GAMMON INDIA LIMITED

Franco Tosi Meccanica S.p.A.
Revenues from agreements include the fees initially agreed with the Purchaser, in addition to the
income from job variants and price changes provided for in the agreement that can be reliably
estimated.
When the result of a contract can be reliably estimated, the contract is valued using the percentage of
completion method. The state of progress is assessed on the basis of the contract costs incurred up to
the reporting date as a percentage of the total estimated cost of the contract.
When it is reasonably and highly likely that the costs of the agreements will be higher than the total
revenues derived from the agreement, the estimated loss is immediately recognized as a cost.
The gross amount owed by Purchasers for all work orders, for which the costs incurred (plus margins
earned, or net of the realized loss) exceed the amount invoiced on a percentage of completion basis, is
recognized as a receivable.
The gross amount owed to Purchasers for all work orders, for which the amount invoiced on a
percentage of completion basis exceeds the costs incurred, plus margins earned (or net of the realized
loss), is recognized as a payable.
Receivables and payables
Receivables and payables are initially recorded at fair value, represented by the current value of the
amount that will be collected or paid and are subsequently written down in the event of impairment.
Trade receivables which expiry does not fall within the trade ordinary terms, and which does not
produce interest, are discounted.
Receivables sold to the recourse factoring companies are maintained as receivables towards the
clients.
Payables are initially recorded at cost, that is to say, at their fair value of the amount paid in the course
of the transaction. Afterwards, payables with a fixed expiry shall be measured at amortized cost, using
the effective interest rate method, whereas, as far as payables without a fixed expiry are concerned,
they shall be measured at cost.
Receivables and payables in currencies other than the company’s presentation currency are translated
at year-end exchange rates with a contra-entry in the income statement.
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