GAMMON INDIA LIMITED

is due. The periodic maintenance of 5 th and 10 th year is amortised over a period of 5 years from
completion of the activity. The periodic maintenance of 15th year is written off over the balance
concession period of 1 year.
Overseas Operations
Depreciation is charged on a straight line basis over the useful life of the assets or as prescribed as per
the relevant local laws of such country. Where the asset being depreciated is made up of distinctly
identifiable elements, whose useful life significantly differs from that of the other parts the deprecation
is provided separately in accordance with the component approach.
The estimated useful lives of the assets for calculating depreciation are as follows:-
ASSET From To
Building 20 Years 40 Years
Plant & Machinery 3 Years 20 Years
Computer 3 Years 7 Years
Furniture & Fixtures 3 Years 10 Years
Office Equipment 3 Years 15 Years
Motor Vehicles
3 Years 8 Years
Temporary Site Office 2 Years 8 Years
Intangible Assets
Intangible assets are amortised over the period of the useful life of the rights and it begins when the
asset is available for use. Intangible assets of infinite useful lives are not amortized but subject to
impairment test, on an annual basis.
9. Impairment of Assets
On annual basis Company makes an assessment of any indicator that may lead to impairment of assets
including goodwill on consolidation. 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.
10. Investments
Investments are classified as current and long term investments. Current Investments are valued at
lower of cost or market value. Long Term Investments are stated at cost. The decline in the value of
long term Investments other than temporary is provided for.
Investments in associates are accounted under Equity Method as per Accounting Standard - 23
“Accounting for Investments in Associates in Consolidated Financial Statements” issued by Institute of
Chartered Accountants of India(„AS 23‟).
11. Inventories
(a) In case of the Indian Operations, the 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. Raw materials are valued at cost, net of Excise duty and Value Added Tax, wherever
applicable. Stores and spares, loose tools are valued at cost except unserviceable and obsolete
items that are valued at estimated realizable value thereof. Costs are determined on FIFO method
(b) Work-in-Progress on construction contracts reflects value of material inputs and expenses incurred
on contracts including estimated profit in evaluated jobs.
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