Annual Report 2005-2006 - Gammon India

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GAMMON INDIA LIMITED 4. Turnover Turnover represents work certified as determined by taking into consideration the actual cost incurred and profit evaluated by adopting the percentage of the work completion method of accounting. Turnover also includes income from Operation and maintenance Contracts. 5. Research and Development Expenses All expenditure of revenue nature is charged to the Profit and Loss Account of the period. All expenditure of capital nature is capitalised and depreciation provided thereon, at the rates as applied to other assets of similar nature. 6. Employee Retirement Benefits Provision for liabilities in respect of Gratuity and Leave Encashment are made based on actuarial valuation as at Balance Sheet date. The Company’s contribution to recognised Employees’ Provident Fund and Superannuation Fund are charged to the Profit and Loss Account. In case of Gammon Al Matar Joint Venture, entitlement of employee’s retirement benefit is based upon the employee’s final salary and length of service, subject to the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment. In case of Gammon & Billimoria (L.L.C) provision for employee terminal benefits has been made under the U.A.E. Labour Law based on employees’ salaries and number of years of service. The terminal benefits are paid to employees’ on their termination or leaving employment. Accordingly, the Company does not expect settlement against terminal benefit obligation in the near future. 7. Goodwill Goodwill arising on consolidation is amortised over a period of 5 years. 8. Fixed Assets and Depreciation Fixed Assets are valued and stated at cost of acquisition less accumulated depreciation thereon. Revalued assets are stated at the revalued amount. Foreign exchange fluctuation relating to repayment of foreign currency loan utilized for acquisition of Fixed Assets is adjusted in the carrying amount of Fixed Assets. Depreciation for the accounting period is provided on: (a) Straight Line Method, for assets purchased after 2-4-1987, at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 (b) Written Down Value Method, for assets acquired on or prior to 2-4-1987, at the rates as specified in Schedule XIV to the Companies Act, 1956. (c) Depreciation on revalued component of the assets is withdrawn from the Revaluation Reserve. (d) The depreciation on assets used for construction has been treated as period cost. (e) Depreciation on assets in Oman used by the company’s Joint Venture entity in Oman is as per the Omani laws, which are detailed as under. These rates are higher than the rates provided in Schedule XIV to the Companies Act, 1956. Ø Plant & Machinery over 7 years Ø Motor Vehicles over 3 years Ø Site Equipments over 3 years. (f) The Infrastructure Projects Assets are amortized over a period of the rights given under the various Concession Agreements to which they relate. (g) The assets lying in the books of Gammon & Billimoria (L.L.C.) are depreciated in equal annual installments over the estimated useful lives of the assets. The estimated useful lives of the assets for calculating depreciation are as follows: Plant & Machinery 3 years Furniture & fixtures 3 years Office Equipment 3 years Motor Vehicle 3 years 9. Impairment of Assets On annual basis company makes an assessment of any indicator that may lead to impairment of assets. An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable amount is higher of an asset’s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. 84
10. Investments Quoted Investments are valued at lower of cost or market value. Unquoted Investments are stated at cost and the cost is inclusive of brokerage, fees and duties. The decline in the value of Unquoted Investments, other than temporary, is provided for. 11. Inventories Stores and Construction Materials are valued and stated at lower of cost or net realisable value. The FIFO method of inventory valuation is used to determine the cost. Work-in-Progress on construction contracts reflects value of material inputs and expenses incurred on contracts including estimated profit in evaluated jobs. In case of Gammon Al Matar Joint Venture, Stores & spares and Construction materials are valued at weighted average cost method. 12. Foreign Currency Translation (a) Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transactions. (b) Current Assets and Current Liabilities are translated at the year end rate or forward contract rate. (c) Any Gain or Loss on account of exchange difference either on settlement or translation is recognized in the Profit and Loss Account except in cases of acquisition of Fixed Assets purchased from out of India in which case they are adjusted in the carrying cost of such Assets. (d) Fixed Assets acquired in foreign currencies are translated at the rate prevailing on the date of Bill of Lading. (e) The transactions of Oman branch are accounted as a non-integral operation. The related exchange difference on conversion is accounted under Foreign Currency Translation Reserve Account. 13. Taxation: Tax expenses comprise Current Tax, Deferred Tax and Fringe Benefit Tax. Current Tax is calculated after considering benefits admissible under Income tax Act, 1961. Deferred Tax is recognized on timing differences being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets, subject to the consideration of prudence 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. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on balance sheet date. Timing differences arising and expected to reverse during the tax holiday period u/s 80 IA are not recognized by the Company in accordance with the Accounting Standard Interpretation (‘ASI’) – 3 issued by the Institute of Chartered Accountants of India. In case of Gammon Al Matar Joint Venture, taxation is provided in accordance with Omani fiscal regulations. 14. Sales Tax / VAT / WCT Sales Tax/VAT/Works Contract Tax are accounted on payment basis. 15. Provision, 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 not recognized but are disclosed in the notes to accounts. Disputed demands in respect of Central Excise, Customs, Income tax and Sales Tax are disclosed as Contingent Liabilities. Payment in respect of such demands, if any, is shown as advance, till the final outcome of the matter. Contingent Assets are neither recognized nor disclosed in the financial statements. 16. Earning per share Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events of share split. For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity shareholders and weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares. 17. Prior Period Items Prior period items are included in the respective head of accounts and material items are disclosed by way of notes to accounts. 85
Page 19 and 20:
DIRECTORS’ REPORT Your Directors
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ii. Rangit-II hydroelectric project
Page 23 and 24:
15. AUDITORS : M/s. Natvarlal Vepar
Page 25 and 26:
REPORT ON CORPORATE GOVERNANCE COMP
Page 27 and 28:
) Recommending the appointment and
Page 29 and 30:
3) The Company sought approval of t
Page 31 and 32:
Registrar & Share Transfer Agents M
Page 33 and 34:
3 Kaiga Nuclear Power Project Unit
Page 35 and 36: To The Members of GAMMON INDIA LTD.
Page 37 and 38: MANAGEMENT DISCUSSION AND ANALYSIS
Page 39 and 40: 5. Outlook : With the economy expec
Page 41 and 42: ANNEXURE TO THE AUDITORS' REPORT (R
Page 43 and 44: (x) The Company does not have any a
Page 45 and 46: INCOME : PROFIT AND LOSS ACCOUNT FO
Page 47 and 48: 31.03.2006 31.12.2004 Rs. in Lacs R
Page 49 and 50: Face Value Nos. as on Nos. as on 31
Page 51 and 52: SCHEDULE 9 49 31.03.2006 31.12.2004
Page 53 and 54: SCHEDULE 13 EXPENDITURE ON CONTRACT
Page 55 and 56: SCHEDULE 16 SIGNIFICANT ACCOUNTING
Page 57 and 58: 16. Earning per share: Basic earnin
Page 59 and 60: 13. MANAGERIAL REMUNERATION: Period
Page 61 and 62: 20. The Company has deposited custo
Page 63 and 64: (c) Details of Income & Expenditure
Page 65 and 66: Annexure Related party Disclosure a
Page 67 and 68: ) Transactions with Related Parties
Page 69 and 70: C) Disclosure of Material Transacti
Page 71 and 72: BALANCE SHEET ABSTRACT AND COMPANY
Page 73 and 74: DETAILS OF SUBSIDIARIES OF GAMMON I
Page 75 and 76: ) In the case of the Consolidated P
Page 77 and 78: CONSOLIDATED PROFIT AND LOSS ACCOUN
Page 79 and 80: SCHEDULE 3 77 31.03.2006 31.12.2004
Page 81 and 82: 31.03.2006 31.12.2004 Rs. in Lacs R
Page 83 and 84: 01.01.2005 to 31.03.2006 01.04.2004
Page 85: Schedule 16 : SIGNIFICANT ACCOUNTIN
Page 89 and 90: c) The following Associates have be
Page 91 and 92: 4. As per original agreement with R
Page 93 and 94: (b) In respect of GDRs issued durin
Page 95 and 96: As at As at 31.03.06 31.12.04 Rs. L
Page 97 and 98: Sr. Name of Joint Venture Descripti
Page 99 and 100: Annexure - I Segment Information as
Page 101 and 102: 21 Gammon Videocon Sadbhav Consorti
Page 103 and 104: C) Disclosure of Material Transacti
Page 105 and 106: GAMMON INDIA LIMITED CONSOLIDATED C
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Annual Report 2005-2006 - Gammon India

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