also filed a Civil Suit (TS 117 of 2014) in March, 2014 before a competent Civil Court at Ranchi, HEC and the Govt. of Jharkhand being the defendants, with prayer for declaration by the Court that GRSE has acquired irrevocable licence coupled with interest in the subject land by setting up Diesel Engine Plant permanently thereon free of cost in accordance with the law of the land and for permanent injunction restraining HEC from interfering with the possession of land by GRSE and running industry thereon. Hearing of the case is in progress.
HEC has filed an Application under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 before the Estate Officer appointed under the said Act by HEC, for eviction of GRSE alleging as ''unauthorised occupant'' from the said land occupied by DEP Unit of GRSE. [Case no. P.P. ACT/REV/201801 dated 28.4.2018]
GRSE has filed a Writ Petition [ being WP (C) No. 3359 of 2018] before the Hon''ble Jharkhand High Court praying for ''declaration'' that summary proceeding before the Estate Officer under the Public Premises (Eviction of Unauthorised Occupants ) Act is not maintainable involving intricate and complicated questions of law pertaining to title, right, interest and possession to the land and moreover competent civil court at Ranchi is already adjudicating the matter on the self-same cause of action. The High Court on 14.8.2018 directed HEC to file Opposition and not to evict GRSE from the said land. Meanwhile, upon approach by HEC, process to find out various possibilities to arrive at amicable settlement has been initiated.
In view of the above an amount of '' 5,505.60 Lakh (Previous year '' 5,356.80 Lakh) without interest has been considered as contingent liability not acknowledged as debt.
Note 42:
Letters seeking confirmation of balances in the accounts as at 31 December, 2022 of sundry creditors were sent to vendors. On the basis of replies received from certain vendors, adjustments wherever necessary have been made in the Accounts.
Note 43:
(a) The Company has sent letters seeking confirmations of balances in respect of its Debtors Though no response has been received from the debtors, in the opinion of the Company, the balances have realisable values equal to the amount as stated in the books in the ordinary course of business, unless otherwise stated.
b) The amounts received from customers are mainly received in respect of ship division, customers being Indian Navy and Indian Coast Guards. In respect of other divisions, advance from customers are received mainly from Government Departments.
With introduction of Indian Accounting Standard (Ind AS 116) effective from 01.04.2019, the Company has adopted the same using retrospective transition method. During the current financial year, total addition of Right of Use (RoU) is '' 46.88 Lakh.
The actual lease rentals paid which were hitherto recognised as expense are now accounted as reduction in lease liability.
During the year, Rent and transport charges under other expenses, for the rent paid for lease hold land of '' 60.19 Lakh (FY 2021-22: '' 36.23 Lakh) and vehicle of '' 102.34 Lakh (FY 2021-22: '' 82.12 Lakh) has been adjusted with corresponding lease liability. Finance cost includes unwinding of Interest on lease rent paid of '' 88.80 Lakh (FY 2021-22: '' 62.62 Lakh) and depreciation & amortisation expenses include amortisation of RoU Assets of '' 109.37 Lakh (FY 2021-22: '' 184.45 Lakh).
Note 50:
The company has reviewed and redrafted its accounting policies in respect of Inventories, Revenue Recognition and Provision, Contingent Liabilities and Contingent Assets in the Financial year 2022-23 for further clarity on the above aspects and there is no financial impact for such redrafting.
Note 51:
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
Note 52:
a) Liquidated Damages claim of Yard 3020 the last ship of Project P 28 which was accounted in previous year have been settled with amendment of contract, in line with recommendation of IHQ. Remaining withheld amount net of LD claim released on 30.9.22 by the customer.
b) For existing contracts liquidated damages treatment is done as per Ind AS 115 requirement and related Company Policy in this regard. Liquidated Damages is a variable consideration are accounted on the basis of contractual provisions/ management estimation and the net amount of consideration to which company will be entitled is recognised as Revenue.
Figures for the previous year have been regrouped/rearranged wherever necessary to correspond to those of the current year. Amounts and other disclosures for the preceding year are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosures relating to the current year.
Note 55:
The financial statements are authorised for issue by the Board of Directors on 24th May, 2023.
Mar 31, 2022
(i) Current year deductions includes adjustment for scrapping of assets valued '' 27.91 Lakh (Deemed Cost '' 66.08 Lakh) , retirement of assets valued '' 7.00 Lakh (Deemed cost '' 35.05 Lakh). Further it also includes assets valued '' 53.68 Lakh (Deemed Cost '' 146.53 Lakh) retired and sold during the year 2021-22. Scrapping of assets and retirement of assets in FY 2020-21 were '' 15.51 Lakh (Deemed Cost '' 43.62 Lakh) and '' 4.13 Lakh (Deemed Cost '' 28.81 Lakh) respectively.Further , previous year deductions includes assets valued ''16.03 Lakh (Deemed Cost '' 41.02 Lakh) retired and sold during the year 2020-21.
(ii) Jointly funded assets - Plant & Machinery as at 31 March, 2022 of '' 875.95 Lakh (''1102.14 Lakh as at 31 March, 2021) also includes Electrical installation of New Dry
Dock valued '' 199.03 Lakh (31 March, 2021: '' 328.05 Lakh).
(iii) Property, plant and equipment as at 31 March, 2022 include Modern Hull Shop, a New Dry Dock, Inclined Berth, Paint cell and other miscellaneous facilities which have been created under modernisation of infrastructure development. These assets have been jointly funded by the Indian Navy to the tune of '' 32,325.77 Lakh (original cost).
(iv) Assets as at 31 March, 2022 exclusively funded by Navy (original Cost) not included in Property, plant and equipment is '' 801.23 Lakh. (31 March, 2021: '' 801.23 Lakh).
(v) Land of 61, Garden Reach Road,Kolkata is owned by Government of India, Ministry of Defence.
(vi) Building as at 31 March, 2022 includes '' 95.96 Lakh (original cost) (31 March, 2021: '' 95.96 Lakh) being one third share of the Company in Delhi Shipyard House. The
building is jointly held by Garden Reach Shipbuilders and Engineers Limited, Mazagon Dock Shipyard Limited and Goa Shipyard Limited.
(i) Pursuant to Section 69 of The Companies Act,2013 the Company has transferred a sum equal to the nominal value of the shares so purchased to the capital redemption reserve account out of free reserves of the Company.
The capital redemption reserve is not in nature of free reserve.
(ii) General reserve is primarily created to comply with the requirements of section 123(1) of the Companies Act, 2013. This is a free reserve and can be utilised for any general purpose like issue of bonus shares, payment of dividend, buy back of shares etc.
Guarantee repairs
Provision is made for estimated warranty claims in respect of ships and other products delivered which are still under warranty at the end of the reporting period. Management estimates the related provision for future warranty claims in respect of delivered ships based on the actuarial report which takes into consideration the historical warranty claim information as well as recent trends that might suggest that past cost information may differ from future claims. The assumptions made in the current period are consistent with those in the prior year. Factors that could impact the estimated claim information include the success of the Company''s productivity and quality initiatives.
For provision with respect to other products management estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts.
Liquidated damages
Provision for liquidated damages is made in the accounts separately as per the contractual provision/proportionate liability basis keeping in view the delay caused by the factors beyond the control of the Company.
Provision for Onerous Contract
Company is required to build one FPV ship towards meeting the contractual obligation with Indian Coast guard in lieu of one ship delivered in the current financial year to Government of Seychelles as per contract with GOS dated 03rd February, 2021 by diverting one ship of the FPV Contract entered with Indian Coast Guard.
Price of the replacement ship is same as per the cost of the original contract with Coast Guard. Necessary escalation for construction of new ship has been catered for supply of the ship to GOS. In view of this it works out that there will be an estimated loss for the new ship on account of escalation, amounts to '' 1,177 Lakh. This estimated loss had been booked in previous financial year under Note 27.
Provision of Onerous loss of '' 393.68 lakhs has been adjusted in current year against cost incurred till date which has been considered as revenue recognition, accordingly movement of onerous loss liablity is reflected under "Movement of Provision".
Other Provisions
Other Provisions represent employee related provisons based on the management''s assessment.
i. Above includes Revenue from operation from export contracts '' 6,094.42 Lakh (FY 20- 21 : '' 2,851.66 Lakh).
ii. Export sales '' 3,485.12 Lakh (FY 20-21 : '' 8,749.00 Lakh).
iii. The Company is engaged in the production of defence equipment and was exempted from Segment Reporting vide notification S.O. 802 (E) dated 23rd February,2018 by amending notification no G.S.R. 463(E) dated 5th June, 2015. In view of the above, no disclosure is made separately by the company on operating segments under Ind AS 108 as well as Ind AS 115.
(a) Contingent Liability on account of Sales Tax amounts to '' 506.83 Lakh (31 March, 2021 '' 506.83 Lakh) towards assessment dues and demand for the year 2007-08. All these amounts have not been acknowledged as debts and accordingly not provided for in the Accounts as all the demands are under different stage of appeal.
(b) Contingent liability on account of Central Excise amounts to NIL (31 March, 2021: '' 106.54 Lakh) towards alleged arrear interest claimed on the excise liability of CIWTC included in the sale consideration received as per agreement for purchase of certain assets of CIWTC. It was considered as Contingent Liability last year since the Company has made appeals before respective Appellate Authorities against the impugned demand. Appellate authority has dismissed the appeal in current year, but subsequently CIWTC has agreed to reimburse the said amount of '' 106.54 Lakh, as part of amicable settlement under process as per instruction by Ministry of Shipping. Accordingly contingent liability has been withdrawn.
(c) Contingent liability on account of Income Tax amounts to ''1,635.1 1 Lakh (31 March, 2021 : '' 363.38 Lakh) towards , Arbitrary increase by the Income Tax Authority in taxable income based on Form 26AS for AY 2009-10 - '' 1624.58 Lakh, disallowance of provision for liquidated damages - ''1.92 Lakh for AY 2014-15 and disallowance of 80G rebate - '' 8.61 Lakh for AY 2017-18. Arbitrary increase by the Income Tax Authority in taxable income based on Form 26AS for AY 2009-10 has been increased from '' 352.85 Lakh to '' 1624.58 Lakh due to an apparent arithmatical error in the computation sheet. The company believes on the basis of relevant documents that it would succeed in the appeal. As per section 199 of Income Tax Act the company is entitled to the credit and expects a favourable order. Above disputes have not been acknowledged as debt and accordingly not provided for in the Accounts as all the issues are under first stage of appeal.
(d) The amounts shown under Contingent Liabilities represent the best possible estimates arrived at on the basis of available information. The uncertainties and timing of the cash flows are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be estimated accurately. The Company does not expect any reimbursement in respect of above Contingent Liabilities.
In the opinion of the Management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals made by Company.
(B) Contingent Assets
(i) The land and various other assets of erstwhile Raja Bagan Dockyard of Central Inland Water Transport Corporation Limited (CIWTC) were purchased by the Company in the Year 2006. The assets like Vessels, Cranes etc. were not taken over by the Company and were to be removed by CIWTC which they did not remove.
GRSE raised claim as Ground Rent on the Vessels and Cranes not removed by CIWTC amounts to '' 351.92 Lakh and '' 1964.16 Lakh respectively till disposal of the Vessels up to 2010 and Cranes up to 2017 (Cranes not yet disposed).Claim on reimbursement of '' 106.54 Lakh which was recovered by Central Excise Dept. towards alleged arrear interest claimed on excise liability of CIWTC which was included in sale consideration received as per Sale Agreement for payment to Excise Authority.
Ministry of Ports, Shipping and waterways, GOI decided to strike-off the name of CIWTC from ROC under section 248 of the Companies Act, 2013 in 2021 and the matter was mandated to Conciliation and Settlement Committee (CSC) to spear head the formalities of closure to settle the pending disputes. CSC has examined the case and proposed a settlement of '' 165.64 Lakh as final settlement considering the terms of Sale agreement and relevant documents pertaining to this case which includes refund by CIWTC the entire amount of '' 106.54 Lakh recovered from GRSE by Central Excise as arrear interest on dues payable by CIWTC to Central Excise considered as "Claim Receivables" and balance of '' 59.10 Lakh towards ground rent (net of disposal proceeds of the assets) due to non removal of assets as per terms of "Sale Agreement" of 2006 which is considered as Contingent Asset.
|
Note 31: Commitments |
('' in Lakh) |
|
|
Particulars |
As at 31 March,2022 |
As at 31 March,2021 |
|
Estimated amount of contracts remaining to be executed on capital account and not provided for |
2,341.67 |
4,945.58 |
|
Advance paid against above |
7.43 |
251.35 |
Note 32: Employee benefit obligations (i) Leave obligations
The leave obligations cover the Company''s liability for sick and earned leave.
Based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. Accordingly, leave obligation of '' 588.77 Lakh (31 March, 2021 '' 679.1 1 Lakh) is presented as current and remaining amount is presented as non current. The leave obligation is an unfunded plan, the Company makes contributions to scheme maintained by Life Insurance Corporation of India (LIC).
Based on actuarial valuation, a provision is recognised in full for the projected obligation over and above the funds held in scheme.
(ii) Post-employment obligations
(a) Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary (including dearness allowance) per month computed proportionately for 15 days salary (reckoning 26 days for a month) multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.
Based on actuarial valuation, a provision is recognised in full for the projected obligation over and above the funds held in scheme.
(b) Post-retirement medical scheme
The Company operates post-retirement medical benefit scheme. The plan is an unfunded plan. Based on actuarial valuation, a provision is recognised in full for the projected obligation.
Apart from above, post retirement medical benefits to the superannuated employees are defined contribution schemes and premium of '' 720.31 Lakh (31 March, 2021: '' 860.52 Lakh) paid to an Insurance Company is charged to the Statement of Profit and Loss of the year. There are no other obligations to employees other than the contribution payable to the Insurance Company.
(c) Provident fund
The exempt provident fund set up by the Company is a defined benefit plan under IND AS 19 Employee benefits.
Provident Fund for eligible employees is managed by the Company through a Trust in line with the Provident Fund and Miscellaneous Provision Act,1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employees and employer @12% of basic salary (including Dearness Allowance) together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement whichever is earlier. The benefits vests immediately on rendering of the services by the employee. The contribution is charged to Statement of Profit and Loss of the year when the contributions to the respective funds are due in accordance with relevant statute .
Employer''s contribution to Provident Fund & Family Pension fund is '' 1,737.98 Lakh for the year 2021-22 ('' 1,661.64 Lakh for the year 2020-21).
The minimum interest rate payable by the trust to the beneficiaries every year is notified by the Government. The Company has an obligation to make good the shortfall ,if any, between the return from the investments of the trust (including investment risk fall) and the notified interest rate.
The Company has obtained report on the determination and disclosure of interest rate Guarantee, valuation of Assets & Liabilities as per Ind AS 19 of Employees Benefits relating to Exempt Provident Fund of GRSE for the period ended 31 March, 2022.
(iii) Defined Contribution Plan:
Superannuation Pension Fund:
The Pension Scheme is administered by a Trust. The Company has transferred an amount of '' 454.81 Lakh for officers and non-unionised supervisiors to LIC towards employer''s contribution for the year 2021-22 ('' 432.40 Lakh for the year 2020-21).
The pension scheme for unionised employees has been introduced w.e.f. 01 January 2012. An amount of '' 371.47 Lakh has been transferred to LIC for the year 2021-22 ('' 353.19 Lakh for the year 2020-21 ) towards employer''s contribution for operatives and office assistants.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied while calculating the defined benefit liability recognised in the Balance Sheet.
The methods and types of assumptions used in preparing the sensitvity analysis did not change compared to the prior period.
(vii) The major categories of plan assets
The defined benefit plans (except Provident Fund) are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies. Thus, the composition of each major category of plan assets has not been disclosed.
(viii) Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below: Investment risk:
The defined benefit plans (except Provident Fund) are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies.
The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.
Interest risk:
A decrease in the interest rate on plan assets will increase the plan liability.
Life expectancy:
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.
Salary growth risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
(i) Trade receivables and contract assets
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying no credit terms. Outstanding customer receivables are regularly monitored. Trade receivables are primarily from Navy (owned by Govt. of India), hence the credit risk is considered low. Further, the Company receives advance against orders which also mitigates the credit risk. For ageing of trade receivables please refer note 10(b).
(ii) Financial instruments and deposits
Credit risk from balances with banks and financial institutions is managed by the Company in accordance with the Company''s policy. Investment of surplus funds are made in accordance with DPE Guidelines on investment of surplus funds of the Company. The limits are set to minimise the concentration of risks and to mitigate financial loss through counterparty''s potential failure to make payments.
The Company''s maximum exposure to credit risk for the components of the Balance Sheet at 31 March, 2022 and 31 March, 2021 is the carrying amounts as illustrated in Note 6 (b),Note 10 (a),Note 10 (c) and Note 10 (d).
(B) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the underlying business, the Company maintains sufficient cash and liquid investments available to meet its obligation.
The Company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements, if any.
Maturities of financial liabilities
The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all financial liabilities.
Foreign currency risk
The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Company is exposed to foreign currency risk since it imports components from foreign vendors. Also, the Company exports some of it''s ships to foreign buyers and is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (''). The outflow on account of imports and payments in foreign currency is mostly reimbursable from the buyers. The risk in case of export is measured through a forecast of highly probable foreign currency cash flows.
Note 40: Russian (USSR) deferred State Credit
An inter-governmental agreement between Russian Federation and Government of India was reached for restructuring of Russian deferred state credit in Ruble in connection with procurement.
As per the said agreement, the outstanding debt in Rouble as on 01.04.1992 was converted to Indian Rupees at the difference in Rupee-Ruble exchange rate between 01.04.1990 and 01.04.1992 and such amount of exchange rate difference was rescheduled by Government Of India under a deferred Rupee payment arrangement payable over 45 years till 2037. These rescheduled payments are also reimbursable by Indian Navy. Such amount is accordingly held as Foreign Suppliers Deferred Credit as at 31 March, 2022 and aggregated to '' 942.88 Lakh (Undiscounted amount being '' 1,859.47 Lakh) [31 March, 2021: '' 828.70 Lakh (Undiscounted amount being '' 1,694.75 Lakh)].
(a) The Company follows a general practice of undertaking physical verification of all the fixed assets in a phased manner in a block of three years. In the current year, such physical verification has been done in the Rajabagan Dockyard (RBD), 61 Park unit, Medical dept., Production Planning & Control Dept., Industrial Engineering & Process (IE&P), Vender development Dept. Discrepancies found have been appropriately dealt with in the Accounts.
(b) The 62 acres of land for setting up the Diesel Engine Plant at Ranchi was obtained free of cost from Heavy Engineering Corporation Ltd., Ranchi (HEC) in 1966 as a part of industrialization drive at the behest of MoD, Govt. of India and Govt. of Bihar. GRSE is in uninterrupted possession of the land since then and has created permanent structures thereon (title deed is with HEC, Ranchi). Various assets of the Diesel Engine Plant, Ranchi having book value of '' 1,138.09 Lakh (original value '' 3,202.04 Lakh) as on 31 March, 2022 have been installed / placed
142 GARDEN REACH SHiPBUiLDERS a ENGiNEERS LTD.
on the said premises. Ignoring the right of GRSE in the said land, the then Govt. of Bihar executed a Deed of Conveyance in favour of HEC in February, 1996. Later, HEC vide a letter of 07 August, 1999 raised a claim for a 30 year lease effective from 01.04.1996 of '' 1488 Lakh as onetime premium and a sum of '' 148.8 Lakh p.a. being 10% of the said premium as annual lease rent which GRSE repudiated. During April, 2013, HEC unilaterally referred the disputes to PMA, DPE, Govt. of India for arbitration and subsequently inter alia prayed before PMA for directing GRSE to enter into lease agreement for totally baseless, frivolous and absurd lease rent and premium with interest for further period and to declare GRSE as "unauthorized occupant" etc. GRSE raised preliminary objection regarding maintainability and sustainability of the alleged reference of HEC and rejection of claim as the same are not sustainable on facts as well as in law. The matter was under adjudication before Smt. Zoya Hadke, Sole Arbitrator, PMA who after hearing both the parties at length, vide Order dated 30.6.2015 held that in absence of any agreement between the parties, the Arbitral Forum lacks jurisdiction to settle the dispute and rejected the reference of HEC. Accordingly, the arbitration matter stood disposed off. No appeal filed by HEC.
GRSE has also filed a Civil Suit (TS 117 of 2014) in March, 2014 before a competent Civil Court at Ranchi, HEC and the Govt. of Jharkhand being the defendants, with prayer for declaration by the Court that GRSE has acquired irrevocable licence coupled with interest in the subject land by setting up Diesel Engine Plant permanently thereon free of cost in accordance with the law of the land and for permanent injunction restraining HEC from interfering with the possession of land by GRSE and running industry thereon. Hearing of the case is in progress.
HEC has filed an Application under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 before the Estate Officer appointed under the said Act by HEC, for eviction of GRSE alleging as ''unauthorised occupant'' from the said land occupied by DEP Unit of GRSE. [Case no. P.P. ACT/REV/201801 dated 28.4.2018]
GRSE has filed a Writ Petition [ being WP ( C ) No. 3359 of 2018 ] before the Hon''ble Jharkhand High Court praying for ''declaration'' that summary proceeding before the Estate Officer under the Public Premises (Eviction of Unauthorised Occupants ) Act is not maintainable involving intricate and complicated questions of law pertaining to title, right, interest and possession to the land and moreover competent civil court at Ranchi is already adjudicating the matter on the self-same cause of action. The High Court on 14.8.2018 directed HEC to file Opposition and not to evict GRSE from the said land. Meanwhile, upon approach by HEC, process to find out various possibilities to arrive at amicable settlement has been initiated.
In view of the above an amount of '' 5,356.80 Lakh (Previous year '' 5,208.00 Lakh) without interest has been considered as contingent liability not acknowledged as debt.
Letters seeking confirmation of balances in the accounts as at 31 December, 2021 of sundry creditors were sent to vendors. On the basis of replies received from certain vendors, adjustments wherever necessary have been made in the Accounts.
(a) The Company has sent letters seeking confirmations of balances in respect of its Debtors Though no response has been received from the debtors, in the opinion of the Company, the balances have realisable values equal to the amount as stated in the books in the ordinary course of business, unless otherwise stated.
b) The amounts received from customers are mainly received in respect of ship division, customers being Indian Navy and Indian Coast Guards. In respect of other divisions, advance from customers are received mainly from Government Departments.
With introduction of Indian Accounting Standard (Ind AS 116) effective from 01.04.2019, the Company has adopted the same using retrospective transition method. During the current financial year, total addition of Right of Use (RoU) is '' 955.86 Lakh with Lease Liability of '' 877.37 Lakh.
The actual lease rentals paid which were hitherto recognised as expense are now accounted as reduction in lease liability.
During the year, Rent and transport charges under other expenses, for the rent paid for lease hold land of '' 36.23 Lakh (FY 2020-21: '' 133.20 Lakh) and vehicle of '' 82.12 Lakh (FY 2020-21: '' 29.47 Lakh) has been adjusted with corresponding lease liability. Finance cost includes unwinding of Interest on lease rent paid of '' 62.62 Lakh (FY 2020-21: '' 39.85 Lakh) and depreciation & amortisation expenses include amortisation of RoU Assets of '' 184.45 Lakh (FY 2020-21: '' 161.16 Lakh).
The total Fund Based limits '' 11,001.00 Lakh (March 31, 2021: '' 10,500 Lakh) and Non-Fund based limits '' 4,56,500 Lakh (March 31, 2021: '' 3,45,500 Lakh) sanctioned by consortium of bankers are interchangeable between Fund based and Non-fund-based limits. The said limits are secured by hypothecation of current asset i.e. inventories and receivables. The Company at present doesn''t have any Fund based utilization. As on 31 March, 2022 guarantees given by Bank is '' 2,74,099.33 Lakh.
In preparation of the financial results for the year ended 31 March, 2022, the Company has taken into account the possible impact of COVID-19 and the related internal and external factors known to the management up to the date of approval of these results. Accordingly, the management is continuously and closely monitoring the developments and possible effects that may result from the COVID -19 pandemic on its financial condition, liquidity and operations and is actively working to minimize the impact of this unprecedented situation.
Exceptional Items
The Company was almost closed from mid of the month of May 2021 due to the then emerging second wave of the COVID-19 pandemic as per Government directives. The operations partially resumed almost after a month with requisite precaution, which has affected the revenue and financial performance of the Company. The management is continuously and closely monitoring the developments and possible effects that may result from the current pandemic on its financial condition, liquidity and operations and is actively working to minimize the impact of this unprecedented situation. Accordingly, manpower cost of Direct, Indirect Operatives, Office Assistants of Production Departments and Depreciation on Plant & Machinery of Production Department during non-operational period has been considered as expenditure under Exceptional Item.
Yard 3020, the 4th and last of Project 28 was delivered to Indian Navy on 18th Feb 2020 as against contractual delivery of April, 2015. Due to cascading effect of delay of previous ships and various other reasons not attributable to and beyond the control of the company, the contractual delivery date of the vessel could not be adhered to.
Post-delivery of the Ship, company submitted its case for extension of contractual delivery date to Warship Overseeing Team, Kolkata the onsite representative of customer i.e. Indian Navy.
Warship Overseeing Team has made their recommendation whereby company has been made accountable for delay for 1 month and 14 days equivalent to 1.467% of Ship Cost.
In line with accounting practices followed, for this project, Company has made an equivalent provision for liquidated damages amounting to '' 2,183.51 Lakh in the books in Financial Year 2019-20.
The LD case has already been approved by MOD, Acquisition. Amendment of contract for delivery date extension is under process at MOD.
Figures for the previous year have been regrouped/rearranged wherever necessary to correspond to those of the current year. Amounts and other disclosures for the preceding year are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosures relating to the current year.
The financial statements are authorised for issue by the Board of Directors on 25th May 2022.
Mar 31, 2018
I. Background
Garden Reach Shipbuilders & Engineers Limited (''GRSE Ltd.'' or ''the Companyâ) was incorporated on 26th February, 1934. The Company is domiciled in India having its registered office at 43/46, Garden Reach Road, Kolkata - 700 024. The Company is mainly engaged in the construction of war ships.
Note 1: Critical estimates and judgements:
The preparation of Financial Statements in accordance with Ind - AS requires use of estimates and assumptions for some items, which might have an effect on their recognition and measurement in the Balance Sheet and Statement of Profit and Loss. The actual amounts realised may differ from these estimates, Accounting estimates could change from period to period, Actual results could differ from those estimates. Appropriate changes in estimates are made as the management becomes aware of changes in circumstances surrounding the estimates. Differences between the actual results and estimates are recognised in the period in which the results are known/materialised and, if material, their effects are disclosed in the notes to the Financial Statements,
Estimates and assumptions are required in particular for:
i. Estimated useful life of Property, plant and equipment (PPE):
Determination of the estimated useful life of PPE and the assessment as to which components of the cost may be capitalized. Useful life of PPE is based on the life prescribed in Schedule II to the Companies Act, 2013. in cases, where the useful life is different from that prescribed in Schedule II, it is based on technical advice, taking into account the nature of the asset estimated usage and operating conditions of the asset, past history of replacement and maintenance support. Assumptions also need to be made, when the Company assesses, whether an asset may be capitalised and which components of the cost of the asset may be capitalised.
ii. Recognition and measurement of defined benefit obligations:
The obligation arising from the defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation and vested future benefits and life expectancy. The discount rate is determined with reference to market yields at the end of the reporting period on the government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.
iii, Recognition of deferred tax assets:
A Deferred tax asset is recognised for all the deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. The management assumes that taxable profits will be available while recognising deferred tax assets.
iv. Recognition and measurement of other provisions:
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore vary from the figure included in other provisions,
v Discounting of long-term financial liabilities
All financial liabilities are measured at fair value on initial recognition. In case of financial liabilities, which are required to be subsequently measured at amortised cost, interest is accrued using the effective interest rate method.
(i) Current year deductions include adjustment for scrapping of assets valued Rs. 1.70 lakh (Deemed cost Rs.4.37 lakh) and retired assets valued Rs. 5.49 lakh (Deemed cost Rs. 11. IS lakh) out of which Rs. 2.00 lakh has been transferred to retired assets and balance transferred to Loss on retirement of assets. Further, it also includes assets valued Rs.7.26 lakh (Deemed cost Rs. 7,26 lakh) retired and sold during the year Scrapping of assets and retired assets in 2016-17 were Rs.0.96 lakh (Deemed cost Rs. 1.51 lakh) and Rs.0.74 lakh (Deemed cost Rs. 15.92 lakh) respectively,
(ii) Jointly funded assets- Plant & Machinery as at 31 March, 2018of Rs.780.70 Lakh (Rs.2,006.89 lakh asat31 March, 2017) also includes Electrical installation of New Dry Dock valued Rs. 715 13 lakh (31 March, 2017: Rs.844.15 lakh).
(iii) Property, plant and equipment as at 31 March. 2018 include modern hull shop, a new dry dock, inclined berth, paint cell and other miscellaneous facilities which have been created under modernisation of infrastructure development. These assets have been jointly funded by the Indian Navy to the tune of Rs. 32,325.77 lakh (original cost).
(iv) Assets as at 31 March, 2018 exclusively funded by Navy (original Cost) not included in Property, plant and equipment is Rs. 801.23 lakh, (31 March, 2017; Rs. 801.23 lakh),
(v) Building as at 31 March, 2018 includes Rs. 95.9G lakh (original cost)(31st March, 2017: Rs. 30,68 lakh) being one third share of the Company in Delhi Shipyard house . The building is jointly held by Garden Reach Shipbuilders and Engineers Limited, Mazagon Dock Shipyard Limited and Goa Shipyard Limited.
Included above are following Deferred Receivables:
a Rs.3,259.46 lakh [31 March, 201, 3t272.76 lakh] on account of tost Stage (Stage XV) payment of ICU Con tract (Yards 2093 &2094) [31 March, 2017: Yard 2092] which ore contractually due after completion of warranty period of 12 months and upon completion of all D-443 Liabilities & Guarantee Repairs.
b.Rs.8,796.88 lakh [31 March, 2017:Rs. 6,965,30 lakh] withheld out of Stage XV payment of P-28 Contract (Yards 3018 & 3019) [31 March, 2017: Yard 3018] by Indian Navy pending settlement of delivery extension case and amendment of contract in this regard.
c. Rs.745,91 lakh [31 March, 2017: Rs.1,230 lakh] withheld out of Stage XIV payment of FO-WJFAC Contract (Yards 2 m 2110,2111 & 2112) [31 March, 2017: Yard 2109,2110 & 2111] by Indian Navy pending settlement of delivery extension case and amendment of contract in this regard. _
Non-recurring fair value measurements
Assets classified as held for sale during the reporting period were measured at the lower of its carrying amount and far value less costs to sell The Company has estimated the fait value to be higher than the earning amount based on historical trend of realisation.
Terms and rights attached to equity shares
Equity shares have a par value of Rs.10/- (31 March, 2017: Rs.100/-). They entitle the holder to participate in dividends, and to share in the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held.
Every holder of equity shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Nature and purpose of other reserves:
I) CSR Reserve had been created for unspent amount in the CSR Budget to be utilised exclusively for CSR activities,
ii) General reserve is primarily created to comply with the requirements of section 123(1) of the Companies Act, 2013, This is a free reserve and can be utilised for any general purpose tike issue of bonus shores, payment of dividend, buy back of shares etc.
iii) The Board of Directors in its meeting held on 6 December, 2017 approved the Buy Back of 92,88,000 equity shares (representing 7.5% of the paid up equity shares of the Company) with face value of Rs. 10/-each to be financed out of free reserves of the Company, at a price of Rs. 83.58 per equity share, for an aggregate consideration of Rs. 9r553.74 lakh (including tax of Rs. 1,791.02 lakh).
Pursuant to Section 69 of The Companies Act, 2013r the Company has transferred a sum equal to the nominal value of the shares so purchased to the Capital redemption reserve account out of free reserves of the Company.
The Capital redemption reserve is not in the nature of free reserve,
(i) Information about individual provision and significant estimates.
Information about individual provisions and significant estimates, are set out in Note 19.
(ii) Movements in provisions
Movements in each class of provision during the financial year ore set out in Note 18,
Information about individual provisions and significant estimates
Guarantee repairs
Provision is made for estimated warranty claims in respect of ships and other products delivered which are still under warranty at the end of the reporting period. Management estimates the related provision for future warranty claims in respect of delivered ships based on the actuarial report which takes into consideration the historical warranty claim information as well as recent trends that might suggest that past cost information may differ from future claims. The assumptions made in the current period are consistent with those in the prior year. Factors that could impact the estimated claim information includes the success of the Companyâs productivity and quality initiatives.
For provision with respect to other products, management estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts.
Liquidated damages
Provision for liquidated damages is made In the books of account separately as per the contractual provisions/proportionate liability basis keeping in view the delay caused by the factors beyond the control of the Company,
Other Provisions
Other Provisions represent employee related provisions based on the management''s assessment.
a) Contingent liability on account of Sales Tax amounts to Rs. 2,975.07 lakh (31 March, 2017: Rs. 2,975.07 lakh) towards assessment dues and demand for the years 2004-05, 2007-08, 2009-10, 2010-11 and 2012-13. All these amounts have not been acknowledged as debts and accordingly not provided for in the accounts as all the demands are under different stages of appeal.
b) Central Excise Authorities have raised demands of Rs. 199.98 lakh (31 March, 2017: Rs. 199.98 lakh) against clearance of goods to Naval Stores Dept of Indian Navy - Rs. 17,90 lakh, for alleged imposition of duty for wrong interpretation of Return filed by GRSE - Rs.75.54 lakh and for alleged arrear interest of Rs. 105.54 lakh claimed on the excise liability of CIWTC included in the sale consideration received as per agreement for purchase of certain assets of CIWTC. Since the Company has made appeals before respective Appellate Authorities against the impugned demands, those demands have not been acknowledged as debts and accordingly not provided for in the accounts.
c) Service Tax Authorities have raised a demand of Rs. 121.30 lakh (31 March, 2017: Rs.121.30 lakh) against imposition of Service Tax on technical fees paid to foreign technicians prior to 18.04.2006. Since the Company has made appeal before the CESTAT, EZB, Kolkata against the impugned demand with due approval of CoD, the same has not been acknowledged as debt and accordingly not provided for in the accounts.
d)Contingent liability on account of income tax demands amounts to Rs. 485.33 lakh (31 March, 2017; Rs. 485.33 lakh) towards arbitrary increase by the Income Tax Authority in taxable income based on Form 260 for the A.Y. 2009-10 (Rs. 352.85 lakh), excess dividend tax liability computed for A.Y. 2010-11 (Rs. 18.56 lakh), addition towards delayed deposit of employees P.F. and E.S.I. contribution for A.Y, 201213 (Rs. 111.33 lakh), addition towards delayed deposit of employees E.S.I Contribution for A.Y. 2013-14 (Rs. 0.67 lakh) and disallowance of Provision for Liquidated Damages (Rs. 1.92 lakh). Above disputes have not been acknowledged as debt and accordingly not provided for in the accounts as all the issues are under different stages of appeal,
e) Contingent Liability on account of Liquidated Damages (LD),
ASWC Project:
The contractual delivery date of Yard 3019 (3rd in the series of 4 Ships) was July, 2014. The Ship was delivered on 14 October, 2017 with a delay of 38 months 14 days. The case for delivery extension of Yard 3019 was taken up with the customer (Indian Navy), post-delivery of the Ship. Warship Overseeing Team (WOT), Kolkata, the onsite representatives of Indian Navy, have recommended a delay of 2 months 10 days attributable to GRSE. Considering a grace period of 1 month, provision for LD in case of this Yard has been made @ 1.33% of Basic Ship Cost for delay of 1 month 10 days in FY 2017-18. Presently, the delays are being scrutinized by lHQ/MoD(N)/DND with the help of WOT, Kolkata before forwarding its final recommendation to MoD for amendment to contract for delivery date extension.
Delay in case of any Ship of a series has a cascading effect on delivery schedule of the follow-on ships of the project, Moreover, the factors leading to delays vary on a case to case basis and the assessment of the delays is made independently by IHQ/MoD(N) post-delivery of each Ship depending on the facts and circumstances of each case.
As per the Company''s internal assessment, the delays in case of last Ship (Yard 3020) are not attributable to GRSE and are likely to be waived off by the customer. However, there may be a situation where the Company may be held accountable for some delays during final assessment at IHQ/MoD(Navy) for which there is no measure to quantify such unforeseen delays, and hence, due to this uncertainty, no provision for LD has been made In this regard.
In view of the above, the Company has decided to continue with its disclosure of Rs. 7,442.10 lakh for Yard 3020 being 5% of Basic Ship Cost, as Contingent Liability (31 March, 2017 : Rs.14,731.35 lakh w.r.t Yard 3019 and Yard 3020).
f) The amounts shown under Contingent Liabilities represent the best possible estimates arrived at on the basis of available information. The uncertainties and timing of the cash flows are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be estimated accurately. The Company does not expect any reimbursement in respect of above Contingent liabilities, in the opinion of the Management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals.
B) Contingent Assets
i) Central Coalfield Limited (CCL) awarded four contracts to GRSE in early 1990 for the supply, erection and commissioning of DG sets, which was executed by GRSE. CCL did not honour the contract in totality and withheld an amount of Rs, 1,553 lakh since then. The matter was referred to arbitration before the PMA. The Arbitral Award published in 2008, was in favour of GRSE, whereby CCL was required to pay Rs. 1,489 lakh within 90 days from the Award plus interest at prescribed rates. Subsequently, CCL appealed against Award, Appellate Authority rejected the appeals filed by CCL and upheld the Arbitral Award in 2011. CCL filed Writ Petition against the Arbitral Awards before the Honâble Jharkhand High Court in 2011, which is yet to be listed for admission. Repeated requests to CCL from time to time for settlement of awarded sum have remained in fructuous. GRSE had since referred the matter to Cabinet Secretariat through MoD as per PMA guidelines for implementation of the Awards.
Under the circumstances, in order to resolve the issue, a meeting was held on 18.06.2018 at the CMD level of both the companies, and accordingly an amount of Rs,1,489 lakh (Awarded amount, exclusive of any interest) has been considered as a Contingent Asset.
ii) The land and various other assets of erstwhile Raja Bagan Dockyard of Central Inland Water Transport Corporation Limited (CIWTC) was purchased by the Company in the Year 2006. The assets like vessels, cranes etc. were not taken over by the Company and were to be removed by CIWTC which they did not remove. CIWTC is presently under liquidation, The Company has raised a claim upon the liquidator towards ground rent and reimbursement of payment of interest on Excise Duty by the Company of Rs. 2,429.74 lakh. The matter is pending with the liquidator. Therefore, this has been considered as a Contingent Asset.
iii) LD imposed and collected by the Company from its subcontractors as per order terms w.r.t Yard 3020 amounting to Rs, 1,515.94 lakh (31 March, 2017 : Rs, 3,502.78 lakh w.r.t Yard 3018, Yard 3019 and Yard 3020) which need not be reimbursed to the customer based on the terms of delivery extension has been considered as Contingent Asset [Refer Note 29 (A) (e)j.
Note 2: Employee benefit obligations
(i) Leave obligations
The leave obligations cover the Company''s liability for sick and earned leave.
Based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. Accordingly, leave obligation of Rs. 784.64 lakh (31 March, 2017; Rs. 714,80 lakh) is presented as current and remaining amount is presented as non current. The leave obligation is an unfunded plan, the Company makes contributions to scheme maintained by Life Insurance Corporation of India (LIC).
Based on actuarial valuation, a provision is recognised in full for the projected obligation over and above the funds held in scheme,
(ii) Post-employment ob ligations
a) Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972, Employees who are in continuous service for a period of 5 years are eligible for gratuity, The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary (including dearness allowance)per month computed proportionately for 15 days salary (reckoning 26 days for a month) multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.
Based on actuarial valuation, a provision is recognised in full for the projected obligation over and above the funds held in scheme.
b) Post-retirement medical scheme
The Company operates post-retirement medical benefit scheme. The plan is an unfunded plan, Based on actuarial valuation, a provision is recognised in full for the projected obligation.
Apart from above, post retirement medical benefits to the super annuated employees are defined contribution schemes and premium of Rs. 634,03 lakh (31 March, 2018) (31 March, 2017; Rs.532.57 lakh) paid to an Insurance company is charged to the Statement of Profit and Loss of the year. There are no other obligations to employees other than the contribution payable to the Insurance Company,
(iii) Defined contribution plans
Provident fund and Pension fund
The Company also has certain defined contribution plans, Contributions are made to provident fund at the rate of 12% of basic salary (including dearness allowance) as per regulations. The contribution is charged to Statement of Profit and Loss of the year when the contributions to the respective funds are due in accordance with relevant statute.
Employer''s contribution to provident fund & family pension fund is Rs. 1,591.21 lakh for the year 2017-18 (Rs.,507.11 lakh for the year 2016-17).
Superannuation Pension Fund;
The Pension Scheme is administered by a Trust. The Company has transferred an amount of Rs. 279.48 lakh for officers and non-unionised supervisors to LIC towards employer''s contribution for the year 2017-18 (Rs. 278,13 lakh for theyear20l6-17),
The pension scheme for unionised employees has been introduced w.e.f. 01 January 2012. An amount of Rs.374,16 lakh has been transferred to LIC for the year 2017-18 (Rs. 360.11 lakh for the year 2016-17 ) towards employer''s contribution for operatives and office assistants.
(iv) Balance sheet recognition
a) Post retirement medical scheme
The amounts recognised in the Balance Sheet and the movements in the net defined benefit obligation over the year are as follows:
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied while calculating the defined benefit liability recognised in the Balance Sheet.
The methods and types of assumptions used in preparing the sensitvity analysis did not change compared to the prior period,
(vii) The major categories of plan assets
The defined benefit plans are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies. Thus, the composition of each major category of plan assets has not been disclosed.
(viii) Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:
Investment
The defined benefit plans are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies.
The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit,
Interest risk:
A decrease In the interest rate on plan assets will increase the plan liability.
Life expectancy:
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.
Salary growth risk:
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability,
(ix) Defined benefit liability and employer contributions
Expected contributions to post-employment benefit plans for the year ending 31 March, 2019 are Rs. 600 lakh.
The weighted average duration of the defined benefit obligation (gratuity) is 12 years (31 March, 2017 - 12 years) and Post-retirement medical benefits is 37 years (31 March, 2017 - 37 years), The expected maturity analysis of undiscounted gratuity and post-retirement medical benefits is as follows:
Note 3: Related party transactions
The Company is controlled by the President of India having ownership interest of 100%
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the Indian accounting standard,
Specific valuation technique used to value financial instruments include the fair value of the remaining financial instruments which is determined using discounted cash flow analysis.
The carrying amounts of trade receivables, trade payables, borrowings and cash and cash equivalents are considered to be the same as their fair values.
The fair values for financial instruments were calculated based on cash flows discounted using Marginal Cost of Funds based Lending Rate (MCLR) of State Bank of India on the reporting date for the same maturity. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.
Note 4: Financial risk management
The Company''s activities are exposed to a variety of financial risks: credit risk, liquidity risk and market risk (i.e. foreign currency risk, interest rate risk and price risk).
This note explains the sources of risk which the entity is exposed to and how the entity manages the risk;
(A) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
i) Trade receivables and unbilled revenue
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying no credit terms. Outstanding customer receivables are regularly monitored. Trade receivables are primarily from Navy (owned by Govt, of India), hence the credit risk is considered low. Further, the Company receives advance against orders who also mitigates the credit risk. The ageing of trade receivables as at the balance sheet date is given below. The age analysis has been considered from the due date:
ii) financial instruments and deposits
Credit risk from balances with banks and financial institutions is managed by the Company in accordance with the Company''s policy. Investment of surplus funds are made in accordance with DPE Guidelines on investment of surplus funds of the Company. The limits are set to minimise the concentration of risks and, therefore .mitigate financial loss through counterparty''s potential failure to make payments.
The Companyâs maximum exposure to credit risk for the components of the Balance Sheet at 31 March, 2018 and 31 March, 2017 is the carrying amounts as illustrated in Note 6 (d) and Note 10 (c).
(B) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the underlying business, the Company maintains sufficient cash and liquid investments available to meet its obligation,
The Company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements, if any,
Maturities of financial liabilities
The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
(C) Market risk
Foreign currency risk
The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Company is exposed to foreign currency risk since it imports components from foreign vendors. Also, the Company exports some of it''s ships to foreign buyers and is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (Rs.). The outflow on account of imports and payments in foreign currency is mostly reimbursable from the buyers, The risk in case of export is measured through a forecast of highly probable foreign currency cash flows.
Foreign currency risk exposure
The Company''s exposure to foreign currency risk at the end of the reporting period expressed in !NR (foreign currency amount multiplied by closing rate), areas follows:
(a) Risk management
The Company''s objectives when managing capital are to:
- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
- maintain an optimal capital structure to reduce the cost of capital,
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares,
The amount mentioned under total equity in balance sheet is considered as Capital.
Note: 5: Construction contracts
On the balance sheet date, the Company reports the net contract position for each contract as either an asset or a liability. A contract represents an asset where costs incurred plus recognised profits (less recognised losses) exceed progress billings; a contract represents a liability where the opposite is the case.
Note: 6 Information given in accordance with the requirements of Ind AS 103 on Segment Reporting:
The chief operating decision maker (CODM) has identified four primary business segments viz. Ship, Base and Depot Spares (BSD Spares), Engineering and Engine. These segments have been identified and reported taking into account the nature of the products/ services, the differing risks and returns, the organisational structure and internal business reporting system.
- Ship segment - Business relating to construction of ships and vessels arising out of contracts with the customer, including modification carried out during construction stage and after delivery of ship based on customer requirements.
- Base and Depot Spares (B & D spares) segment -Business relating to supply of spares for ship equipment /machinery to the customers location as per contractual terms.
- Engineering segment - Engaged in manufacturing/ fabrication of portable steel bridges, on-board machinery of ship (Deck Machinery) & Marine Pump,
- Engine segment - Engaged in the testing & overhauling of marine propulsion engines & partial manufacture(assembly from CKD) of diesel engine-located at Ranchi.
a) Revenue and expenses have been identified to a segment on the basis of direct relationship to operating activities of the segment. Expenditure which are not directly identifiable but has a relationship to the operating activities of the segment are allocated on a reasonable basis.
b) Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Othersâ.''
c) Segment assets and segment liabilities represent assets and liabilities of respective segment. Investments, tax related assets/ liabilities and other common assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as âOthers",
d) Inter segment transfer consists of material, labour and overhead which are recorded at cost.
e) Information about Primary Business Segments:
Note 7: Russian (USSR) deferred State Credit
An inter-governmental agreement between Russian Federation and Government of India was reached for restructuring of Russian deferred state credit in Rouble in connection with procurement.
As per the said agreement, the outstanding debt in Rouble as on 01.04.1992 was converted to Indian Rupees at the difference in Rupee-Rouble exchange rate between 01.04.1990 and 01.04.1992 and such amount of exchange rate difference was rescheduled by Government Of India under a deferred rupee payment arrangement payable over 45 years till 2037. These rescheduled payments are also reimbursable by Indian Navy, Such amount is accordingly held as Foreign Suppliers Deferred Credit as at 31 March, 2018 and aggregated to f 886.03 lakh (Undiscounted amount being Rs.2,012,51 lakh) (31 March 2017: Rs. 902,48 lakh (Un-discounted amount being Rs.2.118,43 lakh)
Note 8: ICD to Hindustan Cables Ltd.:
An amount of Rs.457.75 lakh (Rs. 200 lakh as Principal and Rs. 257.75 lakh as interest) was outstanding as on 31st March, 2002 from Hindustan Cables Ltd. (HCL), a sick PSU. As the case was registered by BIFR, full provision was made in the Accounts of 2003-04. HCL''s winding up process has since been accepted . The Company has received Rs.66 lakh (one third of the principal amount) as full & final settlement From HCL. The balance amount of Rs. 391.75 lakh has been written off during the year.
Note 9:
a) The Company follows a general practice of undertaking physical verification of fixed assets in every 3 years. Such physical verification is carried out in a phased manner following verification programme. In the current year, such physical verification has been done in the Main, FOJ, 61 Park & DEP Ranchi units. Discrepancies found have been appropriately dealt with in the Accounts,
b) Out of three docks and two slipways taken over from CIWTC Ltd. on 1 July, 2006, Dry Dock No.2 has been capitalized. Dry dock No. 1 although technically operational cannot be exploited for production until the rectification of leaking valves gets completed , hence the expenditure incurred in Dry dock No, 1 have been carried in Capita! Work-in-progress. Other facilities are still under repair and have remained non-operational, due to which cost of acquisition of these assets and subsequent capital expenditure have continued to be carried forward as capital work-in progress.
c) The 62 acre of land for setting up the Diesel Engine Plant at Ranchi was obtained free of cost from Heavy Engineering Corporation Ltd,, Ranchi (HEC) in 1966 as a part of industrialization drive at the behest of MoD, Govt, of India and Govt, of Bihar. GRSE is in uninterrupted possession of the land since then and has created permanent structures thereon, Various assets of the Diesel Engine Plant, Ranchi having book value of Rs. 1281.26 lakh (original value Rs. 2865,48 lakh) as on 31 March, 2018 have been installed / placed on the said premises. Ignoring the right of GRSE in the said land, the then Govt, of Bihar executed a Deed of Conveyance in favour of HEC in February, 1996. Later, HEC vide a letter of 07 August, 1999 raised a claim for a 30 year lease effective from 01,04.1996 of Rs. 1488 lakh as one-time premium and a sum of Rs.148.8 lakh p.a. being 10% of the said premium as annual lease rent which GRSE repudiated. During April, 2013, HEC unilaterally referred the disputes to PMA, DPE, Govt, of India for arbitration and subsequently inter alia prayed before PMA for directing GRSE to enter into lease agreement for totally baseless , frivolous and absurd lease rent and premium with interest for further period and to declare GRSE as "''unauthorized occupantâ etc. GRSE raised preliminary objection regarding maintainability and sustainability of the alleged reference of HEC and rejection of claim as the same are not sustainable on facts as well as in law. The matter was under adjudication before Smt. Zoya Hadke, Sole Arbitrator, PMA who after hearing both the parties at length, vide Order dated 30.6.2015 held that in absence of any agreement between the parties, the Arbitral Forum lacks jurisdiction to settle the dispute and rejected the reference of HEC. Accordingly, the arbitration- matter stood disposed off.
GRSE has also filed a Civil Suit (TS- 117 of 2014) in March, 2014 before a competent Civil Court at Ranchi, HEC and the Govt, of Jharkhand being the defendants, with prayer for declaration by the Court that GRSE has acquired irrevocable licence coupled with interest in the subject-land by setting up Diesel Engine Plant permanently thereon free of cost in accordance with the law of the land and for permanent injunction restraining HEC from interfering with the possession of land by GRSE and running industry thereon. Hearing of the case is in progress.
In view of above, an amount of Rs.4,761.60 lakh (Previous year Rs.4,612.80 lakh) without interest has been considered as contingent liability not acknowledged as debt.
Note 10:
Letters seeking confirmation of balances in the accounts of sundry creditors were sent to vendors. On the basis of replies received from certain vendors, adjustments wherever necessary have been made in the accounts.
Note 11:
(a)The Company has sent letters seeking confirmations of balances in respect of its Debtors. Though no response has been received from the debtors, in the opinion of the Company, the balances have realisable values equal to the amount as stated in the books in the ordinary course of business, u n less otherwise stated.
b) The amounts received from customers are mainly received in respect of ship division, customers being Indian Navy and Coast Guards. In respect of other divisions, advance from customers are received mainly from Government departments.
Note 12:
Rent under Other expenses includes Amortisation of Leasehold Land (under operating Lease) Rs. 10.32 lakh (31 March, 2017; Rs.9,58 lakh).
Accordingly, Prepaid expenses under Note no. 8 & Note no: 11 include unamortised Leasehold Land of Rs. 39.69 lakh (31 March, 2017: Rs. 50.01 lakh).
Note 13:
Based on the information/documents available with the Company, information as per the requirement of section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 areas follow:
A 250 Tonne Gofiath crane was created as pari of modernized infrastructure facility at Main Works Unit of the Company, at a total cost of Rs.11,000 lakh, This crane was commissioned during 2013 and used regularly till date,
On 17 April, 2018 a ''Near Cyclonic Strom'' hit Kolkata and inflicted damage to the facilities at Main Works, wherein the Goliath crane suffered total loss and also resulted in damage to facilities in the immediate vicinity of the fallen crane. Estimate of financial effect cannot be ascertained at this point of time,
The assets of the Company damaged during this incident are adequately insured. Inspection by the insurance surveyors is under progress. Assessment of the insurance claim is not yet finalized; however, all efforts are being carried out to minimize the impact on the Yard capacity, and actions are also initiated to ensure fast track restoration of the damaged assets including the Goliath Crane.
Note 14: Change in accounting policy
During the year, the Company changed its accounting policy for revenue recognition with respect to Modification Jobs whereby revenue against completed Modification Jobs is now recognised on the basis of Work Done Certificate issued by appropriate authority and for which Modification Cost for Approval is submitted to the customer, duly recommended by onsite representative of the customer. Prior to this change in policy, revenue in respect of Modification Jobs was accounted for in the year in which final approval was received,
The Company believes the new policy is preferable as It is more closely aligned to the matching cost concept of accounting for these transactions.
This change in accounting policy was applied retrospectively resulting in increase in revenue and profit by Rs. 817.21 lakh, other financial assets by Rs. 980.29 lakh and increase in basic and diluted earnings per share by 0.62. The effect for the year ended 31 March, 2017 is decrease in revenue and profit by Rs. 76.37 lakh, other financial assets by Rs.163.06 lakh and a decrease in basic and diluted earnings per share by 0.06. The effect at the beginning of the earliest period presented in this financial statement is increase in Retained earnings and other financial assets by Rs.239.44 lakh as at 01 April, 2016.
Figures for the previous year have been re-grouped/re-arranged wherever necessary to correspond to those of the current year. Amounts and other disclosures for the preceding year are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosures relating to the current year.
Note 15:
The financial statements were authorised for issue by the Board of Directors on 22 June, 2018.
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