GAMMON INDIA LIMITED

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.
The cost for development in relation to specific project are capitalized only when the Company is able
to show the technical possibility of carrying out the intangible asset in order to make it available for use
and sale, its intension to make it available for use and sale, the modalities the activity can provide for
future economic benefits, the availability of technical, financial, as well as any other kind of resources
in order to carry out development and it‟s capacity to reliably assess the cost attributable to the activity
during its development.
After the original recognition, the costs of development are assessed net of the corresponding quotas of
amortization and of the impairment loss. Further Capitalized costs for development are amortized with
reference to the period of time where it is expected that the project thereof will produce revenue for the
company.
6. Employee Retirement Benefits
Retirement benefits in the form of a defined contribution scheme and contributions are charged to the
Profit and Loss Account for the year/period when the contributions are due.
Other retirement benefits being in the nature of a defined benefit obligation is provided on the basis of
an actuarial valuation made at the end of each year/period on projected Unit Credit Method.
Actuarial gains/losses are immediately taken to the Profit and Loss Account and are not deferred.
In case of certain subsidiaries and a joint venture the 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 based on the laws of the respective country. The expected costs of these benefits are
accrued over the period of employment. 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. Fixed Assets
Fixed Assets are valued and stated at cost of acquisition less accumulated depreciation thereon.
Revalued assets are stated at the revalued amount. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition of its intended use. Borrowing costs
relating to acquisition of fixed assets which take a substantial period of time to get ready for its
intended use are also included to the extent they relate to the period till such assets are ready to be put
to use.
8. Depreciation and Amortization
Indian Operations
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) The Infrastructure Projects Assets are amortized over a period of the rights given under the various
Concession Agreements to which they relate.
(f) Expenses incurred by the Company on periodic maintenance (required to be incurred by it
in the 5 th , 10 th and 15 th year as per the Contract with NHAI) are capitalised on the completion of
said activity. These costs are amortised over the period up to which the next periodic maintenance
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