Equity share capital
(a) Share capital authorised, issued, subscribed and paid up:
(b) Reconciliation of the number of equity shares and share capital:
(c) Terms/rights attached to equity shares:
The Company has only one class of share capital, i.e., equity shares having face value of Rs. 2 per share. Each holder of equity share is entitled to one vote per share.
(d) Shareholder holding more than 5% of equity shares as at the end of the year:
(e) Shares reserved for issue under options outstanding as at the end of the year on un-issued share capital:
* The equity shares will be issued at a premium of RS.146.71 crore (as at 31-3-2016: f 203.97 crore and as at 1-4-2015: Rs. 278.09 crore)
** The equity shares will be issued at a premium of RS.121 5.13 crore (as at 31-3-2016: Rs. 1215.13 crore and as at 1-4-2015: Rs. 1215.13 crore) on the exercise of options by the bond holders
# Note 17(h) for terms of employee stock option schemes ## Note 19(b) for terms of foreign currency convertible bonds
(f) The aggregate number of equity shares allotted as fully paid up by way of bonus shares in immediately preceding five years ended March 31, 2017 are 30,82,94,576 (previous period of five years ended March 31, 2016: 30,82,94,576 shares)
(g) The aggregate number of equity shares issued pursuant to contract, without payment being received in cash in immediately preceding last five years ended onMarch31,2017-Nil (previous period of five years ended March 31, 2016: Nil)
(h) Stock option schemes
A. The grant of options to the employees under the stock option schemes is on the basis of their performance and other eligibility criteria. The options are vested equally over a period of 4 years [5 years in the case of series 2006(A)], subject to the discretion of the management and fulfillment of certain conditions.
B. Options can be exercised anytime within a period of 7 years from the date of grant and would be settled by way of issue of equity shares. Management has discretion to modify the exercise period.
(ii) The details of the grants under the aforesaid schemes under various series are summarised below:
(iii) The number and weighted average exercise price of stock options are as follows:
(iv) Weighted average share price at the date of exercise for stock options exercised during the year is Rs. 1386.19 (previous year: Rs.1543.13) per share.
(v) A. In respect of stock options granted pursuant to the Company’s stock options schemes, the fair value of the options is treated as discount and accounted as employee compensation over the vesting period.
B. Expense on Employee Stock Option Schemes debited to the Statement of Profit and Loss during 2016-17 is Rs. 60.35 crore (previous year: Rs. 59.18 crore) net of recoveries of Rs. 1.42 crore (previous year: Rs. 7.76 crore) from its group companies towards the stock options granted to deputed employees, pursuant to the employee stock option schemes (Note 34).
The entire amount pertains to equity-settled employee share-based payment plans.
(vi) During the year, the Company has recovered Rs. 13.81 crore (previous year: Rs. 14.28 crore) from its subsidiary companies towards the stock options granted to their employees, pursuant to the Employee Stock Option Schemes.
(vii) Weighted average fair values of options granted during the year is Rs. 1056.73 (previous year: Rs. 965.39) per option.
viii. The fair value has been calculated using the Black-Scholes Option Pricing Model and the significant assumptions and inputs to estimate the fair value of options granted during the year are as follows:
ix. The balance in share options (net) account as at March 31, 2017 is Rs.177.25 crore (previous year: Rs. 242.23 crore), including Rs. 117.36 crore (previous year: Rs. 155.87 crore) for which the options have been vested to employees as at March 31, 2017.
(i) Capital management:
The Company continues its policy of a conservative capital structure which has ensured that it retains the highest credit rating even amidst an adverse economic environment. Low gearing levels also equip the Company with the ability to navigate business stresses on one hand and raise growth capital on the other. This policy also provides flexibility of fund raising options for future, which is especially important in times of global economic volatility. The gross debt equity ratio is 0.23:1 (as at 31-3-2016: 0.33:1 and as at 1-4-2015: 0.34:1)
(j) During the year ended March 31, 2017, the Company paid the final dividend of t 18.25 per equity share for the year ended March 31, 2016 amounting to Rs. 1701.51 crore and dividend distribution tax of Rs. 141.20 crore.
(k) The Board of Directors has recommended for approval of shareholders, the issue of bonus equity shares in the ratio of 1:2 (one bonus equity share of t 2 each for every 2 equity shares of t 2 each held). On May 29, 2017, the Board of Directors has recommended the final dividend of t 21 per equity share on the pre-bonus share capital for the year ended March 31, 2017 subject to approval from shareholders. On approval, the total dividend payment based on number of shares outstanding as at March 31, 2017 is expected to be Rs. 1959.23 crore and the payment of dividend distribution tax is expected to be Rs. 316.31 crore.
* Capital Reserve: It represents the gains of capital nature which mainly includes the excess of value of net assets acquired over consideration paid by the Company for business amalgamation transaction in earlier years.
A Debenture redemption reserve (DRR): The Company has issued redeemable non-convertible debentures and created DRR out of the profits of the Company in terms of the Companies (Share capital and Debenture) Rules, 2014 (as amended). The Company is required to maintain a DRR of 25% of the value of debentures issued, either by a public issue or on a private placement basis. The amounts credited to the DRR may not be utilised by the company except to redeem debenture.
# General Reserve: The Company created a General Reserve in earlier years pursuant to the provisions of the Companies Act wherein certain percentage of profits were required to be transferred to General Reserve before declaring dividends. As per Companies Act 2013, the requirement to transfer profits to General Reserve is not mandatory. General Reserve is a free reserve available to the Company.
2(a) Foreign currency convertible bonds:
0.675% US$ denominated 5 years & 1 day Foreign Currency Convertible Bonds (FCCB) carried at 1201.78 crore as at March 31, 2017 (previous year: Rs. 1190.86 crore) represent 1,000 bonds of US$ 200000 each. The bonds are convertible into the Company’s fully paid equity shares of 2 each at a conversion price of t 1916.50 per share at the option of the bond holders at any time on and after December 1, 2014 up to October 15, 2019. The bonds are redeemable, subject to fulfillment of certain conditions, in whole but not in part, at the option of the Company, on or at any time after October 22, 2017 but not less than seven business days prior to the maturity date, at the principal amount together with accrued interest (calculated up to but excluding the date of redemption) on the date fixed for redemption, unless the bonds have been previously redeemed, converted or purchased and cancelled.
2(b)Loans repayable on demand from banks include fund based working capital facilities viz. cash credits and demand loans. The secured portion of loans repayable on demand from banks, short term loans and advances from the banks, working capital facilities and other non-fund based facilities viz. bank guarantees and letter of credit, are secured by hypothecation of inventories and trade receivables. Amount of inventories and trade receivables that are pledged as collateral: Rs. 6149.71 crore as at March 31, 2017; Rs. 6188.72 crore as at March 31, 2016; Rs. 6098.53 crore as at April 1, 201 5.
3(a) Due to others include due to directors Rs. 55.58 crore (as at 31-3-2016: Rs.51.30 crore; as at 1-4-2015: Rs. 53.83 crore)
1. The Company does not expect any reimbursements in respect of the above contingent liabilities.
2. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters at (a) to (d) above pending resolution of the arbitration/appellate proceedings. Further, the liability mentioned in (a) to (d) above excludes interest and penalty in cases where the company has determined that the possibility of such levy is remote.
3. In respect of matters at (e), the cash outflows, if any, could generally occur up to ten years, being the period over which the validity of the guarantees extends except in a few cases where the cash outflows, if any, could occur any time during the subsistence of the borrowings to which the guarantees relate.
4. In respect of matters at (f), the cash outflows, if any, could generally occur up to three years, being the period over which the validity of the guarantees extends.
5. In respect of matters at (g) to (i), the cash outflows, if any, could generally occur upto completion of projects undertaken by the respective joint operations.
Particulars in respect of loans and advances in the nature of loans to related parties as required by the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:
Above figures include interest accrued
Loans to employees (including directors) under various schemes of the Company (such as housing loan, furniture loan, education loan, etc.) have been considered to be outside the purview of disclosure requirements.
Subsidiary classification is in accordance with the Companies Act, 2013
Disclosure pursuant to section 186 of the Companies Act, 2013:
Amount required to be spent by the Company on Corporate Social Responsibility (CSR) related activities during the year is Rs. 98.97 crore (previous year: Rs. 101.46 crore).
(a) The amount recognised as expense in the Statement of Profit and Loss on CSR related activities is Rs. 100.77 crore (previous year: Rs. 119.89 crore), which comprises of:
The expenditure on research and development activities recognised as expense in the Statement of Profit and Loss is Rs. 145.98 crore (previous year: Rs. 149.62 crore). Further, the company has incurred capital expenditure on research and development activities as follows:
(a) on tangible assets of Rs. 9.43 crore (previous year: Rs. 5.79 crore);
(b) on intangible assets being expenditure on new product development of Rs. 43.01 crore (previous year: Rs. 48.19 crore) [Note 1 (i)(ii)] and
(c) on other intangible assets of Rs. 1.09 crore (previous year: Rs. 0.55 crore).
Disclosures pursuant to Ind AS 17 “Leases”:
(a) Where the Company is a lessor
(i) Operating leases:
The Company has given a building under non-cancellable operating lease, the future minimum lease payments receivable in respect of which are as follows:
(b) Where the Company is a lessee:
(i) Finance leases:
(A) Assets acquired on finance lease comprises plant and equipment and land. The leases have a primary period, which is fixed and non-cancellable. The company has an option to renew the lease for a secondary period.
(B) The minimum lease rentals and the present value of minimum lease payments in respect of assets acquired under finance leases are as follows:
(C) Contingent rent recognised in the Statement of Profit and Loss: Rs. Nil (previous year: Rs. Nil)
(ii) Operating leases:
(A) The Company has taken various commercial premises and plant and equipment under cancellable operating leases. These lease agreements are normally renewed on expiry.
(B) Assets acquired on non-cancellable operating lease comprises commercial premises, cars and technology assets, the future minimum lease payments in respect of which are as follows:
(C) Lease rental expense in respect of operating leases: Rs. 109.10 crore (previous year: Rs. 76.97 crore)
(D) Contingent rent recognised in the Statement of Profit and Loss: t Nil (previous year: f Nil)
Disclosure pursuant to Ind AS 105 “Non-current assets held for sale and discontinued operations”:
The Company has identified the above as held for sale to optimise the capital allocation and focus on core business. The sale is envisaged through transfer of title deeds for identified assets held for sale and through divestment of stake/business transfer agreement in case of disposal group held for sale. The proposed sale are expected to be completed within 12 months from the respective reporting dates.
(A) Investments held for sale:
(i) Through a scheme of arrangement of demerger, the Port business in L&T Shipbuilding Limited (effective date March 22, 2017) is transferred to Marine Infrastructure Developer Private Limited (MIDPL). As a shareholder L&T has received 38,80,00,000 equity shares of t 10 each. L&T is planning to divest its stake in MIDPL to an identified strategic partner. Accordingly, the investment in MIDPL is presented as assets held for sale.
(ii) The Investment held for sale forms part of the unallocable corporate assets. [Note 47(a)],
(B) Assets and Liabilities of disposal group classified as held for sale:
(i) Pursuant to Board of Directors decision on November 7, 2014, to sell Company’s Foundry Business Unit a definitive agreement with M/S Bradken Operations Pty Limited was executed on November 11, 2014. The associated assets and liabilities are consequently presented as held for sale as at April 1, 201 5. The Foundry Business was subsequently sold on March 31, 2016.
(ii) Details of assets and liabilities of disposal group classified as held for sale as at April 1, 201 5:
(iii) The assets and liabilities of the disposal group are presented in assets and liabilities of construction equipment & others segment reported under “Others” segment. [Note 47(a)],
Disclosure pursuant to Ind AS 1 “Presentation of financial statements”:
(a) Current assets expected to be recovered within twelve months and after twelve months from the reporting date:
(b) Current liabilities expected to be settled within twelve months and after twelve months from the reporting date:
Disclosure pursuant to Ind AS 107 “Financial Instruments: Disclosures”: Market risk management
(a) Foreign exchange rate and interest rate risk:
The Company regularly reviews its foreign exchange forward and option positions and interest rate swaps, both on a standalone basis and in conjunction with its underlying foreign currency and interest rate related exposures. The Company follows cash flow hedge accounting for Highly Probable Forecasted Exposures (HPFE) hence the movement in mark to market (MTM) of the hedge contracts undertaken for such exposures is likely to be offset by contra movements in the underlying exposures values. However, till the point of time that the HPFE becomes an on Balance Sheet exposure, the changes in MTM of the hedge contracts will impact the Balance Sheet of the Company. Further, given the effective horizons of the Company’s risk management activities which coincide with the durations of the projects under execution and could extend across 3-4 years and the business uncertainties associated with the timing and estimation of the project exposures, the recognition of the gains and losses related to these instruments may not always coincide with the timing of gains and losses related to the underlying economic exposures and, therefore, may affect the Company’s financial condition and operating results. Hence, the Company monitors the potential risk arising out of the market factors like exchange rates, interest rates, price of traded investment products etc. on a regular basis. For on Balance Sheet exposures, the Company monitors the risks on net unhedged exposures.
(i) Foreign exchange rate risk:
In general, the Company is a net receiver of foreign currency. Accordingly, changes in exchange rates, and in particular a strengthening of the Indian Rupee, will negatively affect the Company’s net sales and gross margins as expressed in Indian Rupees. There is a risk that the Company may have to adjust local currency product pricing due to competitive pressures when there have been significant volatility in foreign currency exchange rates.
The Company may enter into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks associated with certain existing assets and liabilities, certain firmly committed transactions, forecasted future cash flows and net investments in foreign subsidiaries. In addition, the Company has entered and may enter in the future, into non-designated foreign currency contracts to partially offset the foreign currency exchange gains and losses on its foreign-denominated debt issuances. The Company’s practice is to hedge a portion of its material foreign exchange exposures with tenors in line with the project/business life cycle, however, the Company may choose not to hedge certain foreign exchange exposures for a variety of reasons.
The net exposure to foreign currency risk (based on notional amount) in respect of recognised financial assets, recognised financial liabilities and derivatives is as follows:
To provide a meaningful assessment of the foreign currency risk associated with the Company’s foreign currency derivative positions against off-Balance Sheet exposures and unhedged portion of on-Balance Sheet financial assets and liabilities, the Company uses a multi-currency correlated value-at-risk (“VAR”) model. The VAR model uses a Monte Carlo simulation to generate thousands of random market price paths for foreign currencies against Indian Rupee taking into account the correlations between them. The VAR is the expected loss in value of the exposures due to overnight movement in spot exchange rates, at 95% confidence interval. The VAR model is not intended to represent actual losses but is used as a risk estimation tool. The model assumes normal market conditions and is a historical best fit model. Because the Company uses foreign currency instruments for hedging purposes, the loss in fair value incurred on those instruments are generally offset by increase in the fair value of the underlying exposures for on Balance Sheet exposures. The overnight VAR for the Company at 95% confidence level is Rs. 59.80 crore as at March 31, 2017 and Rs. 27.60 crore as at March 31, 2016.
Actual future gains and losses associated with the Company’s investment portfolio and derivative positions may differ materially from the sensitivity analysis performed as at March 31, 2017 due to the inherent limitations associated with predicting the timing and amount of changes in foreign currency exchange rates and the Company’s actual exposures and position.
(ii) Interest rate risk:
The Company’s exposure to changes in interest rates relates primarily to the Company’s outstanding floating rate debt. While most of the Company’s outstanding debt in local currency is on fixed rate basis and hence not subject to interest rate risk.
A major portion of foreign currency debt is linked to international interest rate benchmarks like LIBOR. The Company also hedges a portion of these risks by way of derivative instruments like interest rate swaps and currency swaps.
A hypothetical 25 basis point shift in respective currency LIBORs on the unhedged loans would result in a corresponding increase/decrease in interest cost for the Company on a yearly basis.
(b) Liquidity risk management:
The Company manages liquidity risk by maintaining sufficient cash and marketable securities and by having access to funding through an adequate amount of committed credit lines. Given the need to fund diverse businesses, the Company maintains flexibility in funding by maintaining availability under committed credit lines to meet obligations when due. Management regularly monitors the position of cash and cash equivalents vis-a-vis projections. Assessment of maturity profiles of financial assets and financial liabilities including debt financing plans and maintenance of Balance Sheet liquidity ratios are considered while reviewing the liquidity position.
The Company’s investment policy and strategy are focused on preservation of capital and supporting the Company’s liquidity requirements. The Company uses a combination of internal and external management to execute its investment strategy and achieve its investment objectives. The Company typically invests in money market funds, large debt funds, government of india securities, equity funds and other highly rated securities under a limits framework which governs the credit exposure to any one issuer as defined in its investment policy. The policy requires investments generally to be investment grade, with the primary objective of minimising the potential risk of principal loss. To provide a meaningful assessment of the price risk associated with the Company’s investment portfolio, the Company performed a sensitivity analysis to determine the impact of change in prices of the securities that would have on the value of the investment portfolio assuming a 0.25% movement in debt funds and debt securities and a 5% movement in the NAV of the equity funds. Based on the investment position a hypothetical 0.25% change in the fair market value of debt securities would result in a value change of /- Rs. 4.08 crore as at March 31, 2017 and /- Rs. 14.83 crore as at March 31, 2016. 5% change in the equity funds NAV would result in a value change of /- Rs. 17.14 crore as at March 31, 2017 and /- Rs. 2.87 crore as at March 31, 2016. The investments in money market funds are for the purpose of liquidity management only and are held only overnight and hence not subject to any material price risk.
(c) Credit Risk Management:
The Company’s customer profile include public sector enterprises, state owned companies and large private corporates. Accordingly, the Company’s customer credit risk is low. The Company’s average project execution cycle is around 24 to 36 months. General payment terms include mobilisation advance, monthly progress payments with a credit period ranging from 45 to 90 days and certain retention money to be released at the end of the project. In some cases retentions are substituted with bank/corporate guarantees. The Company has a detailed review mechanism of overdue customer receivables at various levels within organisation to ensure proper attention and focus for realisation.
Exceptional items for the year ended March 31, 2017 include the following:
(i) Gain of t 1947.89 crore on sale of the Company’s part stake in subsidiary companies viz. Larsen & Toubro Infotech Limited - Rs. 1191.70 crore and L&T Technology Services Limited - Rs. 756.19 crore;
(ii) Loss on divestment of stake in L&T General Insurance Company Limited - Rs. 92.84 crore;
(iii) Loss on sale of company’s full stake in subsidiary company L&T Arabia LLC - Rs. 11.08 crore to a wholly owned subsidiary company and
(iv) Provision for impairment of investment in Infrastructure Development Projects Limited - Rs. 950 crore.
Exceptional items for the year ended March 31, 2016 include the following:
(i) Gain on sale of the Company’s part stake in L&T Finance Holdings Limited - Rs. 488.39 crore,
(ii) Gain on divestment of stake in L&T-Valdel Engineering Limited - Rs. 36.59 crore, L&T-Gulf Private Limited - Rs. 6.74 crore and L&T Sapura Shipping Private Limited - Rs. 9.18 crore to a wholly owned subsidiary company.
(iii) Gain of Rs. 105.86 crore on sale of the Company’s stake in associate companies viz. Salzer Electronics Limited - Rs. 57.46 crore and L&T-Chiyoda Limited - Rs. 48.40 crore;
(iv) Gain of Rs. 48.52 crore on sale of the Company’s Foundry Business Unit and
(v) Provision for impairment of investment in L&T General Insurance Company Limited - Rs. 135 crore.
Disclosure pursuant to Ind AS 108 “Operating Segment”
(a) Information about reportable segment
(b) Geographical information
(c) Revenue contributed by any single customer in any of the operating segments, whether reportable or otherwise, does not exceed ten percent of the Company’s total revenue.
(d) The Company’s reportable segments are organised based on the nature of products and services offered by these segments.
(e) Basis of identifying operating segments, reportable segments, segment profit and definition of each reportable segment:
(i) Basis of identifying operating segments:
Operating segments are identified as those components of the Company (a) that engage in business activities to earn revenues and incur expenses (including transactions with any of the Company’s other components; (b) whose operating results are regularly reviewed by the Company’s Executive Management Committee (EMC) to make decisions about resource allocation and performance assessment and (c) for which discrete financial information is available.
The Company has four reportable segments as described under “Segment Composition” below. The nature of products and services offered by these businesses are different and are managed separately given the different sets of technology and competency requirements.
(ii) Reportable segments:
An operating segment is classified as reportable segment if reported revenue (including inter-segment revenue) or absolute amount of result or assets exceed 10% or more of the combined total of all the operating segments.
(iii) Segment profit:
Performance of a segment is measured based on segment profit (before interest and tax), as included in the internal management reports that are reviewed by the Company’s EMC.
(iv) Segment composition:
- Infrastructure segment comprises engineering and construction of building and factories, transportation infrastructure, heavy civil infrastructure, power transmission & distribution, water & effluent treatment and smart world & communication projects.
- Power segment comprises turnkey solutions for Coal-based and Gas-based thermal power plants including power generation equipment with associated systems and/or balance-of-plant packages.
- Heavy Engineering segment comprises manufacture and supply of custom designed, engineered critical equipment and systems to core sector industries like Fertiliser, Refinery, Petrochemical, Chemical, Oil & Gas, Thermal & Nuclear Power, Aerospace and Defence.
- Electrical & Automation segment comprises manufacture and sale of low and medium voltage switchgear components, custom built low and medium voltage switchboards, electronic energy meters/protection (relays) systems, control & automation products.
- Others segment includes metallurgical & material handling systems, realty, shipbuilding, manufacture, marketing and servicing of construction equipment and parts thereof, marketing and servicing of mining machinery and parts thereof, manufacture and sale of rubber processing machinery & castings (upto the date of sale). None of the businesses reported as part of others segment meet any of the quantitative thresholds for determining reportable segments in the year ended March 31, 2017, the year ended March 31, 2016 or as at April 1, 201 5.
Disclosure pursuant to Ind AS 19 “Employee Benefits”:
(I) Defined contribution plans - Note 1(k)(ii)(A): Amount of Rs. 118.34 crore (previous year: Rs. 102.98 crore) is recognised as an expense.
(II) Defined benefit plans - Note 1(k)(ii)(B):
(a) The amounts recognised in Balance Sheet are as follows:
(c) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows:
* Basis used to determine interest income on plan assets:
The Trust formed by the Company manages the investments of provident funds and gratuity fund. Interest income on plan assets is determined by multiplying the fair value of the plan assets by the discount rate stated in (g)(i) below both determined at the start of the annual reporting period.
The Company expects to fund Rs. 6.1 8 crore (previous year: Rs. 29.85 crore) towards its gratuity plan and Rs. 73.21 crore (previous year: Rs. 79.93 crore) towards its trust-managed provident fund plan during the year 2017-18.
# Employer’s and employees’ contribution due towards Provident Fund.
(e) The fair value of major categories of plan assets are as follows:
iv) Attrition Rate:
(a) For post-retirement medical benefit plan and Company pension plan, the attrition rate varies from 2% to 8% (previous year: 2% to 8%) for various age groups.
(b) For gratuity plan the attrition rate varies from 1 % to 6% (previous year: 1 % to 6%) for various age groups.
v) The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
vi) The interest payment obligation of trust-managed provident fund is assumed to be adequately covered by the interest income on long term investments of the fund. Any shortfall in the interest income over the interest obligation is recognised immediately in the statement of Profit and Loss.
vii) The obligation of the Company under the post-retirement medical benefit plan is limited to the overall ceiling limits. At present, healthcare cost, as indicated in the principal actuarial assumption given above, has been assumed to increase at 5.00% p.a.
viii) (A) One percentage point change in actuarial assumptions would have the following effects on the defined benefit obligation of gratuity plan:
(B) One percentage point change in actuarial assumptions would have the following effects on the defined benefit obligation of company pension plan:
(C) One percentage point change in actuarial assumptions would have the following effects on the defined benefit obligation of post-retirement medical benefit plan:
(h) Characteristics of defined benefit plans and associated risks:
1. Gratuity plan:
The Company operates gratuity plan through a trust wherein every employee is entitled to the benefit equivalent to fifteen days last salary drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service. The Company’s scheme is more favourable as compared to the obligation under Payment of Gratuity Act, 1972. The defined benefit plan for gratuity of the Company is administered by separate gratuity funds that are legally separate from the Company. The trustees nominated by the Company are responsible for the administration of the plan. There are no minimum funding requirements of these plans. The funding of these plans are based on gratuity funds actuarial measurement framework set out in the funding policies of the plan. These actuarial measurements are similar compared to the assumptions set out in (g) supra. A small part of the gratuity plan, which is not material, is unfunded and managed by the Company. Employees do not contribute to any of these plans.
2. Post-retirement medical care plan:
The Post-retirement medical care plan provides for reimbursement of health care costs to certain categories of employees post their retirement. The reimbursement is subject to an overall ceiling sanctioned based on cadre of the employee at the time of retirement. The plan is unfunded. Employees do not contribute to the plan.
3. Company’s pension plan:
In addition to contribution to state-managed pension plan (EPS scheme), the Company operates a post retirement pension scheme, which is discretionary in nature for certain cadres of employees. The quantum of pension depends on the cadre of the employee at the time of retirement. The plan is unfunded. Employees do not contribute to the plan.
4. Trust managed provident fund plan:
The Company manages provident fund plan through a provident fund trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The plan mandates contribution by employer at a fixed percentage of employee’s salary. Employees also contribute to the plan at a fixed percentage of their salary as a minimum contribution and additional sums at their discretion. The plan guarantees interest at the rate notified by Employees’ Provident Fund Organisation. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement whichever is earlier. The benefit under this plan vests immediately on rendering of service.
The interest payment obligation of trust-managed provident fund is assumed to be adequately covered by the interest income on long term investments of the fund. Any shortfall in the interest income over the interest obligation is recognised immediately in the Statement of Profit and Loss as actuarial loss. Any loss/gain arising out of the investment risk and actuarial risk associated with the plan is also recognised as expense or income in the period in which such loss/ gain occurs.
All the above defined benefit plans expose the Company to general Actuarial risks such as Interest rate risk and market (investment) risk.
Disclosure pursuant to Ind AS 27 “Separate Financial Statements”
Investment in following subsidiary companies, joint venture companies and associates is accounted at cost.
Disclosures pursuant to Ind AS 37 “Provisions, Contingent Liabilities and Contingent Assets”
(a) Movement in provisions:
(b) Nature of provisions:
i. Product warranties: The Company gives warranties on certain products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at March 31, 2017 represents the amount of the expected cost of meeting such obligations of rectification/replacement. The timing of the outflows is expected to be within a period of two to five years from the date of Balance Sheet.
ii. Expected tax liability in respect of indirect taxes represents mainly the differential sales tax liability on account of noncollection of declaration forms.
iii. Provision for litigation related obligations represents liabilities that are expected to materialise in respect of matters in appeal.
iv. Contractual rectification cost represents the estimated cost the Company is likely to incur during defect liability period as per the contract obligations in respect of completed construction contracts accounted under Ind AS 11 “Construction Contracts”.
(c) Disclosure in respect of contingent liabilities is given as part of Note 29 to the Balance Sheet.
Contribution to political parties during the year 2016-17 is t Nil (previous year t Nil).
The Company has amounts due to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006, [MSMED Act] as at March 31, 2017. The disclosure pursuant to the said Act is as under:
There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at March 31, 2017.
Disclosure on Specified Bank Notes (SBN) pursuant to MCA notification 308(E) dated March 30, 2017:
A. The Company is executing some of the projects through unincorporated joint ventures (UJV). Such arrangements have been classified as joint operations pursuant to Ind AS 111 and accordingly Company’s share in assets, liabilities, income and expenses of UJVs has been consolidated in standalone financials on a line by line basis. Under l-GAAP the investment in UJVs was being presented as a single line item in the Balance Sheet and the Company’s share in the net profit or loss was accounted as a single line item in the Statement of Profit and Loss.
B. Pursuant to Ind AS requirements, investment property is presented separately. Under l-GAAP the same was presented as part of tangible assets. Tangible assets have been now divided into two categories under Ind AS viz. Property, plant and equipment and Investment property.
C. Under Ind AS 23 borrowing cost is calculated following effective rate of interest (EIR) method as described under Ind AS 109. Under l-GAAP borrowing cost was computed by applying the coupon rate to the principle amount for the period with consequential impact in the asset items where borrowing cost is capitalised/inventorised. Borrowings are recognised at fair value at the inception and subsequently at amortised cost with interest recognised based on EIR method.
D. All Investments except investments in group companies have been fair valued in accordance with Ind AS 109. Investments in debt securities are fair valued through OCI and reclassified to profit or loss on their sale. Other investments are fair valued through profit or loss. Under l-GAAP the current investments were carried at cost net of diminution in their value as at the Balance Sheet date.
The long term investments were carried at cost net of permanent diminution, if any.
E. Financial guarantee contracts have been recognised at fair value at the inception in accordance with Ind AS 109 along with accrued guarantee charges. Under l-GAAP financial guarantee given was disclosed as contingent liability and commitments.
F. Under Ind AS financial assets and liabilities are measured at fair value at the inception and subsequently at amortised cost or at fair value based on their classification. Under l-GAAP the financial assets and liabilities were measured at cost.
G. Deferred tax under Ind AS has been recognised for temporary differences between tax base and the book base of the relevant assets and liabilities. Under l-GAAP the deferred tax was accounted based on timing differences impacting the Statement of Profit and Loss for the period.
H. The provision is made against trade receivables based on “expected credit loss” model as per Ind AS 109. Under l-GAAP the provision was made when the receivable turned doubtful based on the assessment on case to case basis.
I. ESOP charge is accounted using fair value method. The portion of ESOP charge recoverable from the group companies is accordingly measured and recognised at fair value. Under l-GAAP ESOP charge was calculated based on intrinsic value method.
J. Pursuant to Ind AS 32, Foreign Currency Convertible Bonds (FCCB) issued by the Company is split into equity and liability component and presented accordingly. The measurement of liability component is done at fair value at the inception and subsequently at amortised cost. Under l-GAAP FCCB was accounted at cost and presented as borrowing.
K. Provision is made under Ind AS towards constructive obligations of the Company related to payment of performance linked rewards to the employees and tax on ESOP benefits, wherever applicable. Under l-GAAP the cost was recognised on actual payments.
L. Under Ind AS the final dividend including related tax is recognised in the period in which the obligation to pay is established on its approval, post reporting of financial statements. Under l-GAAP a provision was required to be made in the financial statements for the proposed final dividend in the period to which the liability related.
M. In accordance with Ind AS 105 group of assets held for sale and liabilities associated with such group is presented separately. Under l-GAAP there was no such requirement.
N. Change in fair value of derivative instrument taken to hedge off-Balance Sheet item is accounted in the hedging reserve. Under l-GAAP the premium on these derivative instrument was recognised on accrual basis in the Statement of Profit and Loss.
0. Past service cost arising out of modifications in the post-retirement benefits is recognised in Profit or Loss pursuant to Ind AS 19. Under l-GAAP the past service cost was amortised over a period.
P. Actuarial gains and losses pertaining to defined benefit obligations and re-measurement pertaining to return on plan assets are recognised in Other Comprehensive Income in accordance with Ind AS 19 and are not reclassified to profit or loss. Further, there are certain other items (as presented in OCI) that are accounted in Other Comprehensive Income and subsequently reclassified to Profit or Loss in accordance with Ind AS requirements.
Q. The previous year l-GAAP figures have been reclassified/regrouped to make them comparable with Ind AS presentation.