Mar 31, 2018
1. Corporate information
Punj Lloyd Limited (the Company) is a public limited company domiciled in India. Its equity shares are listed on two recognized stock exchanges in India. The principal place of business of the Company is located at Gurugram, India. The Company is primarily engaged in the business of engineering, procurement and construction in the oil, gas and infrastructure sectors. The Company caters to both domestic and international markets.
These financial statements for the year ended March 31, 2018 were authorized for issue in accordance with a resolution of the directors on May 30, 2018.
1. The Company has elected to adjust exchange differences arising on translation/settlement of long-term foreign currency monetary items, pertaining to acquisition of a depreciable asset, to the cost of such asset. Accordingly, during the current year, foreign exchange loss of 0.45 (Previous year: foreign exchange gain of 1.98) has been adjusted in the gross block of plant and equipment.
2. Gross block of vehicles includes vehicles of cost Nil (Previous year: 1.25) taken on finance lease. Accumulated depreciation there on is Nil (Previous year: 1.25).
3. Gross block of plant and equipment includes equipment of cost 68.34 (Previous year: 105.35) taken on finance lease. Accumulated depreciation thereon is 68.34 (Previous year: 105.35).
4. For assets pledged as security, refer notes 12(a) and 12(b) and for capital commitments refer note 28.
The Company has business losses and unabsorbed depreciation which are allowed to be carried forward and set off against future taxable income under Income Tax Act, 1961. Owing to uncertainties in earlier years regarding future profits, the Company had refrained from recognising deferred tax assets on such carried forward losses and unabsorbed depreciation. However, the Company has undertaken several measures to improve operational efficiency which have resulted in increased revenues and higher margins. Further, as stated in Note 2 (a) (iii), the management is confident of a favourable outcome of its restructuring proposal submitted with its lenders. Accordingly, based on projected future taxable income and results of operations, the management believes that the Company will more likely than not have sufficient taxable income in future allowing it to realize the carried forward losses and unabsorbed depreciation. In the view of the above, the Company has recognized deferred tax asset, on conservative basis, during the year.
(b) Terms/rights attached to equity shares
The Company has only one class of equity shares having par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(d) Shares reserved for issue under options
For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company, please refer note 24.
(e) Over the period of five years immediately preceding March 31, 2018, neither any bonus shares were issued nor any shares were allotted for consideration other than cash. Further, no shares were bought back during the said period.
2. Post-employment benefit plans
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. All permanent 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 employee''s last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contribution to recognized funds (in form of insurance policies) in India.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which is the risk of change in the interest rates due to market volatility. A decrease therein will increase plan liabilities. Apart from the interest rate, the other significant risks associated with defined benefit plans are inflation risk, economic environment and regulatory changes.
The Company manages its investment positions to achieve long-term investments that are in line with the obligations under the employee benefit plans. The designated trust actively monitors how the duration and expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed its processes to manage its risks from previous periods.
3. Segment information
Based on the guiding principles given in Ind AS 108 on âOperating Segments'', the Company''s business activity falls within a single operating segment viz. Engineering, procurement and construction services. Accordingly the segment disclosure requirements of Ind AS 108 are not applicable.
4. Interest in other entities
(a) Subsidiaries
The Company''s interest and share in subsidiaries as at March 31, 2018 are set out below. Unless otherwise stated, the proportion of ownership interests held equals the voting rights held by the Company, directly or indirectly, and the country of incorporation or registration is also their principal place of business.
(c) Interest in associates and joint ventures
The Company''s interest and share in associates and joint ventures as at March 31, 2018 are set out below. Unless otherwise stated, the proportion of ownership interests held equals the voting rights held by the Company, directly or indirectly, and the country of incorporation or registration is also their principal place of business.
(b) Non-cancellable operating leases
The Company leases various offices and guest houses under non-cancellable operating leases expiring, generally, within eleven months to three years. There are no contingent rents in the lease agreements. Upon renewal, the terms of the leases are renegotiated. There is no escalation clause in the lease agreements. There are no significant restrictions imposed by lease arrangements. The amount of total future minimum lease payments under non-cancellable operating leases as at March 31, 2018 is Nil (Previous year: Nil). Rental expenses relating to operating lease for the year ended March 31, 2018 is 31.69 (Previous year: 26.83).
(c) Finance lease obligations
The Company has finance leases and hire purchase contracts for certain project equipments, vehicles and building, the cost of which is included in the gross block of plant and equipment, vehicles and investment property respectively under tangible assets and investment properties. The lease term is for one to ninety nine years. There is no escalation clause in the lease agreements. There are no significant restrictions imposed by lease arrangements.
# excludes possible liquidated damages which can be levied by customers for delay in execution of projects. The management, based on consultation with various experts, believes that there exist strong reasons why no liquidated damages shall be levied by these customers. Although, there can be no assurances, the Company believes, based on information currently available, that the ultimate resolution of these proceedings is not likely to have an adverse effect on the results of operations, financial position or liquidity of the Company.
*The management believes that the claims made are untenable and is contesting them. As of the reporting date, the management is unable to determine the ultimate outcome of the above matters. However, based on favorable decisions/outcomes in similar cases earlier and based on legal opinions /consultations with solicitors, the management believes that there are good chances of success in above mentioned cases and hence, no provision there against is necessary.
f) In respect of the direct tax matters which are subject to legal proceedings in the ordinary course of business, the management, based on the expert opinions, is confident that these matters, when ultimately concluded, will not have a material impact on the result of operations or the financial position of the Company.
g) The Company, directly or indirectly through its subsidiaries, is severally or jointly involved in certain legal cases with its customers / vendors in the ordinary course of business. The management believes that due to the nature of these disputes and in view of numerous uncertainties and variables associated with certain assumptions and judgments, and the effects of changes in the regulatory and legal environment, both the precision and reliability of the resulting estimates of the related contingencies are subject to substantial changes. The Company regularly monitors its estimated exposure to such loss contingencies and, as additional information becomes known, changes its estimates accordingly. In view of aforesaid reasons, as of the reporting date, it is unable to determine the ultimate outcome of these matters.
5. The Company, during earlier years, accrued claims on Heera Redevelopment Project with Oil and Natural Gas Corporation Limited, based upon management''s assessment of cost over-run arising due to design changes and consequent changes in the scope of work on the said project since it was of the view that the delay in execution of the project was attributable to the customer. After all the discussions in various forums to resolve the matter mutually, the Company, with a view to resolve the matter in finality, expeditiously and with legal enforceability, re-commenced the arbitration proceedings. The management is confident of satisfactory settlement of the dispute.
6. The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under the law/ Indian Accounting Standards for the material foreseeable losses on such long term contracts (including derivative contracts, if any) has been made in the books of accounts.
7. The Company has defaulted in repayment of dues (including interest) amounting to 1,274.36 as on March 31, 2018 (March 31, 2017: 717.80).
(b) Fair value hierarchy
Financial instruments are classified into three levels in order to provide an indication about the reliability of the inputs used in determining the fair values.
The categories used are as follows:
Level 1: Where fair value is based on quoted prices from active market.
Level 2: Where fair value is based on significant direct or indirect observable market inputs.
Level 3: Where fair value is based on one or more significant input that is not based on observable market data.
(c) Fair value of financial instruments measured at amortized cost
The carrying amounts of the financial instruments measured at amortized cost, disclosed in note (a) above, approximates to their fair values. Accordingly, the fair values of such instruments have not been disclosed separately.
(d) Valuation techniques and processes used to determine fair value
Fair value of quoted investments is based on the quotation as at the reporting date. For unquoted investments, fair value is determined based on the present values, calculated using internationally accepted valuation principles, by independent valuers.
(e) Valuation inputs and relationships to fair value
Significant unobservable inputs used in Level 3 fair value measurement.
8. Financial risk management objective and policies
The Company''s principal financial instruments are as follows:
Financial assets: Investments, Cash and cash equivalents, Loans, Trade and other receivables,
Financial liabilities: Borrowings, Trade and other payables.
The main purpose of these financial instruments is to regulate, finance and support the Company''s operations.
The Company is exposed to various financial risks such as credit, liquidity and market risk. An experienced and qualified team ensures that all financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives.
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 and other receivables) and from its financing activities, including deposits with banks and other financial instruments.
A.1. Trade receivables
The Company executes various projects for public sector/ government undertaking and others at various locations, including overseas. Trade receivables are contractual amounts due from these customers for works certified. Trade receivables are noninterest bearing and are generally on 30 to 45 days credit, depending upon contractual terms. The management evaluates the outstanding receivables on a periodic basis and provides for the impairment loss based on the established ECL policy, as described below.
The Company follows a âsimplified approach'' (i.e. based on lifetime ECL) for recognition of impairment loss allowance on its trade receivables. For the purpose of measuring lifetime ECL allowance for trade receivables, the Company estimates irrecoverable amounts based on the ageing of the receivable balances, clubbed with, historical experience with the customer and/or the industry in which the customer operates and assessment of litigation, if applicable. Receivables are written off when they are no more deemed collectible.
. Though the Company executes projects with repeat customers but there is no significant customer level concentration of the credit risk as at any of the reported periods. Further, there is no concentrated risk based on the location where the Company operates.
A.2. Other financial assets
Loans and receivable from related parties are periodically reviewed by the management in conjunction with the re-measured fair values of the Company''s investments in those parties. Where the carrying amount of any receivable exceeds the re-measured fair value of investment, an impairment loss, to that extent, is provided for in the financial statements.
Cash and cash equivalents are managed by the Company''s treasury department. Concentration risk is constantly monitored to mitigate financial loss.
The Company''s maximum exposure to credit risk for the components of the financial assets as at March 31, 2018, March 31, 2017 is to the extent of their respective carrying amounts as disclosed in note 7.
B. Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company''s objective is to maintain optimum levels of liquidity to meet its cash and collateral requirements, both immediate and long-term. The finance needs are monitored and managed by the Company''s treasury department, in consultation with the project teams and management. The Company takes support from its secured lenders to finance and support the Company''s operations.
The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans (term and working capital loans), including debentures. The working capital loans are generally revolving in nature and linked with the current assets of the projects. Of the total term debts of 2,019.42, approximately 76% is payable in less than one year at March 31, 2018 (March 31, 2017: 53% of 2,238.67) based on the carrying value of such borrowings reflected in the financial statements. Certain delays and defaults were noticed in scheduled repayment during the reported financial years. However, the Company is taking necessary corrective actions to rectify the defaults and is also in talks with its existing lender to carve out an overall financial restructuring. Such restructuring, when executed, would give the sufficient liquidity to chart out the business turnaround and would also provide an extended period to repay its current debt portfolio, including the over-due amounts.
Other financial liabilities, like trade and other payables, matures predominantly within one year.
C. Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk, such as equity price risk.
The sensitivity analysis as shown below relates to the position as at March 31, 2018 and March 31, 2017. The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2018 and March 31, 2017.
C.1. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s main interest rate risk arises from borrowings with variable rates, which exposes the Company to cash flow interest rate risk. As at March 31, 2018 and March 31, 2017, the Company''s borrowings at variable rate were mainly denominated in INR and USD.
The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying mount nor the future cash flows will fluctuate because of a change in market interest rates.
C.1.2. Interest rate sensitivity
With all other variables held constant, increase of 50 basis points (bps) will result in a loss of 29.40 before tax (Previous year: 28.22) and a decrease of 50 bps will result in a gain of 29.40 before tax (Previous year: 28.22).
C.2. Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s un-hedged foreign currency exposure of its Indian operations and Company''s net investment in its foreign operations.
C.3. Other price risk
Company''s exposure to equity securities price risk arises from quoted investments held and classified in the balance sheet as fair value through OCI. Company''s exposure is insignificant, since Company''s investment in such securities is immaterial.
9. Capital management
Risk management:
For the purpose of the capital management, capital includes the issued equity capital, securities premium and all other equity reserves attributable to the equity holders. The Company''s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.
Loan covenants:
Under the terms of some borrowing facilities, the Company is required to comply with the certain financial covenants. The Company aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants could permit the bank to immediately call loans and borrowings. There have been some breaches in the financial covenants during the reporting periods; however the management, in collaboration with its bankers, is taking necessary corrective measures to rectify the breaches.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2018 and March 31, 2017.
10. Others
a) Details of loan given, investments made and guarantee given covered u/s 186(4) of the Companies Act 2013 Act have been disclosed under the respective heads of âRelated party transactions'' given in note 27.
b) Contract revenues include Rs. 289.25 crores (Previous year Rs. 160.49) representing the retention money which will be received by the Company after the satisfactory performance of the respective projects. The period of release of retention money may vary from six months to eighteen months depending upon the terms and conditions of the projects.
c) The amount to be incurred towards Corporate Social Responsibility (CSR) for the financial year ended March 31, 2018, as prescribed under section 135 of the Companies Act 2013 Act, is Nil.
e) The Company has international and domestic transaction with âAssociated Enterprises'' which are subject to Transfer Pricing regulations in India. The Management of the Company is of the opinion that such transactions with Associated Enterprises are at arm''s length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the financial statements, particularly on account of tax expense and that of provision of taxation.
f) Capitalization of expenditure
During the current and previous year ended on March 31, 2018 and March 31, 2017, the Company has not capitalized any expenditure of revenue nature to the cost of tangible asset/ intangible assets under development.
g) During the current year, the Singapore High Court (âthe Court'') heard upon the application filed by Judicial Management (JM) of Punj Lloyd Pte. Limited and Sembawang Engineers and Constructors Pte. Limited, subsidiaries of the Company. Accordingly the Court ordered for the liquidation of Punj Lloyd Pte. Limited and Sembawang Engineers and Constructors Pte. Limited vide its order dated August 07, 2017. Pursuant to appointment of Judicial Managers by the Court w.e.f June 27, 2016, the Company had lost control over these subsidiaries and consequently necessary adjustments were made in the year ended March 31, 2017.
h) Amounts in the financial statements are presented in INR crores, unless otherwise stated. Certain amounts that are required to be disclosed and do not appear due to rounding off are expressed as 0.00. One crore equals 10 millions.
i) Previous year figures have been regrouped/reclassified, where necessary, to conform to this year''s classification.
Mar 31, 2016
(b) Terms/rights attached to equity shares
The Company has only one class of equity shares having par value of '' 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
As per records of the Company, including its register of shareholders/members, the above shareholding represents both legal and beneficial ownerships of shares.
(d) Shares reserved for issue under options
For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company, please refer note 25.
(e) Over the period of five years immediately preceding March 31, 2016, neither any bonus shares were issued nor any shares were allotted for consideration other than cash. Further, no shares were bought back during the staid period.
''represents adjustment made pursuant to enactment of Schedule II to the 2013 Act.
1. Gross block of land includes 2.10 (Previous year: 2.10) on account of revaluation carried out in earlier years. The said revaluation was carried out during the year ended March 31, 2002 by an external agency using âprice indices released by the Economic Advisor''s Office, Ministry of Industry/Verbal Quotation/Comparison/estimation or any other method considered prudent in specific casesâ.
2. In compliance with the notification dated March 31, 2009 (as amended) issued by MCA, the Company has exercised the option available under paragraph 46 to the Accounting Standards 11 - The effect of changes in foreign exchange rates. Accordingly, during the current year, the foreign exchange loss of 4.41 (Previous year: 2.46) has been added to gross block of plant and equipment.
3. Gross block of land includes leasehold land of cost 6.41 (Previous year: 6.41). Accumulated depreciation thereon is 1.36 (Previous year: 1.14).
4. Gross block of vehicles includes vehicles of cost 1.25 (Previous year: 1.27) taken on finance lease. Accumulated depreciation there on is 1.14 (Previous year: 0.90).
5. Gross block of plant and equipment includes equipment of cost 110.11 (Previous year: 114.16) taken on finance lease. Accumulated depreciation thereon is 109.75 (Previous year: 75.90).
6. Gross block of buildings includes building of cost 98.76 (Previous year: 98.76) taken on finance lease. Accumulated depreciation thereon is 5.69 (Previous year: 4.04).
# Include unclaimed dividend of '' 0.22 crores (Previous year '' 0.25 crores)
* Fixed deposits pledged for ''0.30 crores (Previous year ''0.31 crores) against guarantees
** Margin money deposits with a carrying amount of '' 59.47 crores (Previous year '' 75.22 crores) are subject to first charge to secure the Company''s cash credit loans.
7. Gratuity and other post-employment benefit plans
The Company has a defined benefit gratuity plan. Under the plan, every employee who has completed at least five years of service gets a gratuity on separation at 15 days of last drawn salary for each completed year of service. The scheme is funded with insurance companies in the form of qualifying insurance policy.
The following tables summarize the components of net benefit expense recognized in the statement of profit and loss, the funded status and the amounts recognized in the balance sheet for the plan.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
The weighted average share price at the exercise date is not applicable since no options were exercised during the year. The weighted average remaining contractual life of the stock options outstanding as at March 31, 2016 is 5.85 years.
The weighted average fair value of stock options granted during the year was Rs, 15.72. The Black Scholes valuation model has been used for computing the weighted average fair value considering the following inputs:
For the purpose of valuation of the options granted under the aforesaid schemes up to the year ended March 31, 2016, the compensation cost, calculated as per the fair value method, is Nil.
7. Leases
Finance lease: company as a lessee
The Company has finance leases and hire purchase contracts for certain project equipments, vehicles and building, the cost of which is included in the gross block of plant and equipment, vehicles and buildings respectively under tangible assets. The lease term is for one to ninety nine years. There is no escalation clause in the lease agreements. There are no significant restrictions imposed by lease arrangements.
Operating lease: company as a lessee
The Company has entered into commercial leases for office premises. There are no contingent rents in the lease agreements. The lease term is for 1-3 years and is renewable at the mutual agreement of both the parties. There is no escalation clause in the lease agreements. There are no significant restrictions imposed by lease arrangements. The amount of total future minimum lease payments under non-cancellable operating leases as at March 31, 2016 is Nil (Previous year: Nil).
8. Interest in joint ventures:
The Company''s interest and share in joint ventures in the jointly controlled entities/operations are as follows:
* As per joint venture agreements, the scope and value of work of each partner has been clearly defined and accepted by the clients. The Company''s share in assets, liabilities, income and expenses are duly accounted for in the accounts of the Company in accordance with such division of work and therefore does not require separate disclosure. However, joint venture partners are jointly and severally liable to clients for any claims in these projects.
** These are un-incorporated joint venture, hence information on country of incorporation is not applicable.
@ Entities held for disposal in the near future (carried at net realizable value).
9. Segment Information Primary segment: Business segments -
The Company has identified the business segment as its primary reportable segment. The Company''s operating businesses are organized and managed separately according to the nature of products and services provided. The Company has identified Engineering, procurement and construction (EPC) services and Trading of goods as its two reportable segments. A description of the types of products and services provided by each reportable segment is as follows:
EPC segment includes providing of engineering, procurement and construction services in oil, gas and infrastructure sectors.
Trading of goods segment includes purchase and sale of steel, mainly outside India.
The following table presents segment revenue, results, assets and liabilities in accordance with AS 17 - Segment Reporting as on March 31, 2016 and March 31, 2015:
Secondary segment: Geographical segments* -
Although the Company''s major operating divisions are managed on a worldwide basis, they operate in two principal geographical areas of the world, in India, its home country, and the other countries.
The following table presents revenue from operations, unbilled revenue (work-in-progress) and trade receivables regarding geographical segments as at March 31, 2016 and March 31, 2015.
* All the major assets other than unbilled revenue (work-in-progress) and trade receivables are situated in India and hence, separate figures for assets/additions to assets have not been furnished.
10. Related Parties
Names of related parties where control exists irrespective of whether transactions have occurred or not:
Subsidiary Companies Punj Lloyd Upstream Limited
Spectra Punj Lloyd Limited Punj Lloyd Aviation Limited
Punj Lloyd Industries Limited Sembawang Infrastructure (India) Private Limited
Atna Investments Limited Indtech Global Systems Limited
PLN Construction Limited Shitul Overseas Placement and Logistics Limited
Punj Lloyd International Limited PLI Ventures Advisory Services Private Limited *
Punj Lloyd Kazakhstan, LLP Dayim Punj Lloyd Construction Contracting Company Limited
Punj Lloyd Pte. Limited Punj Lloyd Infrastructure Pte. Limited
PL Engineering Limited Punj Lloyd Building and Infrastructure Private Limited **
Punj Lloyd Infrastructure Limited
Step Down Subsidiary Companies
PT Punj Lloyd Indonesia Punj Lloyd Engineers and Constructors Zambia Limited
PT Sempec Indonesia Buffalo Hills Limited
Punj Lloyd Oil & Gas (Malaysia) Sdn. Bhd. Indtech Trading FZE
Punj Lloyd Sdn. Bhd. PLI Ventures Limited *
Punj Lloyd Engineers and Constructors Pte. Limited Punj Lloyd Aviation Pte. Limited
Christos Aviation Limited Sembawang Libya for General Contracting & Real Estate Investment
Joint Stock Company *
Punj Lloyd (B) Sdn. Bhd. * Contech Trading Pte. Limited
Punj Lloyd Kenya Limited Construction Technology (B) Sdn. Bhd. *
PL Global Developers Pte. Limited * Sembawang Mining (Kekal) Pte. Limited
Graystone Bay Limited * PT Indo Precast Utama *
Punj Lloyd Thailand (Co.) Limited PT Indo Unggul Wasturaya *
Punj Lloyd Delta Renewables Pte. Limited Sembawang (Tianjin) Construction Engineering Co. Limited
Punj Lloyd Delta Renewables Private Limited Sembawang Infrastructure (Mauritius) Limited *
Punj Lloyd Delta Renewables Bangladesh Limited Sembawang UAE Pte. Limited
Punj Lloyd Raksha Systems Private Limited Sembawang Consult Pte. Limited
Punj Lloyd Engineering Pte. Limited Sembawang (Malaysia) Sdn. Bhd.
Simon Carves Engineering Limited Jurubina Sembawang (M) Sdn. Bhd.
PL Delta Technologies Limited @ Tueri Aquila FZE
Punj Lloyd Solar Power Limited Sembawang Bahrain SPC *
Khagaria Purnea Highway Project Limited Sembawang Equity Capital Pte. Limited
Indraprastha Metropolitan Development Limited Sembawang of Singapore - Global Project Underwriters Pte. Limited *
PL Surya Urja Limited Sembawang of Singapore - Global Project Underwriters Limited *
PL Sunshine Limited Sembawang Hong Kong Limited
PL Solar Renewable Limited ** Sembawang (Tianjin) Investment Management Co. Limited
PL Surya Vidyut Limited ** PT Sembawang Indonesia
PL Sunrays Power Limited ** Reliance Contractors Private Limited
Sembawang Engineers and Constructors Pte. Limited Sembawang E&C Malaysia Sdn. Bhd.
Sembawang Development Pte. Limited
Joint Ventures
Thiruvananthpuram Road Development Company Limited @ Joint Venture of Whessoe Oil and Gas Limited and Punj Lloyd Limited
Ramprastha Punj Lloyd Developers Private Limited Punj Lloyd PT Sempec
Punj Lloyd Dynamic LLC Kumagai-Sembawang-Mitsui Joint Venture
AeroEuro Engineering India Private Limited Kumagai-SembCorp Joint Venture
PLE TCI Engineering Limited @ Kumagai-SembCorp Joint Venture (DTSS)
PLE TCI Engenharia Ltda Semb-Corp Daewoo Joint Venture
PT Kekal Adidaya Punj Lloyd Group Joint Venture
Sembawang Precast System LLC * Public Works Company Tripoli Punj Lloyd Joint Venture
Sembawang Caspi Engineers and Constructors LLP * Sembawang - Leader Joint Venture *
Associates
Air Works India (Engineering) Private Limited Reco Sin Han Pte. Limited *
* Entities either in the process of strike-of/liquidation or struck-off/ liquidated during the year.
** Entities incorporated / formed during the year.
@ Entities held for sale in the near future.
Key Manageral Personnel with whom transactions have taken place during the year:
Atul Punj - Chairman and Managing Director
Luv Chhabra* - Director (Corporate Affairs)
P. N. Krishnan* - Director - Finance
J. P. Chalasani* - Managing Director & Group CEO
*since resigned
Relatives of Key Managerial Personnel with whom transactions have taken place during the year:
Shiv Punj - Son of Chairman
Enterprises over which Key Managerial Personnel or their relatives exercise significant influence and with whom transactions have taken place during the year:
PT. Kanahya Lal Dayawanti Punj Charitable Society - Chairmanship of Father of Chairman
PTA Engineering and Manpower Services Private Limited - Shareholding of Chairman
PLE Hydraulics Private Limited - Shareholding of Chairman
Artcon Private Limited - Shareholding of Chairman
Manglam Equipment Private Limited - Shareholding of Chairman
Petro IT Limited - Shareholding of Brother of Chairman
11. Capital and other commitments
(a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance) is Rs,30.52 crores (Previous year Rs, 0.20 crores).
(b) For commitments relating to lease arrangements, please refer note 26.
# excludes possible liquidated damages which can be levied by customers for delay in execution of projects. The management, based on consultation with various experts, believes that there exist strong reasons why no liquidated damages shall be levied by these customers. Although, there can be no assurances, the Company believes, based on information currently available, that the ultimate resolution of these proceedings is not likely to have an adverse effect on the results of operations, financial position or liquidity of the Company.
* The management believes that the claims made are untenable and is contesting them. As of the reporting date, the management is unable to determine the ultimate outcome of the above matters. However, based on favorable decisions/outcomes in similar cases earlier and based on legal opinions /consultations with solicitors, the management believes that there are good chances of success in above mentioned cases and hence, no provision there against is necessary.
e) On March 17, 2010, the Company was subjected to a search and seizure operation under Section 132 and survey under Section 133A of the Income tax Act, 1961. During the search and seizure operation, statements of Company''s officials were recorded in which they were made to offer some unaccounted income of the Company for the financial year 2009-10. The Company believed that the above statements were made under undue mental pressure and physical exhaustion and therefore Company retracted the above statements subsequently. The Company filed fresh returns of income for Assessment years (AY) 2004-05 to 2009-10 in pursuance of the notices dated August 25, 2010 from the Income Tax Department (âthe Departmentâ). The Department completed the assessments for the AY 2004-05 to 2010-11 and created demands aggregating to '' 229.13 crores, by making some frivolous additions to the total income of the Company, which were adjusted against the income tax refunds of the said/subsequent years. The Company filed appeals against these additions on January 27, 2012 and June 12, 2013. On August 29, 2014, favorable orders were received from the CIT (Appeals) for the AY 2004-05 to 2006-07 for all the additions made except for the addition relating to permanent establishment, for which further appeal was filed by the Company to ITAT, Delhi dated October 31, 2014. Based on the expert opinion, the Company is hopeful that it will get relief in appeals pending before the CIT-(A) and/or Income Tax Appellate Tribunal. Hence, no adjustment is considered necessary for these matters.
f) The Company, directly or indirectly through its subsidiaries, is severally or jointly involved in certain legal cases with its customers / vendors in the ordinary course of business. The management believes that due to the nature of these disputes and in view of numerous uncertainties and variables associated with certain assumptions and judgments, and the effects of changes in the regulatory and legal environment, both the precision and reliability of the resulting estimates of the related contingencies are subject to substantial changes. The Company regularly monitors its estimated exposure to such loss contingencies and, as additional information becomes known, changes its estimates accordingly. In view of aforesaid reasons, as of the reporting date, it is unable to determine the ultimate outcome of these matters.
12. Derivative instruments and un-hedged foreign currency exposure
The Company, in addition to its Indian operations, operates outside India through its branches and an unincorporated joint venture established in United Arab Emirates (UAE), Oman, Qatar, Libya, Thailand, Bahrain, Kuwait and Saudi Arabia.
13. a) The Company, during earlier years, accrued claims amounting to Rs, 735.80 crores (Previous year Rs, 735.80 crores) on Heera
Redevelopment Project with Oil and Natural Gas Corporation Limited, based upon management''s assessment of cost over-run arising due to design changes and consequent changes in the scope of work on the said project since it was of the view that the delay in execution of the project was attributable to the customer. Due to the said reasons, certain differences and dispute arose between the parties and several rounds of discussions were held to explore the possibility of amicable resolution of the dispute mutually. The Company, with a view to resolve the matter in finality, expeditiously and with legal enforceability re-commenced the arbitration proceedings, which were kept in abeyance owing to proceedings by the Outside Expert Committee. The management is confident of satisfactory settlement of the dispute and recovery of the said amounts, accordingly no adjustments have been considered necessary in these financial statements.
b) During the year, in an effort to revive their operations, Punj Lloyd Pte Limited (PLPL) and Sembawang Engineers and Constructors Pte Limited (SEC), subsidiaries of the Company, filed separate applications before the Singapore High Court (âthe Courtâ) for seeking its approval to enter into Schemes of Arrangement with their respective creditors pursuant to the applicable provisions of the Singapore Companies Act. In the meetings called as directed by the Court, SEC''s scheme could not get the requisite majority and PLPL''s scheme was withdrawn.
Subsequently, as a next course of action available under the Singapore Companies Act, these subsidiaries have filed separate applications before the Court for placing them under the Judicial Management. The said applications were admitted by the court and are currently pending for hearing.
As at March 31, 2016, the Company has investments and receivables aggregating to Rs, 1,103.72 crores from these subsidiaries. The management believes that the above developments do not necessitate any adjustment against the aforesaid amounts, as it is confident of realizing these assets in excess of their book value. Hence, no adjustments have been considered necessary in these financial statements.
14. The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under the law/ Accounting Standards for the material foreseeable losses on such long term contracts (including derivative contracts, if any) has been made in the books of accounts.
15. The Company has defaulted in repayment of dues (including interest) amounting to Rs, 563.44 crores (Previous year Rs, 92.55 croes), as on March 31, 2016.
16. Additional information required to be disclosed under paragraph 5 (viii) of general instructions for preparation of Statement of Profit and Loss as per Schedule III to the 2013 Act.
a) Projects materials consumed
These comprise miscellaneous items meant for execution of projects. Since these items are of different nature and specifications, it is not practicable to disclose the quantitative information in respect thereof.
b) Traded goods
Sales of traded goods comprise of large number of items of different nature and specifications and hence it is not practicable to furnish information in respect thereof. The cost of such material amounting to Rs, 558.24 crores (Previous year Rs, 931.55 crores) has been included under project material consumed and cost of goods sold.
* excluding foreign operations, comprising foreign branches and an un-incorporated joint venture.
g) The Company had not declared dividend for the years ended March 31, 2015 and 2014, accordingly, dividend remitted in foreign exchange during the financial years ended March 31, 2016 and 2015 is Nil.
17. Others
a) Details of loan given, investments made and guarantee given covered u/s 186(4) of the 2013 Act have been disclosed under the respective heads of âRelated party transactions'' given in note 29.
b) Contract revenues include Rs, 239.02 crores (Previous year Rs, 83.89 crores) representing the retention money which will be received by the Company after the satisfactory performance of the respective projects. The period of release of retention money may vary from six months to eighteen months depending upon the terms and conditions of the projects.
c) The amount to be incurred towards Corporate Social Responsibility (CSR) for the financial year ended March 31, 2016, as prescribed under section 135 of the 2013 Act, is Nil. The Company has however incurred Rs, 0.01 crores (Previous year: 0.02) on promoting rural, nationally recognized, paralympic and Olympic sports and Nil (Previous year: 0.34) on Rural development.
d) Micro and small enterprises have been identified by the Company from the available information, which has been relied upon by the auditors. According to such identification, there are no due to micro and small enterprises that are reportable as per the Micro, Small and Medium Enterprises Development Act, 2006 as at the year end.
e) The Company has international and domestic transaction with âAssociated Enterprises'' which are subject to Transfer Pricing regulations in India. The Management of the Company is of the opinion that such transactions with Associated Enterprises are at arm''s length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the financial statements, particularly on account of tax expense and that of provision of taxation.
f) Capitalization of expenditure
During the current and previous year ended on March 31, 2016 and March 31, 2015, the Company has not capitalized any expenditure of revenue nature to the cost of tangible asset/ intangible assets under development.
g) Amount in the financial statements are presented in INR crores, unless otherwise stated. Certain amounts that are required to be disclosed and do not appear due to rounding off are expressed as 0.00. One crore equals 10 millions.
h) Previous year figures have been regrouped/reclassified, where necessary, to conform to this year''s classification.
# Since he was appointed as a Director of the Company w.e.f. September 25, 2015
## Since he was appointed as a Director of the Company w.e.f. March 25, 2016
A Since he was appointed as a Director of the Company w.e.f. May 20, 2016
Since he was appointed as a Director of the Company w.e.f. May 27, 2016
Since resigned from the Board of Directors of the Company w.e.f. March 31, 2016
Since resigned from the Board of Directors of the Company w.e.f. September 25, 2015 @ Since resigned from the Board of Directors of the Company w.e.f. May 11, 2015
@@ Since resigned from the Board of Directors of the Company w.e.f. May 19, 2016 @@@ Since resigned from the Board of Directors of the Company w.e.f. August 14, 2015
Since resigned from the Board of Directors of the Company w.e.f. March 31, 2016.
@ Since resigned from the Board of Directors of the Company w.e.f. May 11, 2015.
Since resigned from the Board of Directors of the Company w.e.f. September 25, 2015.
Oversight of the Company''s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
- Recommendation for appointment, remuneration and terms of appointment of auditors of the Company;
- Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
- Reviewing / Examining, with the management, the annual financial statements and auditor''s report thereon before submission to the Board for approval, with particular reference to:
To perform such other functions as have been referred / may be referred by the Board or required in accordance with the Act, Listing Agreements or SEBI Regulations as amended from time to time.
The Nomination and Remuneration Committee had formulated the following policies:
1. Policy on Directors'' Appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and relating to remuneration for the directors, key managerial personnel and other employees (which is attached as Annexure I to the Directors Report).
2. Policy on Board diversity
3. The Criteria for performance evaluation of Independent Directors and the Board as provided herein below:
Mar 31, 2015
(A) Terms/rights attached to equity shares
The Company has only one class of equity shares having par value of Rs.
2 per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividends in Indian Rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
As per records of the Company, including its register of
shareholders/members, the above shareholding represents both legal and
beneficial ownerships of shares.
(B) Shares reserved for issue under options
The vesting period of all the stock options has expired and there are
no options in force as at the reporting date. For further details,
please refer note 25.
(e) No bonus shares or shares issued for consideration other than cash
or shares bought back over the last five years immediately preceding
the reporting date.
*After setting off deferred tax assets aggregating Nil (Previous year
Rs. 2.41 crores) in respect of certain branches.
# The Company has accounted for deferred tax assets on timing
differences, including those on unabsorbed depreciation and business
losses, to the extent of deferred tax liability recognized at the
balance sheet date, for which it is virtually certain that future
taxable income would be generated by reversal of such deferred tax
liability.
1. Gross block of plant and equipment includes Rs. 5.82 crores and
accumulated depreciation includes Rs. 5.82 crores (Previous year Rs.
5.82 crores and Rs. 4.66 crores respectively) on account of revaluation
of assets carried out in earlier years. The said revaluation was
carried out during the year ended March 31,1998 by an external agency
using "price indices released by the Economic Advisor's Office,
Ministry of Industry/Verbal Quotation/Comparison/Estimation or any
other method considered prudent in specific cases". Consequent to the
said revaluation, there is an additional charge of depreciation of Rs.
Nil (Previous year Rs. 0.23 crores). In accordance with the option
given in the guidance note on accounting for the depreciation in
companies, the Company has recouped such additional deprecation out of
asset revaluation reserve until March 31,2014. There is additional
profit of Rs. Nil (Previous year Rs. 0.13 crores) on account of sale of
assets, an equivalent amount has been withdrawn from revaluation
reserve and credited to statement of profit and loss.
2. Gross block of land includes Rs. 2.10 crores (Previous year Rs. 2.10
crores) on account of revaluation carried out in earlier years. The
said revaluation was carried out during the year ended March 31,2002 by
an external agency using "price indices released by the Economic
Advisor's Office, Ministry of Industry/Verbal
Quotation/Comparison/estimation or any other method considered prudent
in specific cases".
3. In compliance with the notification dated March 31, 2009 (as
amended) issued by MCA, the Company has exercised the option available
under paragraph 46 to the Accounting Standards 11- The effect of
changes in foreign exchange rates. Accordingly, during the current
year, the foreign exchange loss of Rs. 2.46 crores (Previous year Rs.
10.11 crores) has been added to gross block of plant and equipment.
4. Gross block of land includes leasehold land of cost Rs. 6.41 crores
(Previous year Rs.6.41 crores). Accumulated depreciation thereon is Rs.
1.14 crores (Previous year Rs. 0.92 crores).
5. Gross block of vehicles includes vehicles of cost Rs. 1.27 crores
(Previous year Rs. 6.55 crores) taken on finance lease. Accumulated
depreciation there on is Rs. 0.90 crores (Previous year Rs. 3.36
crores).
6. Gross block of plant and equipment includes equipments of cost Rs.
114.16 crores (Previous year Rs. 109.93 crores) taken on finance lease.
Accumulated depreciation thereon is Rs. 75.90 crores (Previous year Rs.
27.92 crores).
7. Gross block of buildings includes building of cost Rs. 98.76 crores
(Previous year Rs. 98.76 crores) taken on finance lease. Accumulated
depreciation thereon is Rs. 4.04 crores (Previous year Rs. 2.39
crores).
8. Gratuity and other post-employment benefit plans
The Company has a defined benefit gratuity plan. Under the plan, every
employee who has completed at least five years of service gets a
gratuity on separation at 15 days of last drawn salary for each
completed year of service. The scheme is funded with insurance
companies in the form of qualifying insurance policy.
The following tables summarize the components of net benefit expense
recognized in the statement of profit and loss, the funded status and
the amounts recognized in the balance sheet for the plan.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
The overall expected rate of return on assets is determined based on
the market prices prevailing on that date, applicable to the period
over which the obligation is to be settled.
The options under the ESOP 2005 (Plan 1) and ESOP 2006 (Plan 2), (Plan
3), (Plan 4) and (Plan 5) had expired on or before March 31, 2013 and
hence there are no activities to report under these plans.
The vesting period of all the stock options expired before March
31,2015. Also, the weighted average share price at the date of exercise
is not applicable since there are no stock options in force as at the
current and previous balance sheet date.
For the purpose of valuation of the options granted upto year ended
March 31,2015 under ESOP 2005 and ESOP 2006, the compensation cost
relating to Employee Stock Options, calculated as per the intrinsic
value method, is Rs. Nil.
In March 2005, the Institute of Chartered Accountants of India has
issued a Guidance Note on "Accounting for Employees Share Based
Payments" applicable to employee share based plan the grant date in
respect of which falls on or after April 1,2005. The said Guidance Note
requires the Pro-forma disclosures of the impact of the fair value
method of accounting of employee stock compensation in the financial
statements. As the Company has used the intrinsic value method and the
management has obtained fair value of the options at the date of grant
from an independent valuer, using the 'Black Scholes Valuation
Model' at "Rs. Nil" per option, there is no impact on the
reported profits/(losses) and earnings per share.
9. Leases
a) Finance lease
The Company has finance leases and hire purchase contracts for certain
project equipments, vehicles and building, the cost of which is
included in the gross block of plant and equipment, vehicles and
buildings respectively under tangible assets. The lease term is for one
to ninety nine years. There is no escalation clause in the lease
agreements. There are no significant restrictions imposed by lease
arrangements.
b) Operating lease
The Company has entered into commercial leases for office premises.
There are no contingent rents in the lease agreements. The lease term
is for 1-3 years and is renewable at the mutual agreement of both the
parties. There is no escalation clause in the lease agreements. There
are no significant restrictions imposed by lease arrangements.
The break-up of the future minimum lease payments outstanding as at
reporting date is as under:
10. Interest in joint ventures:
The Company's interest and share in joint ventures in the jointly
controlled entities/operations are as follows:
Notes:
* Capital Commitments - Estimated amount of contracts remaining to be
executed on capital account and not provided for (net of advances).
11. Segment Information
Primary segment: Business segments -
The Company has identified the business segment as its primary
reportable segment. The Company's operating businesses are organized
and managed separately according to the nature of products and services
provided. The Company has identified Engineering, procurement and
construction services and Trading of goods as its two reportable
segments. A description of the types of products and services provided
by each reportable segment is as follows:
Engineering, procurement and construction segment includes providing of
engineering, procurement and construction services in oil, gas and
infrastructure sectors.
Trading of goods segment includes purchase and sale of steel, mainly
outside India.
Secondary segment: Geographical segments* -
Although the Company's major operating divisions are managed on a
worldwide basis, they operate in two principal geographical areas of
the world, in India, its home country, and the other countries.
The following table presents revenue from operations, unbilled revenue
(work-in-progress) and trade receivables regarding geographical
segments as at March 31,2015 and March 31,2014.
12. Related Parties
Names of related parties where control exists irrespective of whether
transactions have occurred or not:
Subsidiary Companies
Spectra Punj Lloyd Limited
Punj Lloyd Industries Limited
Atna Investments Limited
PLN Construction Limited
Punj Lloyd International Limited
Punj Lloyd Kazakhstan, LLP
Punj Lloyd Pte. Limited
PL Engineering Limited
Punj Lloyd Infrastructure Limited
Punj Lloyd Upstream Limited
Punj Lloyd Aviation Limited
Sembawang Infrastructure (India) Private Limited
Indtech Global Systems Limited
Shitul Overseas Placement and Logistics Limited (formerly Punj Lloyd
Systems Limited)
PLI Ventures Advisory Services Private Limited
Dayim Punj Lloyd Construction Contracting Company Limited
Punj Lloyd Infrastructure Pte. Limited (w.e.f August 31,2014)
Step Down Subsidiary Companies
PT Punj Lloyd Indonesia
PT Sempec Indonesia
Punj Lloyd Oil & Gas (Malaysia) Sdn. Bhd.
Punj Lloyd Sdn. Bhd.
Punj Lloyd Engineers and Constructors Pte. Limited
Punj Lloyd Engineers and Constructors Zambia Limited Buffalo
Hills Limited Indtech Trading FZE PLI Ventures Limited
Punj Lloyd Infrastructure Pte. Limited (upto August 31,2014)
Punj Lloyd Aviation Pte. Limited (w.e.f. January 02, 2014)* Christos
Aviation Limited
Punj Lloyd (B) Sdn. Bhd. (w.e.f. August 02, 2014)*
Punj Lloyd Kenya Limited
Sembawang Group Pte. Limited (upto March 31,2014)*
PL Global Developers Pte. Limited
Christos Trading Limited (upto March 31,2014)*
Graystone Bay Limited
Punj Lloyd Thailand (Co.) Limited
Punj Lloyd Delta Renewables Pte. Limited
Punj Lloyd Delta Renewables Private Limited
Punj Lloyd Delta Renewables Bangladesh Limited
Punj Lloyd Raksha Systems Private Limited (w.e.f. February 04, 2015)*
Punj Lloyd Engineering Pte. Limited
Simon Carves Engineering Limited
PL Delta Technologies Limited @
Punj Lloyd Solar Power Limited
Khagaria Purnea Highway Project Limited
Indraprastha Metropolitan Development Limited
PL Surya Urja Limited (w.e.f. September 03, 2013)*
PL Sunshine Limited (w.e.f. March 05, 2015)*
Sembawang Engineers and Constructors Pte. Limited
Sembawang Development Pte. Limited
Sembawang Libya for General Contracting & Real Estate
Investment Joint Stock Company
Contech Trading Pte. Limited
PT Contech Bulan (upto March 31,2014) *
Construction Technology (B) Sdn. Bhd.
Sembawang Mining (Kekal) Pte. Limited PT Indo Precast Utama PT Indo
Unggul Wasturaya
Sembawang (Tianjin) Construction Engineering Co. Limited Sembawang
Infrastructure (Mauritius) Limited Sembawang UAE Pte. Limited
Sembawang Consult Pte. Limited (formerly SC Architects and Engineers
Pte. Limited)
Sembawang (Malaysia) Sdn. Bhd.
Jurubina Sembawang (M) Sdn. Bhd.
Tueri Aquila FZE
Sembawang Bahrain SPC
Sembawang Equity Capital Pte. Limited
Sembawang of Singapore - Global Project Underwriters Pte. Limited
Sembawang of Singapore - Global Project Underwriters Limited
Sembawang Australia Pty. Limited (upto February 20, 2014)
Sembawang Hong Kong Limited
Sembawang (Tianjin) Investment Management Co. Limited PT Sembawang
Indonesia
Sembawang International Limited (upto June 27, 2014)*
Sembawang Tianjin Pte. Limited (upto March 12, 2014)
Sembawang Tianjin Heping Pte. Limited (upto March 12, 2014)
Sembawang Commodities Pte. Limited (upto April 16, 2014)*
Reliance Contractors Private Limited
Sembawang E&C Malaysia Sdn. Bhd. (w.e.f. July 25, 2014)*
Joint Ventures
Thiruvananthpuram Road Development Company Limited
Ramprastha Punj Lloyd Developers Private Limited
Punj Lloyd Dynamic LLC
AeroEuro Engineering India Private Limited
PLE TCI Engineering Limited (upto March 31,2014)@
PLE TCI Engenharia Ltda
PT Kekal Adidaya
Sembawang Precast System LLC
Sembawang Caspi Engineers and Constructors LLP
Joint Venture of Whessoe Oil and Gas Limited and Punj Lloyd
Limited
Punj Lloyd PT Sempec
Total-CDC-DNC Joint Operation
Kumagai-Sembawang-Mitsui Joint Venture
Kumagai-SembCorp Joint Venture
Philipp Holzmann-SembCorp Joint Venture
Kumagai-SembCorp Joint Venture(DTSS)
Semb-Corp Daewoo Joint Venture
Sime Engineering Sdn. Bhd. Sembawang Malaysia Sdn.
Bhd. Joint Venture
Sime Engineering Sdn. Bhd. SembCorp Malaysia Sdn.
Bhd. Joint Venture
Total Sempec Joint Operations (upto December 31,2013)
Punj Lloyd Group Joint Venture
Public Works Company Tripoli Punj Lloyd Joint Venture
Sembawang - Leader Joint Venture
Associates
Olive Group India Private Limited (upto August 12, 2013)
Hazaribagh Ranchi Expressway Limited (upto March 31, 2015)*
Air Works India (Engineering) Private Limited
Olive Group Capital Limited (upto October 16, 2013)
Ventura Development (Myanmar) Pte Limited (upto March 12, 2014)
Reco Sin Han Pte Limited
* These entities have been incorporated / formed/ disposed off during
the year.
@ Investment held for sale in the near future.
Key Managerial Personnel with whom transactions have taken place during
the year:
Atul Punj - Chairman
Luv Chhabra - Director (Corporate Affairs)
Pawan Kumar Gupta (upto
December 31,2013) - Whole Time Director
P. N. Krishnan (w.e.f.
November 01,2013) - Director - Finance
J. P. Chalasani (w.e.f. January
31,2014 and upto May 19, 2014 ) - Director and Group CEO
J. P. Chalasani (w.e.f.
May 20, 2014) - Managing Director & Group CEO
Enterprises over which Key Managerial Personnel or their relatives
exercise significant influence and with whom transactions have taken
place during the year:
Pt. Kanahya Lal Dayawanti Punj
Charitable Society - Chairmanship of
Father of Chairman
PTA Engineering and Manpower
Services Private Limited - Shareholding of
Chairman
PLE Hydraulics Private Limited - Shareholding of Chairman
Artcon Private Limited - Shareholding of Chairman
Mangalam Equipment Private Limited - Shareholding of Chairman
Petro IT Limited - Shareholding of Brother of Chairman
13. Capital and other commitments
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advance) is Rs 0.20 crores
(Previous year Rs. 5.30 crores).
(b) For commitments relating to lease arrangements, please refer note
26.
(c) Financial support given to a wholly owned subsidiary, Punj Lloyd
Pte Limited, the outflow of which as at the reporting date is not
practicable to ascertain in view of the uncertainties involved.
Contingent liabilities:
As at March 31,2015 As at March 31, 2014
a) Liquidated damages
deducted by customers
not accepted by the Company
and pending final settlement. 170.05 170.05
b) Corporate guarantees given
on behalf of subsidiaries,
joint ventures and associates 2,730.27 3,020.20
c) Sales tax demands: *
on disallowance of deduction
on labour and services of the works
contracts pending with sales tax
authorities and High Court 39.29 23.71
for non submission of statutory
forms 0.11 0.11
for purchases against sales tax
forms not accepted by department 8.76 8.82
against the central sales tax demand
on sales in transit/ sale in the
course of import 2.84 2.84
d) Entry tax demands against entry
of goods into the local area not
accepted by department. 4.68 4.56
# excludes possible liquidated damages which can be levied by customers
for delay in execution of projects. The management, based on
consultation with various experts, believes that there exist strong
reasons why no liquidated damages shall be levied by these customers.
Although, there can be no assurances, the Company believes, based on
information currently available, that the ultimate resolution of these
proceedings is not likely to have an adverse effect on the results of
operations, financial position or liquidity of the Company.
* The management believes that the claims made are untenable and is
contesting them. As of the reporting date, the management is unable to
determine the ultimate outcome of the above matters. However, based on
favorable decisions/outcomes in similar cases earlier and based on
legal opinions taken /consultations done with solicitors, the
management believes that there are good chances of success in above
mentioned cases and hence, no provision there against is considered
necessary.
e) On March 17, 2010, the Company was subjected to a search and seizure
operation under Section 132 and survey under Section 133A of the Income
tax Act, 1961. During the search and seizure operation, statements of
Company's officials were recorded in which they were made to offer
some unaccounted income of the Company for the financial year 2009-10.
The Company believes that the above statements were made under undue
mental pressure and physical exhaustion and therefore Company has
retracted the above statements subsequently. The Company has filed
fresh returns of income for Assessment years 2004-05 to 2009-10 in
pursuance of the notices dated August 25, 2010 from the Income Tax
Department ("the Department"). The Department had completed the
assessments for the assessment years 2004-05 to 2010-11 and issue
demands aggregating to Rs. 229.13 crores, by making some frivolous
additions to the total income of the Company, which has been adjusted
against the income tax refunds of the said/subsequent years. The
Company had filed the appeals against these additions on January 27,
2012 and June 12, 2013. During the second quarter of FY 2014-15,
favorable orders have been received from the CIT (Appeals) dated August
29, 2014 for the assessment year 2004-05 to 2006-07 on all the
additions made except for the addition of permanent establishment for
which further appeal has been filed by the Company to ITAT, Delhi dated
October 31,2014 and based on the expert opinion, the Company is hopeful
that it will get relief in appeal.
f) The Company, directly or indirectly through its subsidiaries, is
severally or jointly involved in certain legal cases with its customers
/ vendors in the ordinary course of business. The management believes
that due to the nature of these disputes and in view of numerous
uncertainties and variables associated with certain assumptions and
judgments, and the effects of changes in the regulatory and legal
environment, both the precision and reliability of the resulting
estimates of the related contingencies are subject to substantial
uncertainties. The Company regularly monitors its estimated exposure to
such loss contingencies and, as additional information becomes known,
changes its estimates accordingly. In view of aforesaid reasons, as of
the reporting date, it is unable to determine the ultimate outcome of
these matters.
14. Derivative instruments and un-hedged foreign currency exposure
The Company, in addition to its Indian operations, operates outside
India through its branches and an unincorporated joint venture
established in United Arab Emirates (UAE), Oman, Qatar, Libya,
Thailand, Bahrain, Kuwait and Saudi Arabia.
a) Particulars of un-hedged foreign currency exposures of the Indian
operations as at the Balance Sheet date:
b) The income and expenditure of the foreign branches and
unincorporated joint venture are denominated in currencies other than
reporting currency. Accordingly, the Company enjoys natural hedge in
respect of its foreign branches and unincorporated joint ventures'
assets and liabilities. The Company's un-hedged foreign currency
exposure in these branches and un-incorporated joint venture is limited
to the net investment (assets - liabilities) in such operations, the
particulars of which are as under:
15. a) The Company had executed certain projects in earlier years on
which the customers have made deductions/ withheld amounts
aggregating to Rs. 49.35 crores (Previous year Rs. 53.91 crores), which
are being carried as trade receivables. The Company has commenced
arbitration/legal proceedings for recovery of amounts withheld and also
for settlement of additional claims filed against these Customers.
Pending outcome of arbitration/legal proceedings, amounts withheld/
deductions made are being carried forward as recoverable. The Company
has been legally advised that there is no justification in imposition
of deductions by these customers and hence the above amounts are
considered good of recovery.
b) The Company has accrued claims amounting to Rs. 735.80 crores
(Previous year Rs. 735.80 crores) on Heera Redevelopment Project with
Oil and Natural Gas Corporation Limited, based upon management's
assessment of cost over-run arising due to design changes and
consequent changes in the scope of work on the said project since it is
of the view that the delay in execution of the project is attributable
to the customer. Due to the said reasons, certain differences and
dispute arose between both the parties and several rounds of
discussions were held to explore the possibility of amicable resolution
of the dispute mutually. The matter was referred to an Outside Expert
Committee (OEC). Based on developments during the year, the Company has
come to the view that the settlement process can be best resolved in
finality, expeditiously and with legal enforceability only through
arbitration and hence has re-commenced the arbitration proceedings,
which were kept in abeyance owing to proceedings by the OEC. The
management is confident of satisfactory settlement of the dispute and
recovery of the said amounts, accordingly no adjustments have been
considered necessary in these financial statements.
c) During the previous year, the Company's branch in Thailand had
received a termination notice for the Fourth Transmission Pipeline
Project (the Project) with PTT Thailand (the Customer) on the grounds
of delay in execution of the Project for reasons solely attributable to
the Branch and for not honoring the contractual obligations of the
Project. The Branch had retracted the notice by stating that the said
grounds of termination were without merit and in turn there was a
material breach on the part of the Customer in honoring the
obligations. The Branch, in the best interest of the Project, had been
executing the works but in view of the continuing breach of the
contract terms by the Customer and no efforts to ratify the same, the
branch had terminated the project and accounted a claim amounting to
Rs. 391.09 crores for additional costs incurred due to the above stated
reasons.
During the current year, the Customer, in continuation to the
differences that arose between both parties and as mentioned above, has
exercised its contractual rights to encash the performance bond
amounting to Rs. 171.08 crores. The management is taking appropriate
steps for the recovery of the said amounts and, based on the expert
inputs, is confident of recovery of the amounts exceeding the
recognized claim and performance bonds. Accordingly, no adjustments
have been considered necessary in these financial statements.
16. a) The Company has an investment in the equity and preference
capital amounting to Rs. 950.43 crores (Previous year Rs.
1,182.81 crores) and has loans outstanding to Rs. 313.83 crores
(Previous year Rs. 433.58 crores) as at March 31,2015 from Punj Lloyd
Pte Limited, a subsidiary in Singapore. The subsidiary has accumulated
losses of Rs. 1,194.30 crores as at March 31,2015 (Previous year Rs.
681.62 crores). However, the subsidiary is holding certain strategic
investments and considering the intrinsic value, based on the valuation
carried out by an independent valuer, of such investments and also
considering the long term business plan of the subsidiary, including
the forecasts of profitability of operations, the Company is of the
view that there is no other than temporary diminution in the value of
investment and accordingly, no provision is considered necessary in the
financial statements at this stage on the above account.
b) The Company has an investment in the equity capital amounting to Rs.
17.09 crores (Previous year Rs. 17.09 crores) and has loans outstanding
to Rs. 6.94 crores (Previous year Rs. 6.76 crores) from PT Punj Lloyd
Indonesia, a step-down subsidiary in Indonesia. The step-down
subsidiary has accumulated losses of Rs. 467.85 crores as at March 31,
2015 (Previous year Rs. 440.40 crores). However, considering the long
term business plan of the step down subsidiary, including the forecasts
of profitability of operations, the Company is of the view that there
is no other than temporary diminution in the value of investment and
accordingly, no provision is considered necessary in the financial
statements at this stage on the above account
17. The Company has unbilled revenue (work-in-progress) of Rs. 196.61
crores (Previous year Rs. 188.95 crores) on certain projects on account
of variation orders arising due to change in scope of work and delays,
which the management believes is attributable to the customers. The
Management, based on the expert inputs, is of the view that the Company
would collect the above stated amount upon completion of the processing
of the claims by the clients. Accordingly, the above amounts are
considered good of recovery.
18. The Company has a process whereby periodically all long term
contracts (including derivative contracts) are assessed for material
foreseeable losses. At the year end, the Company has reviewed and
ensured that adequate provision as required under the law/ Accounting
Standards for the material foreseeable losses on such long term
contracts (including derivative contracts) has been made in the books
of accounts.
19. The Company has defaulted in repayment of principal and interest
amounting to Rs. 71.28 crores (Previous year Rs. 6.57 crores) and Rs.
21.27 crores (Previous year Rs. 0.14 crores) respectively, as on March
31,2015.
20. Additional information required to be disclosed under paragraph 5
(viii) of general instructions for preparation of Statement of Profit
and Loss as per Schedule III to the 2013 Act.
a) Projects materials consumed
These comprise miscellaneous items meant for execution of projects.
Since these items are of different nature and specifications, it is not
practicable to disclose the quantitative information in respect
thereof.
b) Traded goods
Sales of traded goods comprise of large number of items of different
nature and specifications and hence it is not practicable to furnish
information in respect thereof. The cost of such material amounting to
Rs. 931.55 crores (Previous year Rs. 918.09 crores) has been included
under Project material consumed and cost of goods sold.
g) Net dividend remitted in foreign exchange is Nil (Previous year Nil)
as the Company had not declared any dividend for the years ended March
31,2014 and 2013.
21. Others
a) Details of loan given, investments made and guarantee given covered
u/s 186(4) of the 2013 Act has been disclosed under the respective
heads of 'Related party transactions' given in note 29.
b) Contract revenues include Rs. 83.89 crores (Previous year Rs. 236.28
crores) representing the retention money which will be received by the
Company after the satisfactory performance of the respective projects.
The period of release of retention money may vary from six months to
eighteen months depending upon the terms and conditions of the
projects.
c) Micro and small enterprises have been identified by the Company from
the available information, which has been relied upon by the auditors.
According to such identification, there are no dues to micro and small
enterprises that are reportable as per the Micro, Small and Medium
Enterprises Development Act, 2006 as at the year end.
d) The Company has international and domestic transaction with
'Associated Enterprises' which are subject to Transfer Pricing
regulations in India. The Management of the Company is of the opinion
that such transactions with Associated Enterprises are at arm's
length and hence in compliance with the aforesaid legislation.
Consequently, this will not have any impact on the financial
statements, particularly on account of tax expense and that of.
Mar 31, 2014
1. Gratuity and other post-employment benefit plans
The Company has a defined benefit gratuity plan. Under the plan,
every employee who has completed at least five years of service gets a
gratuity on separation at 15 days of last drawn salary for each
completed year of service. The scheme is funded with insurance
companies in the form of qualifying insurance policy.
The following tables summaries the components of net benefit expense
recognised in the statement of profit and loss and the funded status
and amounts recognised in the balance sheet for the plan.
As on March 31, 2014, no stock options are in force as the vesting
period of the same has expired. The weighted average share price at the
date of exercise is not applicable since no option is exercised
(Previous year not applicable since no options were exercised).
For the purpose of valuation of the options granted upto year ended
March 31, 2014 under ESOP 2005 and ESOP 2006, the compensation cost
relating to Employee Stock Options, calculated as per the intrinsic
value method, is Rs. Nil.
In March 2005, the Institute of Chartered Accountants of India has
issued a Guidance Note on ACI-Accounting for Employees Share Based
Payments ACI- applicable to employee share based plan the grant date in
respect of which falls on or after April 01, 2005. The said Guidance
Note requires the Pro-forma disclosures of the impact of the fair value
method of accounting of employee stock compensation in the financial
statements. As the Company has used the intrinsic value method and the
management has obtained fair value of the options at the date of grant
from an independent valuer, using the ''Black Scholes Valuation Model''
at ACI-Rs. Nil ACI- per option, there is no impact on the reported profits
and earnings per share.
2. Leases
a) Finance lease
The Company has finance leases and hire purchase contracts for certain
project equipments, vehicles and building, the cost of which is
included in the gross block of plant and equipment, vehicles and
buildings respectively under tangible assets. The lease term is for one
to ninety nine years. There is no escalation clause in the lease
agreements. There are no restrictions imposed by lease arrangements.
b) Operating lease
The Company has entered into commercial leases for office premises.
There are no contingent rents in the lease agreements. The lease term
is for 1-3 years and is renewable at the mutual agreement of both the
parties. There is no escalation clause in the lease agreements. There
are no restrictions imposed by lease arrangements.
3. Capitalization of expenditure
During the year, the Company has capitalized the following expenses of
revenue nature to the cost of tangible asset/capital work-in- progress.
Consequently, expenses disclosed under the respective notes are net of
amounts capitalized.
4. Segment Information
Primary segment: Business segments -
The Company has identified the business segment as its primary
reportable segment. The Company''s operating businesses are organized
and managed separately according to the nature of products and services
provided. The Company has identified Engineering, procurement and
construction services and Trading of goods as its two reportable
segments. A description of the types of products and services provided
by each reportable segment is as follows:
Engineering, procurement and construction segment include providing of
engineering, procurement and construction services in oil, gas and
infrastructure sectors.
Trading of goods includes purchase and sale of steel, mainly outside
India.
5. Related Parties
Names of related parties where control exists irrespective of whether
transactions have occurred or not
Subsidiary Companies
Spectra Punj Lloyd Limited
Punj Lloyd Industries Limited
Atna Investments Limited
PLN Construction Limited
Punj Lloyd International Limited
Punj Lloyd Kazakhstan, LLP
Punj Lloyd Pte. Limited
PL Engineering Limited
Punj Lloyd Infrastructure Limited
Punj Lloyd Upstream Limited
Punj Lloyd Aviation Limited
Sembawang Infrastructure (India) Private Limited
Indtech Global Systems Limited
Punj Lloyd Systems Limited
PLI Ventures Advisory Services Private Limited
Dayim Punj Lloyd Construction Contracting Company Limited
Step Down Subsidiary Companies
PT Punj Lloyd Indonesia
PT Sempec Indonesia
Punj Lloyd Oil ACY- Gas (Malaysia) Sdn. Bhd.
Punj Lloyd Sdn. Bhd.
Punj Lloyd Engineers and Constructors Pte Limited
Punj Lloyd Engineers and Constructors Zambia Limited (w.e.f. January
14, 2013)
Buffalo Hills Limited
Indtech Trading FZE LLC
PLI Ventures Limited
Punj Lloyd Infrastructure Pte Limited
Punj Lloyd Kenya Limited
Sembawang Group Pte Limited (upto March 31, 2014) ACo-
PL Global Developers Pte Limited (Formerly known as Punj Lloyd
Singapore Pte Ltd)
Christos Trading Limited (upto March 31, 2014) ACo-
Christos Aviation Limited ( w.e.f. October 24, 2012)
Graystone Bay Limited ( w.e.f. February 05, 2013)
Punj Lloyd Thailand (Co.) Limited
Punj Lloyd Aviation Pte Limited (w.e.f. January 02, 2014) ACo-
Punj Lloyd Delta Renewables Pte. Limited
Punj Lloyd Delta Renewables Private Limited
Punj Lloyd Delta Renewables Bangladesh Limited
Punj Lloyd Engineering Pte Limited
Simon Carves Engineering Limited
PL Delta Technologies Limited (from September 10, 2012 to March 01,
2013) AEA-
Punj Lloyd Solar Power Limited
Khagaria Purnea Highway Project Limited
Indraprastha Metropolitan Development Limited
PL Surya Urja Limited (w.e.f. September 03, 2013) ACo-
Sembawang Engineers and Constructors Pte. Limited
Sembawang Development Pte Limited
Sembawang Libya General Contracting ACY- Investment Company
Contech Trading Pte Limited
PT Contech Bulan (upto March 31, 2014) ACo-
Construction Technology (B) Sdn Bhd
Sembawang Mining (Kekal) Pte Limited
PT Indo Precast Utama
PT Indo Unggul Wasturaya
Sembawang (Tianjin) Construction Engineering Co. Limited
Sembawang Infrastructure (Mauritius) Limited
Sembawang UAE Pte Limited
SC Architects and Engineers Pte Limited
Sembawang (Malaysia) Sdn Bhd
Jurubina Sembawang (M) Sdn Bhd
Tueri Aquila FZE
Sembawang Bahrain SPC
Sembawang Equity Capital Pte. Limited
Sembawang of Singapore - Global Project Underwriters Pte Limited
Sembawang of Singapore - Global Project Underwriters Limited (w.e.f.
August 09, 2012)
Sembawang Australia Pty. Limited (upto February 20, 2014) ACo-
Sembawang Hong Kong Limited
Sembawang (Tianjin) Investment Management Co. Limited
PT Sembawang Indonesia
Sembawang International Limited
Sembawang Tianjin Pte Limited (upto March 12, 2014) ACo-
Sembawang Tianjin Heping Pte Limited (upto March 12, 2014) ACo-
Sembawang Commodities Pte Ltd. (w.e.f. December 04, 2012)
Reliance Contractors Private Limited (w.e.f. August 05, 2013) ACoAKg-
Joint Ventures
Thiruvananthpuram Road Development Company Limited
Kaefer Punj Lloyd Limited ACM-
Ramprastha Punj Lloyd Developers Private Limited
Asia Drilling Services Limited (upto June 30, 2012)
Punj Lloyd Dynamic LLC
AeroEuro Engineering India Private Limited
PLE TCI Engineering Limited (upto March 31, 2014) AEA-
PLE TCI Engenharia Ltda
PT Kekal Adidaya
Sembawang Precast System LLC
Sembawang Caspi Engineers and Constructors LLP
Joint Venture of Whessoe Oil and Gas Limited and Punj Lloyd Limited
Punj Lloyd PT Sempec
Total-CDC-DNC Joint Operation
Kumagai-Sembawang-Mitsui Joint Venture
Kumagai-SembCorp Joint Venture
Philipp Holzmann-SembCorp Joint Venture
Kumagai-SembCorp Joint Venture (DTSS)
Semb-Corp Daewoo Joint Venture
Sime Engineering Sdn Bhd Sembawang Malaysia Sdn Bhd Joint Venture
Sime Engineering Sdn Bhd SembCorp Malaysia Sdn Bhd Joint Venture
Total Sempac Joint Operations (upto December 31, 2013) ACo-
Punj Lloyd Group Joint Venture
Public Works Company Tripoli Punj Lloyd Joint Venture
Sembawang - Leader Joint Venture(w.e.f August 03, 2012)
Associates
Olive Group India Private Limited (upto August 12, 2013) ACo-
Hazaribagh Ranchi Expressway Limited (upto January 23, 2014) AEA-
Air Works India (Engineering) Private Limited
Olive Group Capital Limited (upto October 16, 2013) ACo-
Reliance Contractors Private Limited (upto August 05, 2013) ACoAKg-
Ventura Development (Myanmar) Pte Limited (upto March 12, 2014) ACo-
Reco Sin Han Pte Limited
ACo- These entities have been incorporated / formed/ disposed off during
the year.
ACoAKg- The Company acquired additional stake in this entity to make it its
subsidiary on August 05, 2013. Before this date the said entity was an
associate.
ACM- The Company has ceased to have the control over the operations of the
joint venture w.e.f. February 15, 2013. AEA- Investment held for sale in
the near future.
Key Managerial Personnel
Atul Punj - Chairman
Luv Chhabra - Director (Corporate Affairs)
Pawan Kumar Gupta (upto
December 31, 2013) - Whole Time Director
P. N. Krishnan (w.e.f.
November 01, 2013) - Director - Finance
J. P. Chalasani (w.e.f.
January 31, 2014) - Managing Director ACY- Group CEO
Relatives of Key Managerial Personnel
S.N.P. Punj - Father of Chairman
Arti Singh - Sister of Chairman
Indu Rani Punj - Mother of Chairman
Navina Punj - Wife of Chairman
Uday Punj - Brother of Chairman
Manglam Punj - Wife of Brother of Chairman
Jai Punj - Son of Brother of Chairman
Dev Punj - Son of Brother of Chairman
Jyoti Punj - Sister of Chairman
Enterprises over which Key Managerial Personnel or their relatives are
exercising significant influence
Pt. Kanahya Lal Dayawanti
Punj Charitable Society - Chairmanship of Father of Chairman
Spectra Punj Finance
Private Limited - Shareholding of Chairman
Cawdor Enterprises Limited - Shareholding of Chairman
Uday Punj (HUF) - HUF of Brother of Chairman
K.R. Securities Private
Limited - Shareholding of Brother of Chairman
Atul Punj (HUF) - HUF of Chairman
PTA Engineering and Manpower
Services Private Limited - Shareholding of Chairman
PLE Hydraulics Private
Limited - Shareholding of Chairman
Petro IT Limited - Shareholding of Brother of Chairman
Artcon Private Limited - Shareholding of Chairman
Mangalam Equipment Private
Limited - Shareholding of Chairman
Intramural Design Limited - Shareholding of Sister of Chairman
6. Capital and other commitments
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advance) is Rs 18.88 crores
(Previous year Rs. 9.95 crores).
(b) Estimated future investments in joint venture and other companies
in terms of respective shareholders agreements is Rs. Nil (Previous
year Rs. 24.99 crores).
(c) Comfort letter given for utilization of export benefit obligations
of a subsidiary company is Rs. Nil (Previous year Rs. 2.99 crores).
(d) For commitments relating to lease arrangements, please refer note
26.
7. Contingent liabilities
As at March As at March
31,2014 31,2013
a) Liquidated damages deducted by
customers not accepted by the Company
and pending final settlement. ACM- 170.05 171.75
b) Corporate guarantees given on behalf
of subsidiaries, joint ventures
and associates 3,020.20 4,389.74
c) Sales tax demands: ACo-
on disallowance of deduction on labour
and services of the works contracts
pending with sales tax authorities and
High Court 22.35 22.82
for non submission of statutory forms - 6.60
for purchases against sales tax forms
not accepted by department 8.61 8.61
against the central sales tax demand on
sales in transit 0.07 0.07
for non-admissible of deduction of
supply turnover 2.77 2.77
d) Entry tax demands against entry of
goods into the local area not
accepted by department. ACo- 4.08 4.49
ACM- excludes possible liquidated damages which can be levied by customers
for delay in execution of projects. The management, based on
consultation with various experts, believes that there exist strong
reasons why no liquidated damages shall be levied by these customers.
Although, there can be no assurances, the Company believes, based on
information currently available, that the ultimate resolution of these
proceedings is not likely to have an adverse effect on the results of
operations, financial position or liquidity of the Company.
ACo-Based on favourable decisions in similar cases/legal opinions taken by
the Company/consultations with solicitors, the management believes that
the Company has good chances of success in above mentioned cases and
hence, no provision there against is considered necessary.
e) On March 17, 2010, the Company was subjected to a search and seizure
operation under Section 132 and survey under Section 133A of the Income
tax Act, 1961. During the search and seizure operation, statements of
Company''s officials were recorded in which they were made to offer
some unaccounted income of the Company for the financial year 2009-10.
The Company believes that the above statements were made under undue
mental pressure and physical exhaustion and therefore Company has
retracted the above statements subsequently. The Company has filed
fresh returns of income for Assessment years 2004-05 to 2009-10 in
pursuance of the notices dated August 25, 2010 from the Income Tax
Department ( ACI-the Department ACI-). The Department has completed the
assessments for the assessment years 2004-05 to 2010-11 and has issue
demands aggregating to Rs. 229.13 crores, by making some frivolous
additions to the total income of the Company, which has been adjusted
against the income tax refunds of the said/ subsequent years. The
Company has filed the appeals against these additions on January 27,
2012 and June 12, 2013 and based on the expert opinion, the Company is
hopeful that it will get relief in appeal.
f) On January 20, 2014, the Company was subjected to an investigation
by Directorate General of Central Excise Intelligence (DGCEI) on
various service tax compliance matters. The Company is furnishing the
requisite information and the same is currently being scrutinized/
inquired by DGCEI as per the provisions of the Finance Act, 1994 (as
amended). The amount of demand, if any, can be ascertained only upon
completion of the said inquiry.
g) The Company, directly or indirectly through its subsidiaries, is
severally or jointly involved in certain legal cases with its customers
/ vendors. The management believes that due to the nature of these
disputes and in view of significant uncertainty over the ultimate
outcome of the said cases, the amount of exposure, if any, is not
currently determinable.
h) The Company has undertaken to provide continued financial support
to its below mentioned subsidiaries and step-down subsidiaries:
i) Punj Lloyd Pte Limited
ii) PT Punj Lloyd Indonesia
iii) PT Sempec Indonesia
iv) Punj Lloyd Aviation Pte Limited
v) PL Delta Renewables Pte Limited
vi) PL Global Developers Pte Limited (formerly known as Punj Lloyd
Singapore Pte Limited)
vii) Punj Lloyd Infrastructure Pte Limited
viii) Punj Lloyd Engineers and Constructors Pte Limited
ix) PLI Ventures Limited
x) PLI Ventures Advisory Services Private Limited
8. Derivative instruments and un-hedged foreign currency exposure
The Company, in addition to its Indian operations, operates outside
India through its branches and an unincorporated joint venture
established in United Arab Emirates, Oman, Qatar, Libya, Thailand and
Bahrain.
9. The Company had executed certain projects for some customers in
earlier years. These customers have withheld amounts aggregating to Rs.
53.91 crores (Previous year Rs. 58.02 crores) on account of deductions
made/amount withheld by some customers, which are being carried as
trade receivables. The Company has also fi led certain claims against
these customers. The Company has gone into arbitration/legal
proceedings against these customers for recovery of amounts withheld
and for claims lodged by the Company . Pending outcome of
arbitration/legal proceedings, amounts withheld for deductions made are
being carried forward as recoverable. The Company has been legally
advised that there is no justification in imposition of deductions by
these customers and hence the above amounts are considered good of
recovery.
10. The Company has an investment in the equity and preference capital
amounting to Rs. 1,182.81 crores (Previous year Rs. 299.71 crores) and
has loans and advance outstanding to Rs. 433.58 crores (Previous year
Rs. 1,538.71 crores) as at March 31, 2014 from Punj Lloyd Pte Limited,
a subsidiary in Singapore. The subsidiary has accumulated losses of Rs.
681.62 crores (Previous year Rs. 413.27 crores) as at March 31, 2014.
However, the subsidiary is holding certain strategic investments.
Considering the intrinsic value of the investments held by the
subsidiary, based on the valuation carried out by an independent
valuer, and also considering the long term business plan of the
subsidiary including the forecasts of profitability of operations, the
Company is of the view that there is no other than temporary diminution
in the value of investment and accordingly, no provision is considered
necessary in the financial statements at this stage on the above
account.
11. The Company has unbilled revenue (work-in-progress) of Rs. 188.95
crores on certain projects on account of variation arising due to
change in scope of work and delays, which the management believes is
attributable to the customers. The Management, based on the expert
inputs, is of the view that the Company would collect the above stated
amount upon completion of the processing of the claims by the clients.
Accordingly, the above amounts are considered good of recovery.
12. Sales include Rs. 236.28 crores (Previous year Rs. 275.53 crores)
representing the retention money which will be received by the Company
after the satisfactory performance of the respective projects. The
period of release of retention money may vary from six months to
eighteen months depending upon the terms and conditions of the
projects.
13. The Company has accrued claims amounting to Rs. 733.98 crores
(Previous year Rs. 250.33 crores) on Heera Redevelopment Project with
Oil and Natural Gas Corporation Limited, based upon management''s
assessment of cost over-run arising due to design changes and
consequent changes in the scope of work on the said project since it is
of the view that the delay in execution of the project is attributable
to the customer. Due to the said reasons certain differences and
dispute arose between both the parties and several rounds of
discussions were held to explore the possibility of amicable resolution
of the dispute mutually. In pursuant to it, the dispute has now been
referred to a new Outside Expert Committee. The management, based on
the developments so far in the said matter, is confident of a
satisfactory settlement of the dispute and recovery of the said amounts
exceeding the recognized claim.
14. During the year ended March 31, 2014, the Company''s branch in
Thailand has received a termination notice for the Fourth Transmission
Pipeline Project (the Project) with PTT Thailand (the Customer) on the
grounds of delay in execution of the Project for reasons solely
attributable to the Branch and for not honouring the contractual
obligations of the Project. The Branch has retracted the notice by
stating that the said grounds of termination are without merit and in
turn there is a material breach on the part of the Customer in honouring
the obligations. The Branch, in the best interest of the Project, had
been executing the works but in view of the continuing breach of the
contract terms by the Customer and no efforts to ratify the same, the
branch has terminated the project and accounted a claim amounting to
Rs. 389.86 crores for additional costs incurred due to the above stated
reasons through the Civil Court of Thailand on February 25, 2014. The
management, based on the expert inputs, is confident of recovery of
the amounts exceeding the recognized claim.
15. The Company has an investment in the equity capital amounting to
Rs. 17.09 crores (Previous year Rs. 17.09 crores) and has loans and
advances outstanding to Rs. 6.76 crores (Previous year Rs. 5.54 crores)
from PT Punj Lloyd Indonesia, a step-down subsidiary in Indonesia. The
step-down subsidiary has accumulated losses of Rs. 440.40 crores
(Previous year Rs. 235.96 crores) as at March 31, 2014. However,
considering the long term business plan of the step down subsidiary,
including the forecasts of profitability of operations, the Company is
of the view that there is no other than temporary diminution in the
value of investment and accordingly, no provision is considered
necessary in the financial statements at this stage on the above
account.
16. Asset of Rs. 7.83 crores, (Previous year Rs. 8.23 crores)
recognized by the Company as ''Minimum alternate tax credit entitlement''
under ''Loans and advances'', in respect of Minimum alternate tax payment
for current and earlier years, represents that portion of Minimum
alternate tax liability which can be recovered and set off in
subsequent periods based on the provisions of Section 115JAA of the
Income tax Act, 1961. The management based on the present trend of
profitability and also the future profitability projections, is of
the view that there would be sufficient taxable income in foreseeable
future, which will enable the Company to utilize Minimum alternate tax
credit assets.
17. The Company has defaulted in repayment of principal and interest
amounting to Rs. 6.57 crores and Rs. 0.14 crores respectively, as on
March 31, 2014. The said amounts have been paid subsequent to the
balance sheet date.
18. Projects materials consumed
These comprise miscellaneous items meant for execution of projects.
Since these items are of different nature and specifications, it is
not practicable to disclose the quantitative information in respect
thereof.
19. Traded goods
Sales of traded goods comprise of large number of items of different
nature and specifications and hence it is not practicable to furnish
information in respect thereof. The cost of such material amounting to
Rs. 918.09 crores (Previous year Rs. 273.23 crores) has been included
under Project material consumed and cost of goods sold.
20. Amount in the financial statements are presented in INR crores,
unless otherwise stated. Certain amounts that are required to be
disclosed and do not appear due to rounding off are expressed as 0.00.
One crore equals 10 million.
21. Previous year figures have been regrouped/reclassified, where
necessary, to conform to this year''s classification.
Mar 31, 2013
1. Corporate information
Punj Lloyd Limited (the Company) is a public limited Company domiciled
in India and incorporated under the provisions of the Companies Act,
1956. Its shares are listed on two stock exchanges in India. the
Company is engaged in the business of engineering, procurement and
construction in the oil and gas sector and infrastructure sector. the
Company caters to both domestic and international markets.
2. Basis of preparation
These financial statements have been prepared in accordance with
generally accepted accounting principles in India (Indian GAAP) and
comply in all material respects with the Accounting Standards notified
by Companies (Accounting Standards) Rules, 2006, (as amended) and the
relevant provisions of the Companies Act, 1956 (the "Act"). The
financial statements have been prepared on an accrual basis and under
the historical cost convention, except in case of certain fixed assets
which are being carried at their revalued amounts and derivative
financial instruments which have been measured at fair value. the
accounting policies adopted in the preparation of financial statements
have been consistently applied by the Company and are consistent with
those of previous year.
1. Gross block of Plant and equipment includes Rs. 6.27 crores and
accumulated depreciation includes Rs. 2.66 crores (Previous year Rs.
24.02 crores and Rs. 20.14 crores respectively) on account of
revaluation of assets carried out in earlier years. The said
revaluation was carried out during the year ended March 31, 1998 by an
external agency using "price indices released by the Economic
Advisor''s Office, Ministry of Industry/verbal
Quotation/Comparison/estimation or any other method considered prudent
in specific cases". Consequent to the said revaluation, there is an
additional charge of depreciation of Rs. 0.25 crores (Previous year Rs.
0.25 crores). In accordance with the option given in the guidance note
on accounting for the depreciation in companies, the Company recoups
such additional deprecation out of asset revaluation reserve. There is
additional profit of Rs. 0.02 crores (Previous year Rs. 0.10 crores) on
account of sale of assets, an equivalent amount has been withdrawn from
revaluation reserve and credited to Statement of Profit and Loss.
2. Gross block of Land includes Rs. 2.10 crores (Previous year Rs.
2.10 crores) on account of revaluation of assets carried out in earlier
years. the said revaluation was carried out during the year ended March
31, 2002 by an external agency using "price indices released by the
Economic Advisor''s Office, Ministry of Industry/Verbal
Quotation/Comparison/estimation or any other method considered prudent
in specific cases".
3. In compliance with the notification dated March 31, 2009 (as
amended) issued by Ministry of Corporate Affairs, the Company has
exercised the option available under paragraph 46 to the Accounting
Standards 11- the effect of changes in foreign exchange rates.
Accordingly, during the current year, the foreign exchange loss of Rs.
8.59 crores (Previous year Rs. 10.67 crores) has been added to gross
block of Plant and equipment.
4. Gross block of Land includes leasehold land Rs. 6.41 crores
(Previous year Rs.6.41 crores).
5. Gross block of Vehicles includes vehicles of cost Rs. 6.71 crores
(Previous year Rs. 6.25 crores) taken on finance lease. Accumulated
depreciation there on is Rs. 2.10 crores (Previous year Rs. 0.71
crores).
6. Gross block of Plant and equipment includes equipments of cost Rs.
10.02 crores (Previous year Rs. 6.25 crores) taken on finance lease.
Accumulated depreciation thereon is Rs. 2.25 crores (Previous year Rs.
0.31 crores).
7. Gross block of Buildings includes building of cost Rs. 98.76 crores
(Previous year Nil) taken on finance lease. Accumulated depreciation
thereon is Rs. 0.79 crores (Previous year Nil).
8. During the year, the Company has revised estimated useful life of
cranes (included under Plant and equipments) based on technical
estimates made by the management. Accordingly, additional depreciation
of Rs. 2.25 crores has been accounted for in the financial statements.
Had the Company continued to use earlier basis of providing
depreciation, the change to the statement of profit and loss for the
current year would have been lower by Rs. 2.25 crores and net block
correspondingly would have been higher by same amount.
3. Gratuity and other post-employment benefit plans
The Company has a defined benefit gratuity plan. Under the plan, every
employee who has completed at least five years of service gets a
gratuity on departure at 15 days of last drawn salary for each
completed year of service. The scheme is funded with insurance
companies in the form of qualifying insurance policy.
The following tables summarise the components of net benefit expense
recognised in the statement of profit and loss and the funded status
and amounts recognised in the balance sheet for the plan.
The weighted average share price at the date of exercise is not
applicable since no option is exercised (Previous year not applicable
since no options were exercised).
For the purpose of valuation of the options granted upto year ended
March 31, 2013 under ESOP 2005 and ESOP 2006, the compensation cost
relating to Employee Stock Options, calculated as per the intrinsic
value method, is Rs. Nil.
In March 2005, the Institute of Chartered Accountants of India has
issued a Guidance Note on "Accounting for Employees Share Based
Payments" applicable to employee share based plan the grant date in
respect of which falls on or after April 1, 2005. The said Guidance
Note requires the Pro-forma disclosures of the impact of the fair value
method of accounting of employee stock compensation in the financial
statements. Since the enterprise used the intrinsic value method and
the management has obtained fair value of the options at the date of
grant from a valuer, using the ''Black Scholes Valuation Model'' at
"Rs. Nil" per option, there is no impact on the reported profits
and earnings per share.
4. Leases
a) Finance Lease: Company as lessee
The Company has finance leases and hire purchase contracts for certain
project equipments, vehicles and building, the cost of which is
included in the gross block of plant and equipment, vehicles and
buildings respectively under tangible assets. The lease term is for one
to ninety nine years. There is no escalation clause in the lease
agreements. There are no restrictions imposed by lease arrangements.
b) Operating lease: Company as lessee
The Company had entered into commercial leases on certain project
equipment and office premises. There were no contingent rents in the
lease agreements. The lease term was for 1-3 years and was renewable at
the mutual agreement of both the parties. There was no escalation
clause in the lease agreements. There were no restrictions imposed by
lease arrangements.
5. Capitalization of expenditure
During the year, the Company has capitalized the following expenses of
revenue nature to the cost of tangible asset/capital work-in- progress.
Consequently, expenses disclosed under the respective notes are net of
amounts capitalized by the Company.
6. Segment Information Business Segments:
The Company''s business activity falls within a single business
segment i.e. Engineering and Construction. Therefore, segment reporting
in terms of Accounting Standard 17 on Segmental Reporting is not
applicable.
Geographical Segments*:
Although the Company''s major operating divisions are managed on a
worldwide basis, they operate in two principal geographical areas of
the world, in India, its home country, and the other countries.
7. Related Parties
Names of related parties where control exists irrespective of whether
transactions have occurred or not
Subsidiary Companies
Spectra Punj Lloyd Limited
Punj Lloyd International Limited
Punj Lloyd Kazakhstan LLP
Punj Lloyd Industries Limited
Punj Lloyd Aviation Limited
Punj Lloyd Infrastructure Limited
Atna Investments Limited
Punj Lloyd Upstream Limited
PT Punj Lloyd Indonesia (upto December 31, 2012)
PLN Construction Limited
Punj Lloyd Pte Limited
PL Engineering Limited
Sembawang Infrastructure (India) Private Limited
Indtech Global Systems Limited
Punj Lloyd Systems Limited
PLI Ventures Advisory Services Private Limited
Dayim Punj Lloyd Construction Contracting Company Limited
Step Down Subsidiary Companies
Sembawang Engineers and Constructors Pte. Limited
PT Punj Lloyd Indonesia (w.e.f. January 01, 2013)
PT Sempec Indonesia
Sembawang Development Pte Limited
PT Indo Precast Utama
PT Indo Unggul Wasturaya
Sembawang (Tianjin) Construction Engineering Co. Limited
Contech Trading Pte Limited
Pt Contech Bulan
Construction Technology (B) Sdn Bhd
Sembawang Infrastructure (Mauritius) Limited
Sembawang UAE Pte Limited
SC Architects and Engineers Pte Limited
Sembawang (Malaysia) Sdn Bhd
Jurubina Sembawang (M) Sdn Bhd
Simon Carves Limited- under liquidation (upto July 07, 2011)
Tueri Aquila FZE (formerly Sembawang Engineers and Constructors Middle
East FZE)
Simon Carves Singapore Pte Limited (upto March 31, 2012)
Sembawang Bahrain SPC
Punj Lloyd Oil and Gas (Malaysia) Sdn Bhd
Punj Lloyd Engineers & Constructors Pte Limited
Punj Lloyd Engineers & Constructors Zambia Limited (w.e.f. January 14,
2013) *
Punj Lloyd Delta Renewables Private Limited Punj Lloyd Delta Renewables
(Bangladesh) Limited Punj Lloyd Delta Renewables Pte Limited Buffalo
Hills Limited
PLE TCI Engineering Limited (upto March 18, 2012)
Sembawang Libya General Contracting and Investment Company
Sembawang Australia Pty Limited
Sembawang Hong Kong Limited
Sembawang of Singapore - Global Project Underwriters Pte Limited
(formerly known as Sembawang Securities Pte Limited)
Sembawang of Singapore - Global Project Underwriters Limited (w.e.f.
August 09, 2012) *
Sembawang Equity Capital Pte Limited
Sembawang Commodities Pte Limited (w.e.f. December 04, 2012) *
Punj Lloyd Solar Power Limited
Khagaria Purnea Highway Project Limited
Indraprastha Metropolitan Development Limited (w.e.f. February 25,
2012)
Indtech Trading FZ LLC
Sembawang (Tianjin) Investment Management Co. Limited
Sembawang Mining (Kekal) Pte Limited
Sembawang Tianjin Pte Limited
PLI Ventures Limited
PT Sembawang Indonesia
Punj Lloyd Kenya Limited
Punj Lloyd Infrastructure Pte Limited
Punj Lloyd Engineering Pte Limited
PL Delta Technologies Limited (from September 10, 2012 to March 01,
2013)*
Sembawang International Limited
Punj Lloyd Sdn Bhd
Punj Lloyd Thailand Co. Limited (w.e.f. June 06, 2011)
Punj Lloyd Iraq Pte Limited (upto September 25, 2012)*
Sembawang Group Pte Limited (w.e.f. May 10, 2011)
Simon Carves Engineering Limited (w.e.f. April 08, 2011)
Punj Lloyd Singapore Pte Limited (w.e.f. February 15, 2012)
Sembawang Tianjin Heping Pte Limited (w.e.f. July 07, 2011)
Christos Trading Limited (w.e.f. February 23, 2012)
Christos Aviation Limited (w.e.f. October 24, 2012) **
Graystone Bay Limited (w.e.f. February 05, 2013) **
Joint Ventures
Thiruvananthpuram Road Development Company Limited Asia Drilling
Services Limited (upto June 30, 2012)*
Kaefer Punj Lloyd Limited (upto February 15, 2013)#
Swissport Punj Lloyd India Private Limited (under liquidation) (upto
September 30, 2011)
Joint Venture of Whessoe Oil and Gas Limited and Punj Lloyd Limited
Ramprastha Punj Lloyd Developers Private Limited Total-CDC-DNC Joint
Operation Kumagai-Sembawang-Mitsui Joint Venture Kumagai-SembCorp Joint
Venture (DTSS)
Kumagai-SembCorp Joint Venture Philipp Holzmann-SembCorp Joint Venture
Semb-Corp Daewoo Joint Venture
Sime Engineering Sdn Bhd Sembawang Malaysia Sdn Bhd Joint Venture
Sime Engineering Sdn Bhd SembCorp Malaysia Sdn Bhd Joint Venture
Punj Lloyd PT Sempec Indonesia
PT Kekal Adidaya
Punj Lloyd Group Joint Venture
Public Works Company Tripoli Punj Lloyd Joint Venture
Sembawang Precast System LLC
Total Sempac joint Operation
Aero Euro Engineering India Private Limited (w.e.f. May 13, 2011)
Punj Lloyd Dynamic LLC (w.e.f. March 19, 2012)
Sembawang Caspi Engineering and Construction LLP PLE TCI Engineering
Limited (w.e.f. March 19, 2012)
Sembawang-Leader Joint Venture (w.e.f. August 03, 2012)*
PLE TCI Engenharia Ltda (w.e.f. March 09, 2012)
Associates
Reliance Contractors Private Limited
Ventura Development (Myanmar) Pte Limited
Reco Sin Han Pte Limited
Air Works India (Engineering) Private Limited
Olive Group Capital Limited
Olive Group India Private Limited
Hazaribagh Ranchi Expressway Limited
* These entities have been incorporated / formed/ disposed off during
the year.
** These entities have been acquired during the year.
# The Company has ceased to have the control over the operations of the
joint venture w.e.f. February 15, 2013. Key Managerial Personnel
Atul Punj - Chairman
Luv Chhabra - Director (Corporate Affairs)
Pawan Kumar Gupta - Whole Time Director
Relatives of Key Managerial Personnel
S.N.P. Punj - Father of Chairman
Arti Singh - Sister of Chairman
Indu Rani Punj - Mother of Chairman
Navina Punj - Wife of Chairman
Uday Punj - Brother of Chairman
Manglam Punj - Wife of Brother of Chairman
Shiv Punj - Son of Chairman
Jai Punj - Son of Brother of Chairman
Dev Punj - Son of Brother of Chairman
Jyoti Punj - Sister of Chairman
Enterprises over which Key Managerial Personnel or their relatives are
exercising significant influence
Pt. Kanahya Lal Dayawanti Punj Charitable Society - Chairmanship of
Father of Chairman Collectible @ The Inside Story - Owned by Sister of
Chairman
Spectra Punj Finance Private Limited - Shareholding of Chairman
Cawdor Enterprises Limited - Shareholding of Chairman
Uday Punj (HUF) - HUF of Brother of Chairman
K.R. Securities Private Limited - Shareholding of Brother of Chairman
Atul Punj (HUF) - HUF of Chairman
Vishwadeva Builders and Promoters Private Limited - Shareholding of
Sister of Chairman
PTA Engineering and Manpower Services Private Limited - Shareholding of
Chairman
PLE Hydraulics Private Limited - Shareholding of Chairman
Petro IT Limited - Shareholding of Brother of Chairman
Artcon Private Limited - Shareholding of Chairman
Mangalam Equipment Private Limited - Shareholding of Chairman
Intramural Design Limited - Shareholding of Sister of Chairman
8. Contingent liabilities not provided for :
As at March
31, 2013 As at March
31, 2012
a) Liquidated damages deducted by
customers not accepted by the Company
and pending final settlement. * 171.75 171.75
b) Corporate guarantees given on behalf
of subsidiaries, joint ventures and
associates 4,389.74 4,498.97
* excludes possible liquidated damages which can be levied by customers
for delay in execution of projects. The management, based on
consultation with various experts, believes that there exist strong
reasons why no liquidated damages shall be levied by these customers.
Although, there can be no assurances, the Company believes, based on
information currently available, that the ultimate resolution of these
proceedings is not likely to have a material adverse effect on the
results of operations, financial position or liquidity of the Company.
c) (i) Sales tax demands of Rs. 22.82 crores (Previous year Rs. 68.76
crores) on disallowance of deduction on labour and services of the
works contracts pending with Sales Tax Authorities and High Court.*
(ii) Sales tax demands of Rs. 6.60 crores (Previous year Rs. 6.70
crores) for non submission of statutory forms.*
(iii) Sales tax demands of Rs. 8.61 crores (Previous year Rs. 29.66
crores) for purchases against sales tax forms not accepted by
department.*
(iv) Entry tax demands of Rs. 4.49 crores (Previous year Rs. 4.26
crores) against entry of goods into the local area not accepted by
department.*
(v) Sales tax demands of Rs. 0.07 crores (Previous year Rs 0.07 crores)
against the central sales tax demand on sales in transit.*
(vi) Sales tax demands of Rs. 2.77 crores (Previous year Rs. 2.77
crores) for non-admissible of deduction of supply turnover.*
* Based on favorable decisions in similar cases/legal opinions taken by
the Company/consultations with solicitors, the management believes that
the Company has good chances of success in above mentioned cases and
hence, no provision there against is considered necessary.
d) On March 17, 2010, the Company was subjected to a search and seizure
operation under Section 132 and survey under Section 133A of the Income
Tax Act, 1961. During the search and seizure operation, statements of
Company''s officials were recorded in which they were made to offer
some unaccounted income of the Company for the financial year 2009-10.
The above statements were made under undue mental pressure and physical
exhaustion and therefore Company has retracted the above statements
subsequently. The Company has filed fresh returns of income for
Assessment years 2004-05 to 2009-10 in pursuance of the notices dated
August 25, 2010 from the Income Tax Department ("the Department").
Till the previous year ended March 31, 2012, the Department has
completed the assessments for the assessment years 2004-05 to 2006-07
and has raised demands aggregating to Rs. 146.57 crores by making some
frivolous additions to the total income of the Company which has been
adjusted against the income tax refunds of the subsequent years. The
Company had filed the appeals against these additions on January 27,
2012 and based on the expert opinion, the Company is hopeful that it
will get relief in appeal. During the current year, the assessment
proceedings for the assessment years 2007-08 to 2010-11 have been
completed and the draft assessment orders have been issued by the
Department. The amount of demand, if any, can be ascertained only upon
issue of the final orders by the Department.
9. Derivative Instruments and Un-hedged Foreign Currency Exposure
The Company, along with its Indian Operations, is operating outside
India through its branches and an unincorporated joint venture
established in Abu Dhabi, Oman, Qatar, Libya, Thailand, Dubai, Bahrain,
Columbia and Mexico.
10. The Company had executed certain projects for some customers in
earlier years. These customers have withheld amounts aggregating to Rs.
58.02 crores (Previous year Rs. 308.57 crores) on account of deductions
made/amount withheld by some customers, which are being carried as
trade receivables. The Company has also filed certain claims against
these customers. The Company has gone into arbitration/legal
proceedings against these customers for recovery of amounts withheld
and for claims lodged by the Company. Pending outcome of
arbitration/legal proceedings, amounts withheld for deductions made/old
work in progress are being carried forward as recoverable. The Company
has been legally advised that there is no justification in imposition
of deductions by these customers and hence the above amounts are
considered good of recovery.
11. The Company has an investment in the equity and preference capital
amounting to Rs. 299.71 crores (Previous year Rs. 299.71 crores) in its
subsidiary at Singapore and has loans and advance outstanding to Rs.
1,538.71 crores (Previous year Rs. 1,466.31 crores) as at March 31,
2013 from the said subsidiary. The subsidiary has accumulated losses of
Rs. 413.27 crores (Previous year Rs. 625.75 crores) as at March 31,
2013. However, the subsidiary is holding certain strategic investments.
Considering the intrinsic value of the investments held by the
subsidiary, based on the valuation carried out by an independent
valuer, and also considering the long term business plan of the
subsidiary including the forecasts of profitability of operations, the
Company is of the view that there is no other than temporary diminution
in the value of investment and accordingly, no provision is considered
necessary in the financial statements at this stage on the above
account.
12. The Company has unbilled revenue (work-in-progress) of Rs. 532.86
crores on certain projects on account of variation arising due to
change in scope of work and delays which is attributable to the
customers. The Management, based on the expert inputs, is of the view
that the Company would collect the above stated amount upon completion
of the processing of the claims by the clients. Accordingly, the above
amounts are considered good of recovery.
13. Sales include Rs. 275.53 crores (Previous year Rs. 198.52 crores)
representing the retention money which will be received by the Company
after the satisfactory performance of the respective projects. The
period of release of retention money may vary from six months to
eighteen months depending upon the terms & conditions of the projects.
14. The Company had during an earlier year accounted for a claim of
Rs. 243.03 crores (Previous year Rs. 243.03 crores) on Heera
Redevelopment Project with Oil and Natural Gas Corporation Limited,
based upon management''s assessment of cost over-run arising due to
design changes and consequent changes in the scope of work on the
project and had also not accounted for liquidated damages amounting to
Rs. 7.30 crores (Previous year Rs. 7.30 crores) deducted by the
customer since it is of the view that the delay in execution of the
project is attributable to the customer. The Company had initiated
arbitration proceedings against the customer during an earlier year,
which has, on mutual agreement with the client, been adjourned. The
dispute has been referred to the Outside Expert Committee which is
likely to resolve the same in an expeditious manner. The management,
based on the expert inputs, is confident of recovery of amounts
exceeding the recognized claim and waiver of liquidated damages.
15. Asset of Rs. 8.23 crores, (Previous year Rs. 7.29 crores)
recognized by the Company as ''Minimum alternate tax credit
entitlement'' under ''Loans and advances'', in respect of minimum
alternate tax payment for current and earlier years, represents that
portion of minimum alternate tax liability which can be recovered and
set off in subsequent periods based on the provisions of Section 115JAA
of the Income Tax Act, 1961. The management based on the present trend
of profitability and also the future profitability projections, is of
the view that there would be sufficient taxable income in foreseeable
future, which will enable the Company to utilize Minimum alternate tax
credit assets.
16. Projects materials consumed
These comprise miscellaneous items meant for execution of projects.
Since these items are of different nature and specifications, it is not
practicable to disclose the quantitative information in respect
thereof.
17. Amount in the financial statements are presented in INR crores,
unless otherwise stated. Certain amounts that are required to be
disclosed and do not appear due to rounding off are expressed as 0.00.
One crore equals 10 million.
18. Previous year figures
Previous year figures have been regrouped/reclassified, where
necessary, to conform to this year''s classification.
Mar 31, 2012
1. Corporate Information
Punj Lloyd Limited (the Company) is a public Company domiciled in India
and incorporated under the provisions of the Companies Act, 1956. The
Company is primarily engaged in the business of engineering,
procurement & construction in the oil & gas sector and infrastructure
sector. The Company caters to both domestic and International markets.
2. Basis of preparation
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the Accounting Standards notified
by Companies (Accounting Standards) Rules, 2006, (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention, except in case of certain fixed assets for
which revaluation had been carried out.
The accounting policies adopted in the preparation of financial
statements have been consistently applied by the Company and are
consistent with those of previous year, except for the change in
accounting policy explained below.
1. Gross block of Tangible Assets includes Rs. 24.02 crores and
accumulated depreciation includes Rs. 20.14 crores (Previous year Rs.
24.82 crores and Rs. 20.59 crores respectively) on account of
revaluation of assets carried out in earlier years. The said
revaluation was carried out during the year ended March 31, 1998 by an
external agency using "price indices released by the Economic
Advisor's Office, Ministry of Industry/verbal Quotation/Comparison/
estimation or any other method considered prudent in specific cases".
Consequent to the said revaluation, there is an additional charge of
depreciation of Rs. 0.25 crore (Previous year Rs. 0.27 crore) and
equivalent amount has been withdrawn from revaluation reserve and
credited to Statement of Profit and Loss and there is additional profit
of Rs. 0.10 crore (Previous year Rs. 0.22 crore) on account of sale of
assets, an equivalent amount has been withdrawn from revaluation
reserve and credited to Statement of Profit and Loss.
2. Gross block of land includes Rs. 2.10 crores (Previous year Rs.
2.10 crores) on account of revaluation of assets carried out in earlier
years. The said revaluation was carried out during the year ended March
31, 2002 by an external agency using "price indices released by the
Economic Advisor's Office, Ministry of Industry/verbal
Quotation/Comparison/estimation or any other method considered prudent
in specific cases".
3. In compliance with the notification dated March 31, 2009 (as
amended) issued by Ministry of Corporate Affairs, the Company has
exercised the option available under paragraph 46 to the Accounting
Standards 11- The effect of changes in foreign exchange rates.
Accordingly, the foreign exchange loss of Rs. 10.67 crores (Previous
year Rs. 0.08 crore) has been added to Gross block of tangible assets.
4. Gross block of Land includes leasehold land Rs. 6.41 crores
(Previous year Rs.6.41 crores).
5. Furniture, Fixtures and Office Equipment includes leasehold
equipments of the cost of Rs. Nil (Previous year Rs. Nil) given on
lease, accumulated depreciation thereon is Rs. Nil (Previous year Rs.
Nil). Depreciation thereon for the year included Rs. Nil (Previous year
Rs. 0.79 crore).
6. Vehicles of the cost of Rs. 6.25 crores (Previous year Rs. Nil) are
acquired on hire purchase basis. Accumulated depreciation there on is
Rs. 0.71 crore (Previous year Rs. Nil).
7. During the year, the Company has revised the estimated useful life
of air conditioners (included under office equipments) based on
technical estimates made by the management. Accordingly, additional
depreciation of Rs. 0.64 crore has been accounted for in the financial
statements. Had the Company continued to use earlier basis of providing
depreciation, the charge to the statement of profit and loss for the
current year would have been lower by Rs. 0.64 crore and net block of
fixed assets would correspondingly have been higher by same amount.
3. Gratuity and other post-employment benefit plans
The Company has a defined benefit gratuity plan. Under the plan, every
employee who has completed at least five years of service gets a
gratuity on departure at 15 days of last drawn salary for each
completed year of service. The scheme is funded with insurance
companies in the form of qualifying insurance policy.
The following tables summarise the components of net benefit expense
recognised in the statement of profit and loss and the funded status
and amounts recognised in the balance sheet for the plan.
For the purpose of valuation of the options granted upto year ended
March 31, 2012 under ESOP 2005 and ESOP 2006, the compensation cost
relating to Employee Stock Options, calculated as per the intrinsic
value method, is Rs. Nil.
In March 2005, the Institute of Chartered Accountants of India has
issued a Guidance Note on "Accounting for Employees Share Based
Payments" applicable to employee share based plan the grant date in
respect of which falls on or after April 1, 2005. The said Guidance
Note requires the Pro-forma disclosures of the impact of the fair value
method of accounting of employee stock compensation in the financial
statements. Since the enterprise used the intrinsic value
method and the management has obtained fair value of the options at the
date of grant from a valuer, using the 'Black Scholes Valuation
Model' at "Rs. Nil" per option, there is no impact on the
reported profits and earnings per share.
4. Leases
a) Finance Lease: Company as lessee
The Company has finance leases and hire purchase contracts for certain
Project Equipment, the cost of which is included in the gross block of
Plant & Machinery under Tangible Assets. The lease term is for 1-3
years. There is no escalation clause in the lease agreements. There are
no restrictions imposed by lease arrangements.
5. Interest in Joint Ventures:
The Company's interest and share in joint ventures in the jointly
controlled entities / operations are as follows:
Notes:
1) Figures in bracket relate to previous year
2) * The Company's share of Assets, Liabilities, Revenue and
Expenditure has been included on the basis of unaudited financial
statements received from the joint ventures.
3) ** Capital Commitments- Estimated amount of contracts remaining to
be executed on capital account and not provided for (net of advances).
6. Segment Information Business Segments:
The Company's business activity falls within a single business
segment i.e. Engineering and Construction. Therefore, segment reporting
in terms of Accounting Standard 17 on Segmental Reporting is not
applicable.
Geographical Segments*:
Although the Company's major operating divisions are managed on a
worldwide basis, they operate in two principal geographical areas of
the world, in India, its home country, and the other countries.
7. The Micro and Small Enterprises have been identified by the
Company from the available information, which has been relied upon by
the auditors.
According to such identification, the disclosures in respect to Micro
and Small Enterprise as per Micro, Small and Medium Enterprise
Development Act, 2006 is as follows:
8. The Company had executed certain projects for some customers in
earlier years. These customers have withheld amounts aggregating to Rs.
308.57 crores (Previous year Rs. 72.51 crores) on account of deductions
made/ amount withheld by some customers and pending billing against
certain old work in progress, which are being carried as trade
receivables/ work in progress. The Company has also filed certain
claims against these customers. The Company has gone into arbitration/
legal proceedings against these customers for recovery of amounts
withheld and for claims lodged by the Company. Pending outcome of
arbitration/ legal proceedings, amounts withheld for deductions made/
old work in progress are being carried forward as recoverable. The
Company has been legally advised that there is no justification in
imposition of deductions by these customers and hence the above amounts
are considered good of recovery.
9. Other current assets include Rs. 0.42 crore (Previous year Rs.
0.42 crore) recoverable pursuant to agreements for sale of 128,400
shares (Previous year 128,400 shares) of Panasonic Energy India Company
Limited entered into on March 27, 1992, which are subject matter of a
dispute in the Honourable High Court at Bombay, wherein the Company has
been restrained from transferring these shares till the final disposal
of the suit. These shares remain in the possession of the Company and
the market value thereof at close of the year is Rs. 0.63 crore
(Previous year Rs. 0.85 crore).
10. During an earlier years, the Company had entered into agreements
to sell its investments in the shares of certain companies of the cost
of Rs. 7.64 crores (Previous year Rs.7.64 crore) and had received
advances representing consideration for the future sale of shares (as
defined in the above agreements) in these companies, including all
accretions thereto till the date of sale. Through the above agreements
to sell, the Company had agreed to give all the powers and rights in
these shares to purchasers. In terms of the above arrangement, the
Company in those years have accounted for Rs. 5.92 crores, being the
amount received in excess of book value of shares (for all the
companies) as income on transfer of the powers and rights in the
underlying shares to purchasers and the balance consideration of Rs.
7.64 crores (Previous year Rs. 7.64 crores) against investment in above
shares appearing in the books is shown as deposits under Current
Liabilities to be adjusted against the transfer of shares in the above
companies on the closing date as defined in the above agreement.
11. The Company has an investment in the equity and preference capital
amounting to Rs. 299.71 crores (Previous year Rs. 299.71 crores) in its
subsidiary at Singapore and has loans and advance outstanding to Rs.
1,466.31 crores (Previous year Rs. 1,329.04 crores) as at March 31,
2012 from the said subsidiary. The subsidiary has accumulated losses of
Rs. 631.55 crores (Previous year Rs. 808.11 crores) as at March 31,
2012. However, the subsidiary is holding certain strategic investments.
Considering the intrinsic value of the investments held by the
subsidiary, based on the valuation carried out by an independent
valuer, and also considering the long term business plan of the
subsidiary including the forecasts of profitability of operations, the
Company is of the view that there is no other than temporary diminution
in the value of investment and accordingly, no provision is considered
necessary in the financial statements at this stage on the above
account.
12. The Company's branch at Libya has tangible assets (net) and
current assets aggregating to Rs. 593.05 crores as at March 31, 2012 in
relation to certain projects being executed in that country. The
overall civil and political disturbances and unrest in Libya is getting
stabilised after a period of civil and political disturbance and
unrest. The management, after considering the present environment and
economic conditions in Libya, is confident of realisation of above
amounts and accordingly, no adjustments have been considered necessary
in these financial statements. The Company has also filed the details
of the outstanding assets with the Ministry of External Affairs,
Government of India.
13. Foreign Currency Convertible Bonds
a. During an earlier year, the Company had issued at par, 5 years and
1 day Zero Coupon US $ denominated Foreign Currency Convertible Bonds
(FCCB) aggregating to US $ 125,000 thousand (Rs. 554.38 crores as on
the date of issue) comprising 1,250 bonds of US $ 100,000 each to
invest in capital goods, repayment of international debts, possible
acquisitions outside India, investment in BOOT projects, any other
use as may be permitted under applicable law or by the regulatory
bodies from time to time. The bond holders had an option of converting
these bonds into equity shares. For the purpose, the number of equity
shares to be issued shall be determined taking the initial conversion
price of Rs. 1,362.94 per equity share (Face value Rs. 10) and a fixed
rate of exchange conversion of Rs. 44.35 = US $ 1.00, at any time on
or after July 1, 2006 and prior to close of business on April 07, 2011,
unless redeemed, repurchased and cancelled or converted. This rate is
used to determine dilutive Equity Shares against outstanding bonds.
b. Subsequent to the issue of these FCCBs, the Company, during the
year ended March 31, 2007, sub-divided the face value of equity shares
from Rs. 10 to Rs. 2.
c. During the current year, Zero Coupon Convertible Bonds have been
redeemed at a redemption premium equal to 125.86% of the outstanding
principal amount on the maturity date. The Company up to the date of
redemption, adjusted the amount of redemption premium of Rs. 57.66
crores (Previous year Rs. 59.27 crores) by the amount appearing in
securities premium account in pursuance of Section 78 of the Companies
Act, 1956 since the bonds were considered as monetary liability.
14. On March 17, 2010, the Company was subjected to a search and
seizure operation under Section 132 and survey under Section 133A of
the Income Tax Act, 1961. During the search and seizure operation,
statements of Company's officials were recorded in which they were
made to offer some unaccounted income of the Company for the financial
year 2009-10. The above statements were made under undue mental
pressure and physical exhaustion and therefore Company has retracted
the above statements subsequently. The Company has filed fresh returns
of income for Assessment years 2004-05 to 2009-10 in pursuance of the
notices dated August 25, 2010 from the Income Tax Department.
Assessments for the assessment years 2004-05 to 2006- 07 have been
completed by the Income Tax Department by making some frivolous
additions to the total income of the Company. The Income Tax Department
has raised demands aggregating to Rs.146.57 crores, out of which Rs.
101.21 crores have been adjusted against the income tax refunds of the
subsequent years. The Company had filed the appeals against these
additions on January 27, 2012 and based on the expert opinion, The
Company is hopeful that it will get relief in appeal. Assessment
proceedings for the assessment years 2007-08 to 2010-11 are going on.
15. Sales include Rs. 198.52 crores (Previous year Rs. 71.58 crores)
representing the retention money which will be received by the Company
after the satisfactory performance of the respective projects. The
period of release of retention money may vary from six months to
eighteen months depending upon the terms & conditions of the projects.
16. The Company had during an earlier years accounted for a claim of
Rs. 243.03 crores (Previous year Rs. 243.03 crores) on Heera
Redevelopment Project with Oil and Natural Gas Corporation Limited,
based upon management's assessment of cost over-run arising due to design
changes and consequent changes in the scope of work on a project and
had also not accounted for liquidated damages amounting to Rs. 7.30
crores (Previous year Rs. 65.49 crores) deducted by the customer since
it is of the view that the delay in execution of the project is
attributable to the customer. The Company had initiated arbitration
proceedings against the customer during the previous year, which has,
on mutual agreement with the client, been adjourned. The dispute is
being referred to the Outside Expert Committee which is likely to
resolve the dispute in an expeditious manner. The management, based on
the expert inputs, is confident of recovery of amounts exceeding the
recognized claim and waiver of liquidated damages.
17. The Company had during the previous year accounted for claims of
Rs. 89.73 crores (Previous year Rs. 89.73 crores) on two contracts,
based upon management's assessment of cost over-run arising due to
delay in supply of free issue material by the customer, changes in
scope of work and/or price escalation of materials used in the
execution of the projects. Further, the Company has also withheld Rs.
39.43 crores (Previous year Rs. 50.01 crores) of its vendors, involved
in above projects, which would be released after recovery/settlement of
aforesaid claims. The management, based on its assessment, is confident
of recovery of amounts exceeding the recognized claims.
18. The Company has unbilled work-in- progress inventory of Rs.
1,000.10 crores (Previous year Rs. 1,084.60 crores) on certain projects
which are completely executed/ nearing completion. The Company is of
the view that the Company would collect at least the above stated
amount after completion of certain pending formalities. Further, Rs.
58.77 crores (Previous year Rs. 25.45 crores) withheld by certain
customers on account of miscellaneous deductions, the Company is of the
view that there is no justification in imposition of such deductions by
the customers. Accordingly, the above amounts are considered good of
recovery.
19. The Company had made a commitment to make contributions to Indian
School of Business, Mohali amounting to Rs. 50.00 crores (Previous year
Rs.50.00 crores) in a phased manner over a period of three years vide a
resolution passed in the meeting of Board of Directors dated May 30,
2008. Out of above, the Company has contributed Rs. 45.00 crores (up to
previous year Rs. 21.00 crores) till the close of the year.
20. Asset of Rs. 7.29 crores, (Previous year Rs. 12.60 crores)
recognized by the Company as 'MAT Credit Entitlement' under
'Loans and Advances', in respect of MAT payment for earlier years,
represents that portion of MAT liability which can be recovered and set
off in subsequent periods based on the provisions of Section 115JAA of
the Income Tax Act, 1961. The management based on the present trend of
profitability and also the future profitability projections, is of the
view that there would be sufficient taxable income in foreseeable
future, which will enable the Company to utilize MAT credit assets.
21. Projects materials consumed
These comprise miscellaneous items meant for execution of projects.
Since these items are of different nature and specifications, it is not
practicable to disclose the quantitative information in respect
thereof.
22. Amount in the financial statements are presented in INR crores,
unless otherwise stated. Certain amounts that are required to be
disclosed and do not appear due to rounding off are expressed as 0.00.
One crore equals 10 million.
23. Previous year figures
Till the year ended March 31, 2011, the Company was using pre-revised
Schedule VI to the Companies Act 1956, for preparation and presentation
of its financial statements. During the year ended March 31, 2012, the
revised Schedule VI notified under the Companies Act 1956, has become
applicable to the Company. The Company has reclassified previous year
figures to conform to this year's classification. The adoption of
revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it significantly impacts presentation and disclosures made in the
financial statements, particularly presentation of balance sheet.
Previous year's figures have been regrouped wherever necessary to
conform to this year's classification.
Mar 31, 2011
1. [7] Contingent liabilities not provided for :
Amount in INR'000
2010-11 2009-10
a) i) Bank Guarantees given by the Com- 8,321,696 7,303,547
pany
ii) Bank Guarantees given on behalf of 179,500 179,000
subsidiaries and joint ventures
b) Liquidated damages deducted by cus- 2,206,562 2,709,427
tomers not accepted by the Company
and pending final settlement.
(Also refer notes 5, 6 and 12 below)*
c) Corporate Guarantees given on behalf of 48,292,915 61,874,700
subsidiaries, joint ventures and associates
* excludes possible liquidated damages which can be levied by customers
for delay in execution of projects. The management believes that there
exist strong reasons why no liquidated damages shall be levied by these
customers.
d) Estimated future investments in joint venture & other companies in
terms of respective shareholder agreements amount in aggregate to Rs.
249,870 thousand (Previous year Rs. 289,919 thousand).
e) (i) Sales tax demand of Rs. 298,408 thousand (Previous year Rs.
285,948 thousand) on disallowance of deduction on labour and services
of the works contracts pending with Sales Tax Authorities and High
Court.*
(ii) Sales tax demand of Rs. 66,969 thousand (Previous year Rs. 66,006
thousand) for non submission of statutory forms.*
(iii) Sales Tax liability of Rs. 86,086 thousand (Previous year Rs.
84,946 thousand) for purchases against sales tax forms not accepted by
department.*
(iv) Entry Tax liability of Rs. 42,649 thousand (Previous year Rs.
32,806 thousand) against entry of goods into the local area not
accepted by department.*
(v) Sales Tax liability of Rs. 720 thousand (Previous year Rs 720
thousand) against the Central Sales Tax demand on sales in transit.*
(vi) Demand for nonpayment of excise duty on coating of pipes Rs. 9,567
thousand (Previous year Rs. Nil).*
(vii) Sales tax demand of Rs. 27,710 thousand (Previous year Rs. Nil)
for non-admissible of deduction of supply turnover.*
(viii) Penalty for late deposit of Service Tax of Rs. 172,796 thousand
(Previ- ous year Rs. 172,796 thousand) and Rs. 15,915 thousand
(Previous year Rs. 15,915 thousand) as disallowance of deduction of
supply turnover.*
(ix) Sales tax demand in respect of erstwhile Internet Service Division
re- garding taxability of internet services Rs. Nil (Previous year Rs.
39,877 thousand).* * Based on favorable decisions in similar cases /
legal opinions taken by the Company / consultations with solicitors,
the management believes that the Company has good chances of success in
above mentioned cases and hence, no provision there against is
considered necessary.
Mar 31, 2010
1. Nature of Operations
Punj Lloyd Limited is a Company registered under Indian Companies Act,
1956. The Company is primarily engaged in the business of engineering &
construction in the oil & gas sector and infrastructure sector.
The Company, along with its subsidiaries, Sembawang Engineers &
Constructors Pte. Limited, Singapore, Simon Carves Limited, United
Kingdom, and other joint ventures and associates, is entitled to bid
for verticals of infrastructure sectors and EPC capabilities in
Petrochemical domain including LDPE, PVC, Styrene and Refinery Process.
The Company along with its subsidiaries has strong presence in its home
country India and in South East Asia, Middle East and Europe.
2. Related Parties
Names of related parties where control exists irrespective of whether
transactions have occurred or not Subsidiary Companies Spectra Punj
Lloyd Limited
Punj Lloyd International Limited
Punj Lloyd Kazakhstan LLP
Punj Lloyd Industries Limited
Punj Lloyd Aviation Limited
Punj Lloyd Infrastructure Limited
Atna Investments Limited
Spectra Net Limited (upto May 31, 2008)
Punj Lloyd Upstream Limited
PT Punj Lloyd Indonesia
PLN Construction Limited
Punj Lloyd Pte Limited
PL Engineering Limited (Formerly known as Simon Carves India Limited)
Sembawang Infrastructure (India) Private Limited (w.e.f March 31, 2009)
Spectra ISP Networks Private Limited (Formerly known as PL Engineering
Private Limited (w.e.f. October 23, 2008))
Indtech Global Systems Limited (Formerly known as Punj Lloyd Systems
Private Limited (w.e.f. March 31, 2009)
Punj Lloyd SKIL Marine Systems Limited (w.e.f July 01, 2009)*
Names of related parties where control exists irrespective of whether
transactions have occurred or not Step Down Subsidiary Companies
Spectra Net Holding Limited (upto May 31, 2008)
Spectra Punjab Limited (upto May 31, 2008)
Sembawang Engineers and Constructors Pte. Limited
PT Sempec Indonesia
Sembawang Development Pte Limited
PT Indo Precast Utama
PT Indo Unggul Wasturaya
Sembawang (Tianjin) Construction Engineering Co. Limited
Construction Technology Pte Limited
Contech Trading Pte Limited
PT Contech Bulan
Construction Technology (B) Sdn Bhd
Sembawang (Hebei) Building Materials Co. Limited
Sembawang Infrastructure (Mauritius) Limited
Sembawang Infrastructure (India) Private Limited (upto March 31, 2009)
Sembawang-JTCI (China) Pte Limited (upto February 04, 2010)*
Sembawang UAE Pte Limited
SC Architects and Engineers Pte Limited
Sembawang (Malaysia) Sdn Bhd
Jurubina Sembawang (M) Sdn Bhd
Simon Carves Limited
Sembawang Simon-Carves De Mexico S.A DE. CV
Sembawang Engineers and Constructors Middle East FZE
Simon Carves Singapore Pte Limited
Sembawang Bahrain SPC
Sembawang Precast System LLC
Punj Lloyd Oil and Gas (Malaysia) Sdn Bhd
Punj Lloyd Engineers & Constructors Pte Limited. (Formerly known as
Abudhabi
Engineers & Construction Pte. Limited. (w.e.f. November 26, 2008)
Technodyne International Limited (w.e.f. June 02, 2008)
Punj Lloyd Delta Renewables Private Limited (w.e.f. November 5, 2009)**
Delta Solar (Bangladesh) Limited (w.e.f November 5, 2009)**
Punj Lloyd Delta Renewables Pte Limited (w.e.f. November 5, 2009)**
Buffalo Hills Limited. (w.e.f September 30, 2009)**
Technodyne Engineers Limited (w.e.f March 9, 2010)*
Sembawang Caspi Engineers and Constructors LLP (w.e.f. January 11,
2010)*
Sembawang Libya General Contracting & Investment Company (w.e.f. August
11, 2009)*
Sembawang Australia Pty Limited (w.e.f. November 5, 2009)*
Sembawang Hong Kong Limited (w.e.f. October 13, 2009)*
Sembawang Securities Pte Limited (w.e.f. February 5, 2010)*
Sembawang Equity Capital Pte Limited (w.e.f. August 1, 2009)*
Names of other related parties with whom transactions have taken place
during the year Joint Ventures
Thiruvananthpuram Road Development Company Limited
Persys-Punj Lloyd JV
Asia Drilling Services Limited (Joint Venture of Punj Lloyd
International Limited) Kaefer Punj Lloyd Limited
Swissport Punj Lloyd India Private Limited (under liquidation)
Dayim Punj Lloyd Construction Contracting Co. Limited
Joint Venture of Whessoe Oil and Gas Limited and Punj Lloyd Limited
Ramprastha Punj Lloyd Developers Private Limited
Syna Petrochemical Engineering Company (up to January 25, 2010)
Total-CDC-DNC Joint Operation
Kumagai-Sembawang-Mitsui Joint Venture
Kumagai-SembCorp Joint Venture (DTSS)
Kumagai-SembCorp Joint Venture
Philipp Holzmann-SembCorp Joint Venture
Semb-Corp Daewoo Joint Venture
Sime Engineering Sdn Bhd Sembawang Malaysia Sdn Bhd Joint Venture
Sime Engineering Sdn Bhd SembCorp Malaysia Sdn Bhd Joint Venture
Punj Lloyd PT Sempec Indonesia
Associates
Gaitry Cable Network Private Limited (upto May 31, 2008)
City Vision Private Limited (upto May 31, 2008)
Shitul Engineering Private Limited (upto May 31, 2008)
Sunstar Network & Technologies Private Limited (upto May 31, 2008)
Dot Com Holdings Private Limited (upto May 31, 2008)
Satellite Vision Private Limited (upto May 31, 2008)
Reliance Contractors Private Limited
Ventura Development (Myanmar) Pte Limited
Regional Hotel Pte Limited (up to April 15, 2009)*
System-Bilt (Myanmar) Limited (up to April 15, 2009)*
Realand Pte Limited (up to May 06, 2009)*
Reco Sin Han Pte Limited
Pipavav Shipyard Limited ( up to March 27, 2010)*
Air Works India Engineering Private Limited
Olive Group BV (w.e.f. August 18, 2008)
Olive Group India Private Limited (w.e.f. June 25, 2009)**
Hazaribagh Ranchi Expressway Limited (w.e.f August 01, 2009)**
Ethanol Ventures Grimsby Limited (w.e.f. February 27, 2009)
* These entities have been incorporated / formed/ disposed off during
the year.
**These entities have been acquired during the year.
Key Managerial Personnel
Atul Punj Chairman
VK. Kaushik Managing Director (up to December 16, 2009)
Luv Chhabra Director (Corporate Affairs)
P K Gupta Director
Relatives of Key Managerial Personnel
S.N.P.Punj - Father of Chairman
Arti Singh - Sister of Chairman
Indu Rani Punj - Mother of Chairman
Navina Punj- Wife of Chairman
Uday Punj - Brother of Chairman
Manglam Punj - Wife of Brother of Chairman
Shiv Punj - Son of Chairman
Jai Punj - Son of brother of Chairman
Dev Punj - Son of brother of Chairman
Jyoti Punj- Sister of Chairman
Kumkum Kaushik - Wife of Managing Director (up to December 16, 2009)
Enterprises over which relatives of Key Managerial Personnel are
exercising significant influence
Pt. Kanahya Lal Dayawanti Punj Charitable Society - Chairmanship of
father of Chairman
Collectible @ The Inside Story - Owned by Sister of Chairman
Indtech Global Systems Limited (Formerly known as Punj Lloyd Systems
Private Limited (upto March 31, 2009) - Shareholding of Chairman
Spectra Punj Finance Private Limited - Shareholding of Chairman
Cawdor Enterprises Limited - Shareholding of Chairman
Uday Punj (HUF) - HUF of brother of Chairman
K.R.Securities Private Limited - Shareholding of Brother of Chairman
Atul Punj (HUF) - HUF of Chairman
Vishwadeva Builders and Promoters Private Limited - Shareholding of
sister of Chairman
PTA Engineering and Manpower Services Private Limited - Shareholding of
Chairman
PLE Hydraulics Private Limited - Shareholding of Chairman
Special Steel Forgings Private Limited - Shareholding of Chairman
Petro IT Limited - Shareholding of Brother of Chairman
3. Interest in joint ventures:
Note: (a) As per joint venture agreements, the scope & value of work of
each partner has been clearly defined and accepted by the clients. The
Companys share in Assets, Liabilities, Income and Expenses are duly
accounted for in the accounts of the Company in accordance with such
division of work and therefore does not require separate disclosure.
However, joint venture partners are jointly & severally liable to
clients for any claims in these projects.
4. Contingent liabilities not provided for : (Amount in INR 000)
2009-10 2008-09
a) i) Bank Guarantees given by
the Company 7,303,547 4,743,929
ii) Bank Guarantees given on behalf
of subsidiaries and joint ventures 179,000 234,456
b) Liquidated damages deducted by
customers not accepted by the Company
and pending final 2,709,427 508,835
settlement. (Also refer note 11 and
31 below)*
c) Corporate Guarantees given on behalf
of subsidiaries, joint ventures and
associates 61,874,700 60,768,392
* excludes possible liquidated damages which can be levied by customers
for delay in execution of projects. The management believes that there
exist strong reasons why no liquidated damages shall be levied by these
customers.
d) Estimated future investments in joint venture & other companies in
terms of respective shareholder agreements amount in aggregate to Rs.
289,919 thousand (Previous year Rs. 289,999 thousand).
e) (i) Sales tax demand of Rs. 68,403 thousand (Previous year Rs.
52,173 thousand) on the material components of the works contracts
pending with Sales Tax Authorities and High Court. *
(ii) Sales tax demand of Rs. 66,006 thousand (Previous year Rs. 66,006
thousand) for non submission of statutory forms.*
(iii) Sales tax demand of Rs. 217,545 thousand (Previous year Rs. 41,159
thousand) for disallowance of deduction on purchases.*
(iv) Sales Tax liability of Rs. 84,946 thousand (Previous year Rs.
84,946 thousand) for purchases against sales tax forms not accepted by
department.*
(v) Entry Tax liability of Rs. 23,735 thousand (Previous year Rs 32,806
thousand) against entry of goods into the local area not accepted by
department.*
(vi) Sales Tax liability of Rs. 720 thousand (Previous year Rs 720
thousand) against the Central Sales Tax demand on sales in transit.*
(vii) Penalty for late deposit of Service Tax of Rs. 172,796 thousand
(Previous year Rs. 108,068 thousand) and Rs. 15,915 thousand (Previous
year Rs. Nil) as disallowance of deduction of supply turnover.*
(viii) Sales tax demand in respect of Internet Service Division regarding
taxability of internet services Rs. 39,877 thousand (Previous year
Rs. 39,877 thousand). The same is contested by the Company in view of
similar matter decided by the Honble Supreme Court of India in the case
of Bharat Sanchar Nigam Limited & another Vs Union of India & others
wherein it was held that internet services are not taxable as goods. *
*Based on favourable decisions in similar cases / legal opinions taken
by the Company / consultations with solicitors, the management believes
that the Company has good chances of success in above mentioned cases
and hence, no provision thereagainst is considered necessary.
5. Gratuity and other post-employment benefit plans
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days basic salary (last drawn salary) for each completed year of
service. The scheme is funded with an insurance company in the form of
a qualifying insurance policy.
The following tables summarise the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the respective plans.
6. The Company had executed certain projects for some customers in
earlier years. These customers have withheld amounts aggregating to Rs.
587,863 thousand (Previous year Rs. 605,083 thousand) on account of
liquidated damages and other deductions, which are being carried as
sundry debtors. Some of these customers had also not certified the
final bills amounting to Rs. 31,455 thousand (Previous year Rs. 95,455
thousand), which are being carried forward under Work in Progress
Inventory. The company has also filed certain claims against these
customers. The Company had gone into arbitration against these
customers for recovery of amounts withheld as liquidated damages and
other deductions and for claims of the Company. Pending outcome of
arbitration, amounts withheld for liquidated damages and other
deductions are being carried forward as recoverable. The Company has
been legally advised that there is no justification in imposition of
liquidated damages and other deductions by these customers and hence
the above amounts are considered good of recovery.
7. The Company had executed a pipeline project for Petronet MHB
Limited in an earlier year. The customer had withheld Rs.4,440 thousand
from the running bills, which are being carried forward under sundry
debtors. The customer had also not certified the final bill amounting
to Rs.64,000 thousand which is being carried forward under Work in
Progress inventory. During the year, arbitration award has been
pronounced in favour of the Company and accordingly the Company has
accounted for additional sums of Rs. 96,988 thousand and Rs. 72,999
thousand as contract revenue and interest income respectively over and
above what is already shown as recoverable in books as receivable and
work in progress. The amount is yet to be received by the Company.
8. Current Assets include Rs 4,225 thousand (Previous year Rs 4,225
thousand) recoverable pursuant to agreements for sale of 128,400 shares
(Previous year 128,400 shares) of Panasonic Energy India Company
Limited entered into on March 27, 1992, which are subject matter of a
dispute in the Honourable High Court at Bombay, wherein the Company has
been restrained from transferring these shares till the final disposal
of the suit. These shares remain in the possession of the Company and
the market value thereof at close of the year is Rs. 7,967 thousand
(Previous year Rs. 4,102 thousand).
9. (a) Donations include an amount of Rs 33,000 thousand (Previous
year Rs. Nil) paid for political purposes to Bhartiya Janta Party - Rs.
16,000 thousand (Previous year Rs. Nil), Indian National Congress -
Rs. 14,000 thousand (Previous year Rs. Nil), Shiromani Akali Dal - Rs.
2,000 thousand (Previous year Rs. Nil), Mahesh Jethmalani - Rs. 500
thousand (Previous year Rs. Nil) and Yashodhara Raje Scindia - Rs. 500
thousand (Previous year Rs. Nil).
(b) The Company had made a commitment to make contributions to Indian
School of Business, Mohali amounting to Rs. 500,000 thousand in a
phased manner over a period of three years vide a resolution passed in
the meeting of Board of Directors dated May 30, 2008. Out of above, the
Company has contributed Rs. 50,000 thousand (Previous year Rs. 50,000
thousand) till the close of the year.
10. a) During an earlier year, the Company had entered into agreements
to sell its investments in the shares of certain Companies of the cost
of Rs.111,974 thousand and had received advances representing
consideration for the future sale of shares (as defined in the above
agreements) in these companies, including all accretions thereto till
the date of sale. Through the above agreements to sell, the Company had
agreed to give all the powers and rights in these shares to purchasers.
In terms of the above arrangement, the Company in that year had accounted
for Rs. 20,300 thousand, being the amount received in excess of book
vale of shares (for all the companies) as income on transfer of the powers
and rights in the underlying shares to purchasers and the balance
consideration of Rs. 111,974 thousand equivalent to the amount of
investment in above shares appearing in the books is shown as deposit
under Current Liabilities to be adjusted against the sale of shares in
the above companies on the date of sale.
b) During the year, the Company has entered into agreements to sell its
investments in the shares of certain Companies of the cost of Rs.
37,700 thousand and has received advances representing consideration
for the future sale of shares (as defined in the above agreements) in
these companies, including all accretions thereto till the date of
sale. Through the above agreements to sell, the Company has agreed to
give all the powers and rights in these shares to purchasers. In terms
of the above arrangement, the Company has accounted for Rs. 38,877
thousand, being the amount received in excess of book value of shares
(for all the companies) as income on transfer of the powers and rights
in the underlying shares to purchasers and the balance consideration of
Rs. 37,700 thousand equivalent to the amount of investment in above
shares appearing in the books is shown as deposit under Current
Liabilities to be adjusted against the sale of shares in the above
companies on the date of sale.
11. Pursuant to an agreement dated March 27, 2010, entered into with
some parties (Purchasers), the Company agreed to sell its investments
in 49,999,000 equity shares of a company to Purchasers subject to
fulfilment of certain conditions by the Company and the Purchasers. The
Company has booked the sale of investment amounting to Rs. 2,537,300
thousand during the year, while the conditions precedent to such sales
have been fully complied with and the Company has received full
consideration against sale of these shares after the close of year. The
Company has recognized profit of Rs 1,187,476 thousand on sale of such
shares.
12. Foreign Currency Convertible Bonds
a. During an earlier year, the Company had issued at par, 5 years and
1 day Zero Coupon US $ denominated Foreign Currency Convertible Bonds
(FCCB) aggregating to US $ 125,000 thousand (Rs. 5,543,750 thousand as
on the date of issue) comprising 1,250 bonds of US $ 100,000 each to
invest in capital goods, repayment of international debts, possible
acquisitions outside India, investment in BOOT projects, any other use
as may be permitted under applicable law or by the regulatory bodies
from time to time. The bond holders have an option of converting these
bonds into equity shares. For the purpose, the number of equity shares
to be issued shall be determined taking the initial conversion price of
Rs. 1,362.94 per equity share (Face value Rs 10) and a fixed rate of
exchange conversion of Rs 44.35 = US $ 1.00, at any time on or after
July 1, 2006 and prior to close of business on March 24, 2011, unless
redeemed, repurchased and cancelled or converted. This rate is used to
determine dilutive Equity Shares against outstanding bonds.
b. Subsequent to the issue of these FCCBs, the Company, during the
year ended March 31, 2007, sub-divided the face value of equity shares
from Rs. 10 to Rs. 2.
c. Zero Coupon Convertible Bonds due 2011 amounting to USD 49,700
thousand (Rs. 2,246,440 thousand) (Previous year USD 49,700 thousand
(Rs. 2,520,287 thousand)) are pending for redemption as on March 31,
2010. Unless these Bonds have been previously converted, redeemed,
repurchased and cancelled, the Company will redeem these Bonds at a
redemption premium equal to 125.86% of the outstanding principal amount
on the maturity date. The Company as a matter of abundant caution has
provided for redemption premium of Rs. 451,400 thousand (Previous year
Rs. 370,445 thousand) upto March 31, 2010 and adjusted the same against
Securities Premium Account in pursuance of section 78 of the Companies
Act, 1956. The bonds are considered monetary liability. The bonds are
redeemable only if there is no conversion of the bonds earlier.
13. The Company, as per the Companies Accounting Standard Rules, 2009,
had exercised the option of deferring the charge to Profit & Loss
Account arising on exchange differences in respect of accounting
periods commencing on or after December 07, 2006, on long term foreign
currency monetary items. As per the option, exchange differences
related to long term foreign currency monetary items and so far as they
relate to the acquisition of depreciable capital assets are capitalized
and depreciated over the useful life of the assets and in other cases,
have been transferred to Foreign Currency Monetary Item Translation
Difference Account and amortized over the balance period of such long
term assets/liabilities but not beyond accounting period ending on or
before March 31, 2011. The unamortized balance in this account as at
March 31, 2010 is Rs. 2,319 thousand (Previous year Rs. (462,946
)thousand).
14. Loans to Subsidiaries include Rs. 1,084,503 thousand (Previous
year Rs. 1,193,057 thousand) (including interest thereon) on account of
loan given by the Company to its step-down subsidiary, Simon Carves
Limited, (Simon) and also encashment of bank guarantee given by the
Company to a customer of such step down subsidiary. As per the audited
financial statements of Simon as at March 31, 2010, it has incurred
substantial losses during the current year and the previous year,
resulting in its accumulated losses far exceeding its net worth. The
Company is hopeful that in view of the restructuring undertaken by
Simon and its future profitability projections, Simon would be able to
repay the above amount.
In any case, Punj Lloyd Pte Ltd, Singapore, a subsidiary of the Company
and the immediate holding Company of Simon, has guaranteed the payment
of above outstanding to the Company in case Simon is unable to pay the
same.
15. During the previous year,the Company had entered into an agreement
to sell its Internet Services Division (ISP) with Citycom Networks
Private Limited. As per the terms of agreement effective from June 01,
2008, the operations and controls of ISP division have been transferred
to the acquirer and all profits/losses that arise after that date are
to the account of the acquirer.
The Company had accordingly not included the results of operation of
ISP Division in its financial statement from June 01, 2008.
For implementation of sale, the Company had filed a Scheme of
arrangement and demerger under Sections-391-394 and other relevant
provisions of the Companies Act, 1956 with the Honble High Court of
Delhi, for demerger of the ISP division of the Company and vesting of
the same in Spectra ISP Networks Private Limited (Formerly PL
Engineering Private Limited), its wholly owned subsidiary, with effect
from the appointed date i.e. June 01, 2008. During the year the Company
has received the order from the Honble High Court of Delhi, for
demerger of the ISP division of the Company and vesting of the same in
Spectra ISP Networks Private Limited w.e.f. the appointed date of June
01, 2008.
16. On March 17, 2010, the Company was subjected to a search and
seizure operation under Section 132 and survey under Section 133A of
the Income Tax Act, 1961. During the search and seizure operation,
statements of Companys officials were recorded in which they were made
to offer some unaccounted income of the Company for the financial year
2009-10. The Company is of the view that the above statements were made
under undue mental pressure and physical exhaustion and it has
retracted the above statements subsequently. In view of the above, tax
liability, if any that may arise on this account is presently
unascertainable.
17. During the year, the Company has issued 27,900,920 equity shares
to Qualified Institutional Buyers @ Rs 240.20 per share on August 11,
2009 under chapter XIII A of SEBI (DIP) Guidelines 2000 as amended from
time to time. Accordingly, Rs. 6,645,999 thousand has been transferred
to Securities Premium Account. Expenses of Rs. 192,760 thousand
incurred in connection with the issue have been adjusted against
Securities Premium Account in terms of Section 78 of the Companies Act,
1956.
18. The Company had during an earlier year obtained approval of
Central Government for a contract entered with a private company in
which a director of the Company is a director, to execute a project for
them for values not exceeding Rs.1,410,000 thousand. The scope of the
project has been enhanced and as at March 31, 2010, it has exceeded the
Central Government approval by Rs. 19,476 thousand. The management is
in the process of informing the scope enhancements to the Central
Government and seeking their approval for the same.
19. Sales include Rs. 1,348,221 thousand (Previous year Rs. 1,819,116
thousand) representing the retention money which will be received by
the Company after the satisfactory performance of the respective
projects. The period of release of retention money may vary from six
months to eighteen months depending upon the terms & conditions of the
projects.
20. The Company has during the year accounted for a claim of Rs.
2,430,300 thousand on a contract, based upon managements assessment of
cost over-run arising due to design changes and consequent changes in
the scope of work on a project and has also not accounted for
liquidated damages amounting to Rs. 654,891 thousand deducted by the
customer since it is of the view that the delay in execution of the
project is attributable to the customer. The management, based on the
expert inputs, is confident of recovery of amounts exceeding the
recognized claim which they shall pursue once they have fully executed
the project and is also confident of waiver of liquidated damages.
21. a) During the current year, in one of the projects being executed
by the Company, consequent to revision in estimates of the project
costs and revenue on the project has gone up by Rs. 2,248,595 thousand
and Rs. 171,981 thousand respectively.
b) During the current year, in one of the projects being executed by
one of the branches of the Company, consequent to revision in estimates
of the project, costs and revenue on the project has gone down by Rs.
2,855,900 thousand (QAR 218,508 thousand) and Rs. 256,290 thousand (QAR
19,609 thousand) respectively.
c) During the current year, in one of the projects being executed by
one of the branches of the Company, consequent to revision in estimates
of the project, costs and revenue on the project has gone up by Rs.
1,734,521 thousand (LYD 45,442 thousand) and Rs. 842,680 thousand (LYD
22,077 thousand) respectively.
22. Previous years figures have been regrouped wherever necessary to
conform to this years classification.