GAMMON INDIA LIMITED

In respect of some road projects completed during the year 2007-08 the Company has incurred
additional cost not covered by contract conditions pertaining to variations, escalations & other
claims. These claims were disputed by customer but the Company has received favorable verdicts
from Dispute Resolution Board (DRB) end thereafter also in Arbitration awards in some of the
cases. The customers however appealed against the said arbitration awards. The management is
reasonably confident of recovery of these claims. The management has also obtained independent
legal opinion from eminent council in this regards, who have opined on the recoverability of the
claims.
Accordingly, the Company has recognized these claims of Rs. 570.40 Millions as turnover to the
extent of the expenditure incurred without recognizing any future profits from the same although
the awards/ claims are of higher amount. The said amount of Rs. 570.40 Millions is part of sundry
debtors.
d) Recovery of VAT from annuity payments
In the year 2006-07, on the basis of an interim order of the Honourable Andhra Pradesh High
Court, NHAI recovered Rs. 92.05 million, being the VAT @ 4% from the annuities paid to AEL
and REL by NHAI (including all annuities of all past years which had been fully paid by NHAI to
the AEL and REL). This amount was included in Sundry Debtors.
The interim order had directed NHAI to transfer this amount as a Fixed Deposit in any
nationalised bank pending the final order of the Honourable High Court.
In the year 2007-08, the Honourable High Court, on April 12, 2007, passed the final order
accepting the Company‟s position and directed NHAI to refund the said amount to the Company.
The said amount of Rs. 44.70 million received was adjusted against Sundry Debtors.
e) Work – in – Progress as at 31 st March 07 includes Rs, 200 Million pertaining to variation and
escalation claim of certain road project for which the Company has verdicts of DRB in favor of
the Company. These claims however have been disputed by the client and the client has preferred
arbitration. The Company contains that based on favorable awards by arbitrator in case of similar
claims by other contractors; favorable verdict is expected to be received in respect of the claims.
The Company has however earmarked out of special contingency reserve an equal amount
towards possible awards against the Company following the principle of conservatism and
prudence.
23. Disclosure in accordance with Accounting Standard - 7 (Revised), in respect of contracts entered into
on or after April 1,2003 :-
(Rs. In Millions)
Particulars Year ended
March, 2009
Year ended
March, 2008
Year ended
March, 2007
Turnover for the year 27,527.10 22,608.10 16,108.00
Aggregate Expenditure (Net of inventory adjustments) for
contracts existing as at the year end
Aggregate Contract Profits/Losses recognized for
contracts existing as at the year end
67,132.50 41,329.60 14,222.80
9,144.60 5,725.30 1,885.20
Contract Advances (Net) 6,402.60 11,348.80 3,097.50
Gross Amount due from Customers for contract work 4,625.90 4,500.00 2,581.60
Gross Amount due to customers for contract work 664.80 25.80 6.50
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