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Notes to Accounts of Nesco Ltd.

Mar 31, 2017

Ind AS conversion

Background

Nesco Limited ("Nesco" or "the Company") was incorporated on April 15, 1946, under the Indian Companies Act VII of 1913. The Company is domiciled in India having registered office at Nesco Complex, Western Express Highway, Goregaon (East), Mumbai 400063 and listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

The Company is mainly engaged in the following.

1. Licensing premises in IT park building and providing related services.

2. Licensing premises in its exhibition and convention incubation centre and providing related services to the clients.

3. Manufacturing of machines and capital equipment.

4.- Basis of Preparation of Financial Statements:

5. Compliance with Ind AS

These financial statements have been prepared in compliance with Indian Accounting Standards (Ind-AS) notified under section 133 of the Companies Act 2013 (the Act), read together with The Companies (Indian Accounting Standards) Rules, 2015]

For all periods up to and including the year ended 31 March 2016, the Company has prepared its Financial Statements in accordance with Accounting Standards notified under the Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP). Detailed explanation of how the transition from Previous GAAP to Ind-AS has affected the Company''s Balance Sheet, financial performance and cash flows is given under Note 31.

These financial statements have been prepared and presented under the historical cost convention, on the accrual basis of the accounting except for certain financial assets and financial liabilities that are measured at fair values at the end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been applied consistently over all the periods presented in these financial statements.

6. Current / Non-Current Classification

Any asset or liability is classified as current if it satisfies any of the following conditions:-

7. The asset / liability is expected to be realized / settled in the Company''s normal operating cycle;

8. The asset is intended for sale or consumption;

9. The asset/liability is held primarily for the purpose of trading;

10. The asset/liability is expected to be realized / settled within twelve months after the reporting period;

11. The asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the repotting cycle;

12. In the case of a liability, the Company does not have an unconditional right to defer settlement of a liability for at least twelve months after the reporting cycle;

All other assets and liabilities are classified as non-current.

For the purpose of current/non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as twelve months. This is based on the nature of services and the time between the acquisition of assets or inventories for processing their realization in cash and cash equivalents.

13. Functional and Presentation Currency

The Financial Statements are presented in Indian rupees which is the functional currency for the Company. Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss. Foreign exchange gains and losses are presented in the statement of profit and loss on a net basis.

14. Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of schedule III, unless otherwise stated.

15. Use of Estimates

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 realized 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 recognized in the period in which the results are known / materialized and, if material, their effects are disclosed in the notes to the Financial Statements.

16:-First-time adoption of Ind AS:

The Company had prepared its financial statements up to the year ended 31 March 2016, in accordance with the Accounting Standards notified under Section 133 of Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (''Previous GAAP'').

The Standalone financial statements of the Company for the year ended 31 March 2017 have been prepared in accordance with Ind AS. For the purpose of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101 - ''First time adoption of Indian Accounting Standard'', with 01 April 2015 as transition date and IGAAP as previous GAAP.

The transition to Ind As has resulted in changes in the presentation of the Financial Statements, disclosures in notes thereto, accounting policies and principles. The accounting policies set out in Note 2 have been applied in preparing the standalone financial statements for the year 31 March 2017 and the comparative information. Exemptions on first time adoption of Ind AS availed in accordance with Ind AS 101 and an explanation of how the transition from previous GAAP to Ind AS has affected the Company''s Balance Sheet, Statement of Profit and Loss are given below.

17- Exemptions availed on first time adoption of Ind AS 101:

Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has accordingly applied following exemptions:

- The Company has elected to continue with the previous GAAP carrying value of its property, plant and equipment recognized as of 01 April 2015 measured as per previous GAAP and use that carrying value as its deemed cost as at the date of transition.

- The Company has elected to continue with the previous GAAP carrying value of its investment in Subsidiary as its deemed cost as at the date of transition.

- Designation of previously recognized financial instruments:

Under Ind AS 109 Financial Instruments, at initial recognition of financial asset, an entity may make an irrevocable election to present subsequent changes in fair value of investment in an equity instrument in other comprehensive income. Ind AS 101 allows such designation of previously recognized financial asset, as ''fair value through other comprehensive income'' on the basis of facts and circumstances that existed at the date of transition to Ind AS.

Accordingly, the Company has designated its investments in equity instruments at fair value through other comprehensive income on the basis of the facts and circumstances that existed at the date of transition to Ind AS.

18:- Reconciliations:

The following reconciliation provides the effect of transition to Ind AS from IGAAP in accordance with Ind AS 101 on First time Adoption of Indian Accounting Standards:

19. Balance sheet as at 01 April 2015 and 31 March 2016

20. Proft and Loss account for the year ended 31 March 2016

On the date of transition to Ind AS, the difference between the fair value of Non-current and Current investments as per Ind AS and their corresponding carrying as per financial statements prepared under previous GAAP, has resulted in net increase in carrying amount of Investments, which has been recognized in retained earnings (Equity). Deferred Tax liability has been recognized on fair value gain (net) on mutual funds valued through profit and loss (Refer note C.1 and E.1). Fair value gain on quoted equity instruments valued through OCI, classified under Noncurrent investments has been recognized in OCI, which has been recognized in retained earnings (Equity) (Refer note E.2).

As at 31 March 2016, the difference between the fair value of Non-current and Current investments as per Ind AS and their corresponding carrying as per financial statements prepared under previous GAAP, has resulted in increase in carrying amount of Investments. Fair value gain (net) on mutual funds valued through profit and loss has been recognized in the Statement of profit and loss under the head Other income. Deferred tax expense on such gain has been recognized in Statement of Profit and Loss (Refer note C.1 and E.1). Fair value loss on quoted equity instruments valued through OCI, classified under Non-current Investments has been recognized in OCI (Refer note E.2).

21. Interest Free Security deposits classified under Other Financial Liabilities (Non - Current) and Rentals received in advance classified under Other non-current liabilities:

The Company obtains interest free security deposits from its IT Park clients, which are repayable at the end of lease period. These leases are non-cancellable in nature. These security deposits were recognized at their contracted amount under previous GAAP. Ind AS requires such security deposits, being financial instruments, to be valued at an amortized cost. In view of this, following Ind AS adjustments have been carried out.

22. Deferred Tax Liabilities classified under Non-current Liabilities:

In the Financial statements prepared under previous GAAP, deferred tax was accounted as per the income statement approach which required creation of deferred tax asset / liability on timing differences between taxable profit and accounting profit. Under Ind AS, deferred tax is accounted as per Balance Sheet approach, which requires creation of deferred tax asset / liability on temporary differences between the carrying amount of Assets in Balance sheet and its corresponding tax base.

The application of Ind AS has resulted in recognition of deferred tax on new temporary difference, which was not required to be recognized under previous GAAP. In addition, transitional Ind AS adjustments have also led to temporary differences and creation of deferred tax thereon (Refer C.1. C.2, C.3 and C.4).

23. Accounting of Dividend:

Under Indian GAAP, proposed dividend including dividend distribution tax (DDT), are recognized as liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognized as liability in the period in which it is declared and approved. Accordingly, under Ind AS, final dividend of year 201415, amounting to Rs. 915.98 lakhs and Tax on dividend amounting to Rs. 155.67 lakhs, totaling to Rs. 1071.65 lakhs is accounted in year 2015-16, in which it is declared.

24. Re-measurement benefit of Defined Benefit Plans:

In financial statements prepared under previous GAAP, re-measurement benefit of defined Plans (Gratuity), arising primarily due to change in actuarial assumption was recognized as employee benefit expense in the Statement of Profit and Loss. Under Ind AS, such re-measurement benefits relating to defined benefit plans is recognized in OCI as per the requirements of Ind AS 19 - Employee Benefits. Consequently, the related tax effect of the same has also been recognized in OCI (Refer note C.4 and E.7).

25. Excise Duty:

Excise duty on account of sale of goods has been included in Revenue, being liability of manufacturer which forms part of cost of production, irrespective of whether goods are sold or not.

26: There are no major Ind AS adjustments in Cash flow statement

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

Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

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

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

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

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of 31 March 2017, 31 March 2016 and 31 March 2015

27. Financial Risk Management:

Financial Risk Factors:

The Company''s activities are exposed to Market risk, credit risk and liquidity risk. The Company has set up Risk Management Committee in order to minimise any adverse effects of the risk exposure on the financial performance of the Company.

Market Risk:

Market risk comprises of three types of risk: Currency Risk, Interest rate Risk and Other Price Risk. Other Price risk is the risk that fair value or future cash flows of financial instrument will fluctuate because of change in market prices.

The Company invests in units of mutual funds including Fixed Maturity Plans, various debt Funds and Equity funds, and hence exposed to Other Price risk. Company''s Treasury dept. manages investments portfolio diversification in order to minimize risk and ongoing monitoring of market prices of investments.

Credit Risk:

Credit risk refers to the risk of default on its obligation by the counterparty resulting in financial loss. Trade receivables are typically unsecured and are derived from customers from three operations NEsco IT Park lease, Bombay Exhibition Centre (BEC) revenue and sale of Industrial Capital Goods.

The maximum exposure to credit risk on account of trade receivables, at the reporting date is Rs.1,111.76 Lakhs and Rs.1,438.11 Lakhs as on 31 March 2017 and 31 March 2016 respectively.

The Company minimizes credit risk relating to IT Park lease and BEC business as follows:

- The Company obtains security deposits from IT Park lessees and entitled to terminate lease agreement in case lessee makes defaults in payment of lease for a period of two consecutive months.

- BEC customers are required to pay advance and place refundable security deposit with the Company.

Whereas, in case of trade receivables from Industrial Capital Goods division for sale of machineries, credit risk is managed through credit approvals, establishing credit limits and continuously monitored by creditworthiness of customers to whom, credit terms are granted in normal course of business.

Credit risk of financial assets other than Trade receivables:

- Investments in mutual fund schemes are marked to market on ongoing basis, which is major part of total Non-current and current investments.

- Long term loans and advances include deposits with local authorities, electricity Board, electricity companies etc.

- Cash and Cash equivalents are balances with Public and Private Banks.

- Other current assets include deposits with more than 12 months maturities with Public and Private Banks and Earnest Money deposits with Govt. customer.

Liquidity Risk:

The Company''s principal sources of liquidity are cash and cash equivalents, Balances and cash flows that are generated from business. The Company does not have any borrowings.

The Company had working capital of Rs.5,754.08 Lakhs and Rs.11,209.99 Lakhs, as on 31 March 2017 and 31 March 2016 respectively. The working capital includes cash and cash equivalents of Rs.363.58 Lakhs and Rs.471.67 Lakhs as on 31 March 2017 and 31 March 2016 respectively.

28. Contingent Liabilities and Commitments

29. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.. 28,661.67 Lakhs (previous year - Rs.21,964.94 Lakhs) against which an advance of Rs. 4,987.52 Lakhs (previous year -Rs. 4472.00 Lakhs) has been paid.

30. Claims against the Company contested at various courts amounting to Rs. 1,445.24 lakhs (previous year Rs. 1,631.48 lakhs) against which the Company has provided Rs. 1,081.36 lakhs (previous year Rs. 1,245.03 lakhs) as ascertained by management and as advised by advocates and counsels.

31. Income-tax demand disputed by the Company Rs. 213.26 lakhs (previous year Rs. 148.15 lakhs)

d. Counter guarantees given by the company to banks in respect of:

- Indian Bank Guarantees given by bank on Company''s behalf Rs. 639.99 Lakhs (Previous year - Rs. 545.57 Lakhs

- Foreign Bank Guarantees given by bank on Company''s behalf US $2,387 (Previous year - US $44,271)

35) The Company is in process of identifying enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amount payable to such micro, small and medium enterprises as on 31 March 2017 has not been given in the financial statements. However, in the opinion of the management, the impact of interest if any, that may be payable in accordance with the provisions of the act is not expected to be material.

32. Leases: Pursuant to Ind AS 17 - Leases following information is disclosed:

Company as Lessor:

The Company has entered into operating leases on its following Property, Plant and Equipment:

33. It has given its land located at Byculla (Mumbai) on long term lease, without transferring risks and rewards incidental to legal ownership. It is classified as operating lease as per para 10 of Ind AS 17.

34. It has given its premises at IT Park on operating leases. These leases have terms up-to 5 years. Some of the Lease arrangements have price escalation clauses.

Company as Lessee:

35. It has taken its factory land at Karamsad, Gujarat, under non-cancellable operating lease. Lease is for three years starting from 9 May 2015. Lease payments recognized as an expense in the year 2016-17 is Rs.20 Lakhs (Previous Year Rs.20 Lakhs).

36. It has taken its corporate office at Mahalaxmi, Mumbai, under non-cancellable operating lease. Lease is for three years starting from 1 January 2016 to 31 December 2018. Lease payments recognized as an expense in the year 2016-17 is Rs.18 Lakhs (Previous Year Rs.4.50 Lakhs).


Mar 31, 2016

1. Terms / Rights Attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs, 10/- per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the board of directors is subject to the approval of shareholders in the ensuing annual general meeting.

The Board of Directors has declared an interim dividend of Rs, 8.50 per equity share at its meeting held on 17.03.2016, Rs, 6.50 per equity share was paid as final dividend for the previous year. The interim dividend appropriation for the year ended 31.03.2016 amounts to Rs, 1,197.83 lakhs and corporate dividend tax of Rs, 243.85 lakhs (previous year Rs, 915.98 lakhs and corporate dividend tax of Rs, 155.67 lakhs)

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shares holders.

2. The Company is in process of identifying enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amount payable to such micro, small and medium enterprises as on 31st March, 2016 has not been given in the financial statements. However, in the opinion of the management, the impact of interest if any, that may be payable in accordance with the provisions of the act is not expected to be material.

3. Contingent Liabilities and Commitments

a. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs, 21,264.94 Lakhs (previous year - Rs, 170.11 lakhs) against which an advance of Rs, 4,472.00 lakhs (previous year – Rs, 77.02 lakhs) has been paid.

b. Claims against the Company contested at various courts amounting to Rs, 1,631.48 lakhs (previous year Rs, 1,631.48 lakhs) against which the Company has provided Rs, 1,245.03 lakhs (previous year Rs, 1,224.12 lakhs) as ascertained by management and as advised by advocates and counsels.

c. Income-tax demand disputed by the Company Rs, 148.15 lakhs (previous year Rs, 93.34 lakhs)

d. Value Added Tax demand disputed by the Company Rs, 33.27 lakhs for F.Y.2008-2009.

e. Counter guarantees given by the company to banks in respect of:

i. Indian Bank Guarantees given by bank on Company''s behalf Rs, 545.57 lakhs (previous year – Rs, 375.50 lakhs)

ii. Foreign Bank Guarantees given by bank on Company''s behalf US $ 44,271.00 (previous year – US $3,400.00).

4. Company has contributed Rs, 260.34 lakhs (previous year Rs, 218.29 lakhs) towards CSR activities prescribed under Schedule VII of the Companies Act, 2013.

5. Figures of the previous year have been re-arranged and re-grouped wherever necessary to confirm to the classification adopted for the current year.


Mar 31, 2013

1 Related party disclosures:

(a) List of related parties and relationships Associate

(i) NSE Housing and Investments Pvt. Ltd.

(ii) Chandler & Price (India) Pvt. Ltd.

(iii) JVP Industrial Training Institute

(iv) J V Patel Charitable Trust

(v) J V Patel & Co.

(vi) K S Patel Finance & Investments Pvt. Ltd.

Key management personnel (i) Mr. Sumant J. Patel

(ii) Mrs. Sudha S. Patel

(iii) Mr. Krishna S. Patel

2 The company is in process of identifying enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amount payable to such micro, small and medium enterprises as on 31s1 March, 2013 has not been given in the financial statements. However, in the opinion of the management, the impact of interest if any, that may be payable in accordance with the provisions of the act is not expected to be material.

3 Contingent Liabilities and Commitments

- Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 10,328,791/- (previous year - Rs. 147,131,198/-) againstwhich an advance of Rs. 7,200,352/- (Previous year Rs. Nil) has been paid.

- Claims against the company contested at various courts amounting to Rs. 1,631.48 lakhs (previous year Rs. 1,631.48 lakhs) against which the company has provided Rs. 1,271.08 lakhs (previous year Rs. 1,271.08 lakhs) as ascertained by management and as advised by advocates and counsels.

- Income-tax demand disputed by the company Rs. 152.82 lacs

- Counter guarantees given by the company to banks in respect of:

i. Indian Bank Guarantees given by bank on company''s behalf Rs. 38,766,338/- (Previous year Rs. 42,031,090/-)

ii. Foreign Bank Guarantees given by bank on company''s behalf US $3,400.00 (Previous year US $3,400.00).

4 Income tax assessments are completed up to the assessment year 2010-2011. The company does not expect any additional liability for the pending assessments.

5 Provision for income tax is made after considering exemptions and deductions available under the Income Tax Act, 1961.

6 Sales tax assessments are completed for Maharashtra up to the financial year 2004-2005, and for Gujarat up to the financial year 2009-2010. The company does not expect any additional liability for the pending assessments.

7 Particulars in respect of Foreign currency transactions:

8 Figures of the previous year have been re-arranged and re-grouped wherever necessary to confirm to the classification adopted for the current year.


Mar 31, 2012

* Loans and advances to employees and related parties include amounts due from Officers of the Company Rs10.74 (previous year Rs13.08) and due from NSE Housing & Investment Pvt Ltd in which some of the Directors are interested as Directors Rs 0.49 (previous year Rs0.49)

# Includes advance to sundry creditors of Rs 119.35 Lacs and advance recoverable in cash or kind or value to be received of Rs322.43 Lacs

30. The company is in process of identifying enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amount payable to such micro, small and medium enterprises as on 31st March, 2012 has not been given in the financial statements. However, in the opinion of the management, the impact of interest if any, that may be payable in accordance with the provisions of the act is not expected to be material.

1. Contingent Liabilities and Commitments

- Estimated amount of contracts remaining to be executed on capital account and not provided for Rs 147,131,198/- (previous year - Rs 892,500,000/-) against which an advance of Rs Nil/- (Previous year- Rs 576,406,048/-) has been paid.

- Claims against the company contested at various courts amounting to Rs 1,631.48 lacs (previous year Rs 1,764.19 lacs) against which the company has made total provision of Rs 1,271.08 lacs (previous year Rs 1,271.08 lacs) as per management's estimation of expected liability as advised by legal opinions.

- Contingent liabilities not provided for in respect of Counter guarantees given by the company to banks in respect of:

i. Indian Bank Guarantees given by bank on company's behalf Rs 42,031,090/- (Previous year - Rs 40,155,309/-)

ii. Foreign Bank Guarantees given by bank on company's behalf US $3,400.00 (Previous year - US $23,800.00)

iii. Foreign Letter of Credit given by bank on company's behalf US $Nil (Previous year US $364,559.00)

2. The Revised Schedule VI has become effective from 01st April 2011. In view of this figures of the previous year have been re-arranged and re-grouped wherever necessary to confirm to the classification adopted for the current year.

3. Significant accounting policies and practices adopted by the Company are disclosed in the statement annexed to these financial statements as Annexure 1.


Mar 31, 2011

1. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.892,500,000/- (previous year Rs. 602,715,387/-) against which an advance of Rs. 576,406,048/- (previous year Rs. 442,384,347/-) has been paid.

2. Contingent liabilities not provided for in respect of (a) counter guarantees given by the company to banks in respect of Indian bank guarantees given by them on companys behalf Rs. 40,155,309/- (previous yearRs. 44,214,879/-) (b) Foreign bank guarantees given by bank on companys behalf US $23,800.00 (previous year Rs. Nil) (c) Foreign Letter of Credit given by bank on companys behalf US $364,559.00 (previous year Rs. Nil) (d) Property tax in dispute Rs. Nil (previous year Rs. 51,350,675/-).

3. Income tax assessment is completed up to the assessment year 2008-2009. The company does not expect any additional liability for the pending assessments.

4. Sales tax assessment is completed for Maharashtra up to the financial year 2004-2005, and for Gujarat up to the financial year 2006-2007. The company does not expect any additional liability for the pending assessments.

5. (a) According to the information and explanations given by the management there are no dues to SSI units which are outstanding for more than 30 days as on 31s1 March, 2011 including the interest if any, thereon.

(b) The company is in process of identifying enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amount payable to such micro, small and medium enterprises as on 31st March, 2011 has not been given in the financial statements. However, in the opinion of the management, the impact of interest if any, that may be payable in accordance with the provisions of the act is not expected to be material.

6. Provision for income tax is made after considering exemptions and deductions available under the Income Tax Act, 1961, as advised by tax consultants.

8. Pursuant to the Accounting Standard 22 Accounting for taxes on income issued by the Institute of Chartered Accountants of India, which is mandatory with effect from 1st April 2002, The deferred tax asset/liability has been reassessed in view of the various appeals, decisions and consequential effect on carry forward losses as well as revision in tax rate applicable. Accordingly net liability as on 31.03.2011 is worked out to Rs. 8,582,095/- as computed below. Since the company has a deferred tax liability balance of Rs. 9,719,329/- as on 31.03.2010 in the balance sheet, Rs. 1,137,234/- has been credited in the profit & loss account.

9. Figures of the previous year have been re-arranged and re-grouped wherever necessary to confirm to the classification adopted for the current year.

10. Figures in brackets related to previous year.


Mar 31, 2010

1. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 602,715,387/- (previous year Rs. 889,045,770/-) against which an advance of Rs. 442,384,347/- (previous year Rs. 175,045,770/-) has been paid.

2. Contingent liabilities not provided for in respect of (a) counter guarantees given by the company to banks in respect of Indian bank guarantees given by them on companys behalf Rs. 44,214,879/- (previous year Rs. 27,562,157/-) (b) Foreign bank guarantees given by bank on companys behalf Rs. Nil (previous year Rs. 337,544/- (US$ 6,625/-) (c) Property tax in dispute Rs. 51,350,675/- (previous year Rs. 145,992,315/-).

3. Income tax assessment is completed up to the assessment year 2007-2008. The company does not expect any additional liability for the pending assessments.

4. Sales tax assessment is completed for Maharashtra up to the financial year 2004-2005, and for Gujarat up to the financial year 2006-2007. The company does not expect any additional liability for the pending assessments.

5. (a) According to the information and explanations given by the management there are no dues to SSI units which are outstanding for more than 30 days as on 31a March, 2010 including the interest if any, thereon.

(b) The company is in process of identifying enterprises covered under the micro, small and medium enterprises development act, 2006. Accordingly, the disclosure in respect of the amount payable to such micro, small and medium enterprises as on 31s March, 2010 has not been given in the financial statements. However, in the opinion of the management, the impact of interest if any, that may be payable in accordance with the provisions of the act is not expected to be material.

6. Claims against the company contested at various courts amounting to Rs. 1,764.19 lakhs (previous year Rs. 1,764.19 lakhs) against which the company has made total provision of Rs. 1,271.08 lakhs (previous year Rs. 1,271.08 lakhs) as per managements estimation of expected liability as advised by legal opinions.

7. Provision for income tax is made after considering exemptions and deductions available under the income tax act, 1961, as advised by tax consultants.

9. Pursuant to the Accounting Standard 22 Accounting for taxes on income issued by the Institute of Chartered Accountants of India, which is mandatory with effect from 1st April 2002, The deferred tax asset/liability has been reassessed in view of the various appeals, decisions and consequential effect on carry forward losses as well as revision in tax rate applicable. Accordingly net liability as on 31.03.2010 is worked out to Rs. 9,719,329/- as computed below. Since the company has a deferred tax liability balance of Rs. 7,353,282/- as on 31.03.2009 in the balance sheet, Rs. 2,366,047/- has been credited in the profit & loss account.

10. Figures of the previous year have been re-arranged and re-grouped wherever necessary to confirm to the classification adopted for the current year.

11. Figures in brackets related to previous year.

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