GAMMON INDIA LIMITED

For accrued liabilities/income – prepayments/deferred income of multi-year duration the conditions that determined
their original recording was checked making the necessary variations.
Inventory
Work-in-progress has been recorded on the basis of the criterion of the completion or the status of progress; the
revenues and the job margin are recognized according to the progress of the productive activity.
Provisions for liabilities and charges
These provisions are set aside to cover losses or liabilities that are certain or likely to arise, but for which the amount
and date of occurrence could not be determined at the end of the fiscal year
In the valuation of these provisions the general prudential and accrual criteria have been adopted and generic
provisions for liabilities without economic justification have not been constituted.
Potential liabilities have been shown in the financial statements and recorded in the provisions as considered
probable and as the amount of the relative charge is reasonably estimable.
Provision for employee leaving indemnity
This consists of the amounts actually accrued in favour of the employees pursuant to the law and the current labour
agreements, taking into account any elements of remuneration paid on a continuous basis.
The provision includes the total indemnities accrued for employees at the year-end net of any advances paid, and
assuming termination of their employment relationship at such date.
Income taxes
The provision for taxes has been set aside on an accruals’ basis and includes the following:
accruals in respect of the taxes paid or to be paid, determined at the current rates and in accordance with current
rules;
the amount of deferred tax assets or liabilities in respect of timing differences which arose or were written off in
the year;
any adjustments to the balance of deferred taxes to account for the change of IRES tax rate which occurred
during the year.
Recognition of income
Revenue for supplies are recognised at the time of the transfer of ownership which usually coincides with the
delivery or shipmen of the goods, and, however, on the basis of the work progress reports provided for each
contract.
Revenue for design and assemblies are recognized on the basis of the work progress reports provided for each
contract
Financial revenue and revenue from the supplies of services is recognised on an accruals basis.
Revenue and income, costs and charges related to transactions in foreign currencies are determined at the exchange
rate in force at the date when the relevant transaction takes place.
Criteria for the translation of accounts in foreign currency
Accounts payable and receivable denominated in foreign currency and recorded at the rates of exchange in force on
the date of the transaction, are aligned to the those in force at the year-end on the basis of the surveys made by the
F
111