1.1 Basis of Preparation and Presentation of Consolidated Financial Statements
The Consolidated Financial statements of the Company and its Subsidiaries and Jointly Controlled Entities (constitutes the ‘Group’) have been prepared to comply with generally accepted accounting principles (Indian GAAP) including the Accounting Standards notified under Section 133 of the Companies Act 2013 ("the Act") read with rule 7 of the Companies (Accounts) Rules 2014 and the relevant provisions of the Act ( to the extent notified). Further, the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also considered, wherever applicable except to the extent where compliance with other statutory promulgations viz. SEBI guidelines override the same requiring a different treatment. Accounting Policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy used previously.
The Financial statements are prepared on accrual basis following the historical cost convention except in certain cases of fixed assets which are carried at revalued amounts and in case of certain financial instruments which are measured at fair values. The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule III to the Act. The Cash Flow Statement has been prepared and presented as per the requirements of Accounting Standard (AS) - 3 "Cash Flow Statements". The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Schedule III to the Act, are presented by way of notes forming part of the financial statements along with the other notes required to be disclosed under the notified Accounting Standards and the Listing Agreement.
1.2 Use of estimates
The preparation of financial statements in conformity with GAAP requires the management of the Company to make estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, allowance for doubtful debts/advances, future obligations in respect of retirement benefit plans, estimation of costs as a proportion to the total costs. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known/ materialized. Changes in estimates are reflected in the financial statements in the period in which changes are made and if material are disclosed in the notes to Account.
1.3 Revenue recognition
A. Revenue from Operations
a. Revenue from Construction activity:
i) Income is recognized on fixed price construction contracts in accordance with the percentage completion basis, which necessarily involve technical estimates of the percentage of completion, and costs to completion, of each contract / activity, on the basis of which profits and losses are accounted. Such estimates, made by the Company and certified to the Auditors have been relied upon by them, as these are of technical nature.
ii) The stage of completion of contracts is measured by reference to the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract
iii) Price escalation and other variations in the contract work are included in contract revenue only when:
a) Negotiations have reached at an advanced stage such that it is probable that customer will accept the claim and
b) The amount that is probable will be accepted by the customer can be measured reliably.
iv) Incentive payments, as per customer-specified performance standards, are included in contract revenue only when:
a) The contract is sufficiently advanced that it is probable that the specified performance standards will be met and
b) The amount of the incentive payment can be measured reliably.
v) Insurance claims are accounted for on cash basis.
vi) Contract Claims raised by the company which can be reliably measured and have reached an advanced stage of arbitration pending in High court have been recognized as income.
b. Revenue from supply of materials:
Revenue from supply of materials is recognized when substantial risks and rewards of ownership are transferred to the buyer and invoice for the same is raised.
c. Revenue form generation and distribution of Wind Power:
Revenue from wind power operations is recognized when the units are reliably measured and billed and it is reasonable to expect ultimate collection.
d. Income from development of highways i.e. Toll Revenue & Annuity Income:
In case of companies involved in construction and maintenance of roads, toll revenue from operations is recognized on accrual basis which coincides with the collection of toll. In annuity based projects, revenue recognition is based on annuity accrued on time basis in accordance with the provisions of the concessionaire agreements entered into with NHAI or with respective state governments or authorities. Claims raised on NHAI or with respective state governments or authorities under concessionaire agreements are accounted for in the year of acceptance.
e. Revenue receipts on Joint Venture Contracts
i) In work sharing Joint Venture arrangements, revenues, expenses, assets and liabilities are accounted for in the Company’s books to the extent work is executed by the Company.
ii) In jointly controlled entities, the share of profits or losses is accounted as and when dividend/ share of profit or loss are declared by the entities.
f. Other Operational Revenue:
All other revenues are recognized only when collectability of the resulting receivable is reasonably assured.
B. Other Income
i) Interest income is accounted on accrual basis as per applicable interest rates and on time proportionate basis taking into account the amount outstanding.
ii) Dividend income is accounted in the year in which the right to receive the same is established.
1.4 Principles of Consolidation
The consolidated financial statements have been prepared on the following basis:
a) The Financial Statements of the Company and its subsidiary companies have been consolidated on a line by line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealized profits or losses as per Accounting Standard - 21 "Consolidated Financial Statements" issued by Institute of Chartered Accountants of India (‘AS-21’) specified Under Section 133 of the Companies Act, 2013.
b) Investments in associate companies have been accounted for, by using equity method as per Accounting Standard
- 23 "Accounting for Investments in Associates in Consolidated Financial Statements" specified Under Section 133 of the Companies Act, 2013,whereby investment is initially recorded at cost and the carrying amount is adjusted thereafter for post-acquisition change in the Company’s share of net assets of the associate. The carrying amount of investment in associate companies is reduced to recognize any decline which is other than temporary in nature and such determination of decline in value, if any, is made for each investment individually. The unrealized profits/losses on transactions with associate companies are eliminated by reducing the carrying amount of investment.
c) The Company’s interests in joint ventures are consolidated as follows:
d) The financial statements are presented to the extent possible, in the same manner as the parent company’s independent financial statements.
e) Goodwill/Capital Reserve arrived on account of consolidation of Associates in accordance with AS-23 is included /adjusted in the carrying amount of the investment.
f) Minority interest in the net assets of the consolidated subsidiaries is computed and presented in consolidated balance sheet separately from current liabilities and equity of the Company.
g) Minority interest in the net assets of consolidated subsidiaries consists of:
i) The amount of equity attributable to minorities at the date on which investment in a subsidiary is made; and
ii) The minorities’ share of changes in the equity since the date the parent subsidiary relationship came into existence.
h) Minority interest in the net profit/(loss) for the year of consolidated subsidiaries is computed and adjusted against the net profit/(loss) after tax of the group.
1.5 Inventories and work in progress
Raw Materials, construction materials and stores & spares are valued at weighted average cost. Expenditure incurred
towards construction work and yet to be certified is carried forward as work in progress. Cost includes direct
material, work expenditure, labour cost and appropriate overheads.
1.6 Fixed Assets and Depreciation & Amortization
a) Tangible Fixed assets
Tangible Fixed Assets are stated at cost of acquisition, less accumulated depreciation thereon. Expenditure which are capital in nature are capitalized at cost, which comprises of purchase price (net of rebates and discounts), import duties, levies, financing costs and all other expenditure directly attributable to bringing the asset to its working condition for its intended use.
b) Capital work in progress
i) Tangible assets which are purchased but not yet installed and not ready for the intended use on the date of balance sheet are disclosed as "Capital Work-in-Progress".
ii) Capital Expenditure incurred towards projects which is yet to be capitalized is accounted and disclosed as Capital Work in Progress.
c) Depreciation and amortization
In respect of fixed assets (other than land and Capital Work in Progress) depreciation / amortization is charged on a straight line basis over the useful lives as prescribed in Schedule II to the Companies Act 2013. For the assets acquired prior to April 1, 2014 the carrying amount is depreciated over the remaining useful life as stipulated in the Act.
However, the remaining use-full life of certain class of plant & machinery is considered as 6 years (w.e.f. 01.04.2014) based on the technical assessment, managements experience of use of those assets, present condition of the asset etc.
Leasehold improvements or assets are amortized over the period of lease.
d) Intangible Assets and Amortization
i. Carriageway: Carriageways represents commercial rights to collect toll fee in relation to roads projects and to receive annuity in the case of annuity based projects which has been accounted at the cost incurred on the project activity towards reconstruction, strengthening, widening, rehabilitation of the roads on build, operate and transfer basis. It includes all direct material, labour and subcontracting costs, inward freight, duties, taxes, obligation towards negative grant payable to concessionaires, if any, and any directly attributable expenditure on making the commercial right ready for its intended use.
ii) Goodwill represents the difference between the Group’s share in the net worth of a subsidiary or an associate or a joint venture, and the cost of acquisition at each point of time of making the investment in the subsidiary or the associate or the joint venture. For this purpose, the Group’s share of net worth is determined on the basis of the latest financial statements prior to the acquisition after making necessary adjustments for material events between the date of such financial statements and the date of respective acquisition.
e) Intangible Asset under development :
Expenses incurred relating to the development of Road Projects prior to commencement of commercial operations are included under Intangible Asset under development (net of income earned during project development stage) and after completion of the road project to be transferred to Intangible Asset. Intangible Asset under development includes direct and indirect expenditure incurred for the road project and costs incidental and related thereto.
1.7 Foreign Currency Transactions
The reporting currency of the Group is Indian Rupee. Foreign exchange transactions are accounted at the rates prevailing on the date of transactions. Monetary assets and current liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates. The difference in translation of monetary assets and liabilities and realized gains and losses on foreign exchange transactions are recognized in the Statement of Profit and Loss. Non-monetary foreign currency items are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
Trade investments comprise investments in subsidiary companies, joint ventures, associate companies and in the entities in which the Company has strategic business interest. Investments are classified as Current investments and Non-Current investments.
Investments, which are readily realizable and are intended to be held for not more than 1 year from the date of acquisition, are classified as current investments. All other investments are classified as long term investments.
Non-Current Investments are carried at cost less provision for permanent diminution, if any, in value of such investments. Current investments are carried at lower of cost and fair value. Dividend income is accounted when the right to receive dividend is established.
1.9 Employee Benefits
Liability for employee benefits, both short and long term, for present and past service which are due as per the terms of employment are recorded in accordance with Accounting Standard (AS) 15 "Employee Benefits" issued by the Institute of Chartered Accountants of India.
In accordance with the Payment of Gratuity Act, 1972 the company provides for Gratuity covering eligible employees. The liability on account of Gratuity is provided on the basis of valuation of the liability by an independent actuary as at the year end.
ii) Provident Fund
In accordance with applicable local laws, eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan to which both the employee and employer contributes monthly at a determined rate (currently up to 12% of an employee’s salary). These contributions are either made to the respective Regional Provident Fund Commissioner, or the Central Provident Fund under the State Pension Scheme, and are expenses as incurred.
iii) Compensated Absences
Liability for compensated absence is treated as a long term liability and is provided on the basis of valuation by an independent actuary as at the year end.
iv) Actuarial gains and losses are immediately recognized and taken to the profit and loss account and are not deferred.
1.10 Deferred Revenue Expenditure
Projects and Other amenities expenditure incurred up to 31st March, 2016, the benefit of which is spread over more than one year is accounted as Project Promotion Expenses grouped under Other Advances and is amortized over the period in which benefits would be derived
Grants or subsidies from the government or any regulatory authorities are recognized when there is reasonable assurance that the grant/subsidy will be received and all conditions attached to the grant / subsidy will be complied with.
When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with the related costs, which they are intended to compensate.
Where the grant or subsidy relates to an asset, the grant or subsidy amount (net of direct amount incurred to earn aforesaid grant or subsidy) is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset.
1.13 Borrowing Costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such asset. A qualifying asset is one that requires substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
Assets taken on finance lease are capitalized at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost, so as to obtain a constant periodic rate of interest on outstanding liability for each period.
Operating leases in respect of office & other equipment, house for employees, Office buildings are cancelable / renewable by mutual consent on agreed terms. Lease payments under an operating lease are recognized as an expense in the Profit and Loss Account.
1.15 Earnings per Share (EPS)
In arriving at the EPS, the Company’s net profit after tax, computed in terms of the Indian GAAP, is divided by the weighted average number of equity shares outstanding on the last day of the reporting period. The EPS thus arrived at is known as ‘Basic EPS’. To arrive at the diluted EPS the net profit after tax, referred above, is divided by the weighted average number of equity shares, as computed above and the weighted average number of equity share that could have been issued on conversion of shares having potential dilutive effect subject to the terms of issue of those potential shares. The date/s of issue of such potential shares determine the amount of the weighted average number potential equity shares.
i) Current Tax
Provision for Current tax is made based on the liability computed in accordance with the relevant tax rates and provisions of Income Tax Act, 1961.
ii) Deferred Taxes
Deferred Tax is accounted for by computing the tax effect of timing differences which arise during the year and reverse in subsequent periods. Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized.
1.17 Impairment of Fixed Assets
The carrying amount of assets, other than inventories is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the assets is estimated. The recoverable amount is the greater of the asset’s net selling price and value in use which is determined based on the estimated future cash flow discounted to their present values. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
1.18 Provisions for Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.
Contingent liabilities are present obligations arising from a past event, when it is not probable / probability is remote that an outflow of resources will be required to settle the obligation and they are not recognized but are disclosed in the notes.
Contingent Assets are neither recognized nor disclosed in the financial statements. Provisions for Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.
Commitments are future liabilities for contractual expenditure.
Commitments are classified and disclosed as follows:
a. Estimated amount of contracts remaining to be executed on capital account and not provided for
b. Uncalled liability on shares and other investments partly paid
c. Funding related commitment to subsidiary, associate and joint venture companies and
d. Other non-cancellable commitments, if any, to the extent they are considered material and relevant in the opinion of management.
Other commitments related to sales/procurements made in the normal course of business are not disclosed to avoid excessive details.
1.20 Operating cycle for current and non-current classification
Operating cycle for the business activities of the Company covers the duration of the specific project/contract/ product line/service including the defect liability period, wherever applicable and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective lines of business.
1.21 Cash Flow Statement
Cash Flow Statement is prepared segregating the cash flows from operating, investing and financing activities. Cash flow from operating activities is reported using indirect method. Under the indirect method, the net profit is adjusted for the effects of:
i. transactions of a non-cash nature
ii. any deferrals or accruals of past or future operating cash receipts or payments and
iii. items of income or expense associated with investing or financing cash flows
Cash and cash equivalents (including bank balances) are reflected as such in the Cash Flow Statement. Those cash and cash equivalents which are not available for general use as on the date of Balance Sheet are also included under this category with a specific disclosure.
1.22 Cash and bank balances
Cash and bank balances also include fixed deposits, margin money deposits, earmarked balances with banks and other bank balances which have restrictions on repatriation. Short term and liquid investments being not free from more than insignificant risk of change in value, are not included as part of cash and cash equivalents.
2(a) Terms / Rights, Preferences and restrictions attached to Equity Shares:
The company has only one class of shares referred to as equity shares having a par value of Rs. 10/-. Each holder of equity shares is entitled to one vote per share. 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.
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
The Board of Directors have recommended dividend of Rs. 2/ per equity share in their meeting held on 30th May,
2016, subjected to approval of the share holders in the ensuing Annual General Meeting (For the year ended 31st March, 2015 : Rs. 1.00 per equity share).
4.1 15,00,00,000 - 10.50% Secured Compulsorily Convertible Debentures (CCDs) of Rs.10/- each issued by Gayatri Energy Ventures Pvt. Ltd., (GEVPL) a subsidiary company amounting to Rs.150,00.00 Lakhs (31st March, 2015: Rs.15000.00 Lakhs ) are secured by way of (a) Pledge of 7,47,49,590 Equity Shares of NCC Infrastructure Holdings Ltd held by the GEVPL, (b) Pledge of 16,96,248 equity shares of GEVPL held by Gayatri Projects Limited (GPL) (c) Personal guarantee of promoter directors of GEVPL, (d) the buyback guarantee from the Company. The CCDs carry an interest rate of 10.50% p.a. payable in quarterly basis and balance 6% premium yield shall be payable at the time of buyout as a premium. The CCDs are repayable in 8 equal quarterly installments commencing from 15th May,
4.2 During the year, Gayatri Energy Ventures Pvt. Ltd., (GEVPL), a subsidiary company has issued 99,25,000 Unsecured Optionally Fully Convertible Debentures (OFCD) of Rs. 10/- each, amounting to Rs. 992.50 Lakhs (31st March, 2015: ‘ Nil). The OFCD carry an interest of 9% cumulative and will be matured in 36 Months from the date of issue. The subscriber has an option to convert these Debentures into Equity Shares of Rs.760/- per share with prior consent of the Board.
4.3 The Equipment loans are secured by hypothecation of specific equipments acquired out of the said loans and all these loans are guaranteed by directors. The rate of interest on these loans varies between 11% to 15%.
4.4 Secured Term Loans from Banks of GPL are secured by hypothecation of construction equipments not specifically charged to other banks, immovable properties of group companies and personal guarantees of the promoters. The rate of interest various between 11% to 13% with an average yield of 12.04% p.a. and the repayment is in 84 structured monthly installments commencing from 31st July, 2016.
4.5 Project Loans comprising of Rs. 15000.00 lakhs Term Loan obtained by Bhandara Thermal Power Corporation Ltd.(BTPCL) a step-down subsidiary company is secured by a) Pledge of 100% Equity Shares of BTPCL held by its Holding Company. b) 67.76% Equity Shares of Gayatri Infra Ventures Limited (GIVL) held by the Company. c) Hypothecation of 21.291 Acres of Freehold Land at Mohadi Dist. Maharashtra held by BTPCL. d) Corporate Guarantee from GIVL and the Company e) Personal Guarantee of a Director. The rate of interest is 16% and the loan will be
repaid at the end of 36 months from the date of first disbursement i.e. 30th June, 2015. Interest amount of Rs.528.52
lakhs is due for more than 90 days.
4.6 Project Loans - Gayatri Infraventures Ltd. group (GIVL):
i) Secured Indian Rupee Term Loan from Banks of Rs.19383.00 Lakhs (31st March, 2015: Rs. 20582.00 Lakhs ) of GJRL is secured by way of (a) first mortgage and charge of all the borrower’s immovable properties, present and future, (b) first charge by way of hypothecation of all the movables, including movable plant and machinery, machinery spares, tools and accessories, furniture, fixtures, vehicles and all other movable assets, present and future, operating cash flows, book debts and receivables and any other revenues of whatsoever nature and wherever arising, present and future, all intangibles, including but not limited to goodwill, uncalled capital, present and future, (c) assignment or creation of security interest in all Insurance Contracts/Insurance proceeds
(d) Escrow Account, Debt Service Reserve, other reserves and any other bank accounts of the borrower wherever maintained (e) pledge of all the shares (equity and preference) held by the sponsors representing 51% of the paid up share capital. The facilities carry an annual interest rate of 11.20% (31st March 2015: