PATEL ENGINEERING Notes to Accounts

NOTE : 1.


EMPLOYEE BENEFITS


I Brief description of the plans


The Company provides long-term benefits in the nature of Provident fund and Gratuity to its employees. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through appropriate authorities/insurers. The Company''''s defined contribution plans are provident fund, employee state insurance and employees'''' pension scheme (under the provisions of the Employees'''' Provident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions. The Company''''s defined benefit plans include gratuity benefit to its employees, which is funded through the Life Insurance Corporation of India. The employees of the Company are also entitled to leave encashment and compensated absences as per the Company''''s policy. The Provident fund scheme additionally requires the Company to guarantee payment of specified interest rates, any shortfall in the interest income over the interest obligation is recognized immediately in the statement of profit and loss as actuarial loss. Any loss/gain arising out of the investment with the plan is also recognized as expense or income in the period in which such loss/gain occurs.


2. (i) Income-tax assessments are completed up to A.Y. 2013-2014. Several appeals for the earlier assessment years are pending before the Appellate Authorities and out of the aggregate demand of '''' 3,404.43 Million, Rs. 1,050.69 Million (P.Y. Rs. 1,050.69 Million) has been already adjusted / paid. The Company has made a provision for tax of Rs. 6.46 Million (P.Y. Rs. 171.18 Million) under all proceeding under the Income Tax Act, 1961, and increment of Deferred Tax Assets by Rs. 156.04 Million (P.Y. Rs. 72.23 Million).


(ii) The Finance Act, 2009 has amended Section 80IA (4) of the Income Tax Act, 1961 by inserting an explanation to the said section retrospectively from April 1, 2000 purporting to withdraw the benefit hitherto available. The company has filed a writ petition with High Court of Mumbai for challenging constitutional validity for insertion of explanation with retrospective effect and writ has been admitted. Recently the Hon''''ble Income Tax Appellate Tribunal, Mumbai vide its order dated 30.9.2015 has held that the Assessed is eligible for the deduction u/s 80IA(4) on all the projects claimed by it including the projects contract which have been entered into with Government Corporations. However, out of abundant caution the provisions made with respect to the deduction claimed on Government Corporations is not written back. Excess provision for the tax of '''' Nill (P.Y. '''' 600.64 Million) has been adjusted and credited to Reserves.


3. In view of the amendment in the Service Tax Act, certain projects which were hitherto not liable for service tax became liable to tax by virtue of the said amendment effective 1st July 2012. The amount of service tax payable on such projects is reimbursable by the client as per the contract conditions and the same has been reflected as receivables. However in few cases where the client has not accepted this liability, the same has been debited to the statement of profit and loss.


4. LEASE


The Company has taken various construction equipments under non cancellable operating leases. The future minimum lease payment in respect of these as at March 31, 2016 are as follows:


5. The Company has main reportable business segment namely “Civil Construction “.


6. Income consisting of construction income of Rs.109.60 Million (P.Y. Rs. Nil) and other income of Rs.12.10 Million (P.Y. Rs. 60.66 Million) and expenses consisting of piece rate expenses Rs. 68.34 Million (P.Y. Rs. 33.38 Million), store material purchases Rs. 0.09 Million (P.Y. Rs. 14.67 Million) and other expenses Rs.126.62 Million (P.Y. Rs. 189.58 Million) pertaining to prior period credited and debited respectively to the Statement of Profit and Loss under various heads of accounts.


7. In accordance with “The Companies (Accounting Standards) Amendment Rules 2009, where in the provisions pertaining to AS-11 relating to “The Effects of the changes in Foreign Exchange Rates", vide notification dated March 31, 2009 and further amended on May 13, 2011 and on December 29, 2011, the Company has carried over exchange (gain)/loss of Rs. Nil (P.Y. Rs. 3.89 million) through “Foreign Currency Monetary Items Translation Difference Account", to be amortized over the balance period of the long term asset/liability, in respect of which such exchange gain/loss has arisen, but not beyond March 31, 2020. Further exchange loss (net) of Rs.(-) 0.12 Million (P.Y. Rs. Nil) has been added/ (reduced) to the cost of the respective fixed asset.


8. In terms of provisions of Section 135 of the Companies Act 2013 and rules there under, the Company is required to spend an amount of Rs. 6.87 Million (P.Y. Rs. 8.90 Millions) during the financial year on Corporate Social Responsibility (CSR). However, the Company has not spent the requisite amount during this financial year.


9. The Company is engaged in providing infrastructural facilities as hence, as per Section 186(11) of Companies Act, 2013, nothing in Section 186 shall apply to the Company except sub-section (1) of Section 186. Accordingly, a separate disclosure has not been given in the financial statements as required under Section 186(4) with regard to particulars of loan given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient of the loan or guarantee or security.


10. Confirmation letters have been sent in respect of sundry debtors / loans and advances / sundry creditors of which certain confirmations have been received which are accordingly accounted and reconciled. The remaining balances have been shown as per books of accounts and are subject to reconciliation adjustments, if any. In the opinion of the management, the realizable value of the current assets, loans and advances in the ordinary course of business will not be less than the value at which they are stated in the balance sheet.


11. Additional information pursuant to the provision of sub - clause (ii) of clause (40) of section 2 (5) of part II of Schedule III to the Companies Act, (wherever applicable).


12. Disclosure required in accordance with Accounting Standard - 7 (Revised). In respect of contracts entered into on or after 1st April 2003, contract revenue recognized as gross construction Rs. 24,986.33 Million (P.Y. Rs. 21,581.62 Million) contract costs incurred and recognized profit (less recognized losses) Rs. 129,834.23 Million (P.Y. Rs. 111,450.01 Million) advance received Rs. 535.70 Million (P.Y. Rs. 838.63 Million) retention deposit Rs. 1,822.44 million (P.Y. Rs. 2,026.18 Million) and gross amount due from clients for contract works included under current assets Rs. 26,552.47 Million (P.Y. Rs. 19,950.36 Million).


13. a Unbilled work in progress includes stock of land under development (including held in the name of directors/relatives of directors/employees, as nominees of the Company).


b Turnover includes construction of multipurpose projects, water supply projects, irrigation projects, building projects, road and railway projects, on item rate or EPC basis and sale of development rights (net of rebate / cancellation of Rs. 2,000 Million (P.Y. Rs. 1068 Million)). It also includes duty drawback and entitlement etc but excludes VAT, Service Tax etc.


c. During the Financial year 2010-11, two of Company''''s hydropower projects in Loharinagpala, in the state of Uttarakhand, awarded by NTPC, were prematurely terminated by Government of India. NTPC has sought details of expenditure incurred, committed costs, anticipated expenditure on safety and stabilization measures, other recurring site expenses and interest costs, as well as other claims of various packages of contractors / vendors for further submission to the Government after compiling all the details of expenses incurred by various contractors working for the project. Management expects that all these cost as well as claims will be recovered in full and hence the cost incurred on the project up to March 31, 2016 Rs.1,849.70 Million (P.Y. Rs. 1,849.70 Million) (including hedging cost of Rs. 458.71 Million (P.Y. Rs. 458.71 Million) are considered recoverable and billable to the client and hence included under work in progress.


d. Arbitration awards received in favor of the Company amounting to Rs. 492.24 Million (P.Y. Rs. 783.56 Million) is accounted for as construction receipts.


14. Derivative transactions:


a. For Interest Rate Related Risks:


Nominal amounts of interest rate swaps entered into by the company and outstanding as on 31st March, 2016 amounts to Rs. Nil (P.Y. Nil).


b. Foreign Currency Exposure that are not hedged by derivative instruments as on March 31, 2016 amounting to Rs. -181.75 Million (P.Y Rs.-330.54 Million).


15. Contingent Liabilities


a Commitment for capital expenditure is Rs. 125.51 Million (P.Y. Rs. 169.72 Million), advance paid Rs. 29.26 Million (P.Y. Rs. 36.47 Million).


b Counter indemnities given to Banks and others in respect of secured guarantees, etc. on behalf of subsidiaries and others given by them in respect of contractual commitments in the ordinary course of business is Rs. 14,057.00 Million (P.Y. Rs. 13,115.98 Million) (including Customs Rs. 109.17 Million (P.Y. Rs. 120.64 Million) Entry Tax Rs. 37.57 Million ( P.Y. Rs. 67.57 Million) for the current year includes guarantees given in US$ 10 Million (P.Y. US$ 10.00 Million). Corporate guarantees / Letter of Credit on behalf of subsidiaries and others is Rs. 12,500.16 Million (P.Y. Rs. 11,135.34 Million) (against which the Company has obtained counter indemnities for Rs. Nil (P.Y. Rs 4,821.06 Million) and towards Custom Duty Rs. Nil (P.Y. Rs. 71.62 Million).


c The Company has received an amount of Rs. 12.74 Million in 1997 against arbitration award in its favor. The client has preferred an appeal against above award claiming an amount of Rs 213.32 Million (P.Y. Rs. 213.32 Million) before the Hon''''ble appeal court. However the management feels that the likelihood of outflow of resources is remote.


d Service tax liability that may arise on matters in appeal Rs. 1,085.92 Million (P.Y. Rs. 1,085.92 Million) and advance paid Rs. 20.00 Million (P.Y. Rs. 20.00 Million). However, this amount is contractually recoverable from the Clients.


e Sales tax Rs. 105.95 Million (P.Y. Rs 99.56 Million) (Advance paid Rs. 18.68 Million (P.Y. Rs. 17.09 Million)), Cess Rs. 107.81 Million (P.Y. Rs. 78.55 Million), Custom Duty Rs. 17.62 Million (P.Y. Rs. 17.62 Million) (Advance paid Rs. Rs. 8.46 Million (P.Y. Rs. 8.46 Million)).


f Income tax liability that may arise on matters in appeal Rs. 3,671.77 Million (P.Y. Rs. 2,819.73 Million).


g Trade Receivables/ Client Retention to the extent of Rs. Nil (P.Y. Rs. 179.47 Million) have been discounted with Bank on Recourse Basis.


h Allowances due to employees in remote areas (North East) may accrue in future maximum to the extent of Rs. Nil (P.Y. Rs. 0.37 Million). The same will be paid to the employees who were on the payrolls upto July 1, 2014.


i Provident Fund liability that may arise on matter in appeal Rs. 9.52 Million ( P.Y. Rs. 9.52 Million) and advance Paid Rs. 2.38 Million (P.Y. 2.38 Million)


j Claims not acknowledged as debt Rs. Nil (P.Y. Rs. 485 Million) (any liability herein shall be borne by the Principal Contractor).


k Entry Tax liabilities on purchase of goods of Rs. 11.35 Million (against which amount of Rs. 3.78 Million have been paid and for the balance amount of Rs. 7.60 Million bank guarantee has been furnished) for assessment of F.Y. 2010 - 11 which has been stayed by Hon''''ble High Court of H.P. The Company has not provided any further liability for assessment of the relevant financial year as the amount for same is not ascertainable.


16. Information pertaining to loans given to subsidiaries (information pursuant to regulation 34(3) of SEBI (Listing Obligation And


Disclosure Requirements) Regulations, 2015:


Loans and Advances in the nature of loans given to Subsidiaries and Associates:


for reversal of Prudent Provision for Tax refer to note no. 25(ii) of notes to Standalone Financial Statement. And note no. 24(ii) of Notes to Consolidated Financial Statements


Consolidated


The Consolidated total income which stood at '''' 41,932.57 million increased by 18.75% as against '''' 35,313.09 million for the previous year. The profit before depreciation was lower by 137.52% at Rs. (360.64) million as against Rs. 961.15 million for the previous year. The net loss is at Rs. 1,866.57 million as against profit of Rs. 84.69 million for the previous year.


Standalone


On Standalone basis, the total income stood at Rs. 28,444.66 million as against Rs. 26,682.25 million for the previous year. The profit before depreciation was lower at Rs. 300.84 million as against Rs. 737.86 million for the previous year. The Company has incurred Net Loss of Rs. 186.91 million as against the profit of Rs. 118.86 million for the previous year.


Dividend


Due to operating losses, your Directors have not recommended payment of dividend for the financial year 2015-16.


Information on state of affairs of the Company


Information on the operational and financial performance, among others, is given in the Management Discussion and Analysis Report which is forming part of the Annual Report and is in accordance with Regulation 34 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.


CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

  • Download our Mobile App
  • Available on Google Play
  • Available on App Store
  • RSS