annual report - Jindal Group of Companies

B. NOTES ON ACCOUNTS1. Estimated amount of contracts remaining to be executed on capital accountEstimated amount of contracts remaining to be executed on capital account, not provided for (net of advances)Rs. 44,293,705/- (Previous Year Rs. 3,936,105/-).2. Contingent Liabilities not provided for:i) A demand raised by Custom Authority in earlier years for Rs. 25,502,866/- on repair and return, scrap and storage ofthe rig material taken out by ONGCL based at Nhava, Maharashtra which is being contested by the company and theHon'ble CEGAT has already passed an order allowing Company's contention and directed the Custom Department forreview. The liability, if any, would be accounted for at the time of final disposal of the case. The Company had depositedRs. 6,000,000/-during earlier years as an advance under protest with the Collector of Custom and has been shown asadvance recoverable in cash or in kind. There is no progress in the case during the year.ii)iii)iv)Company has received a demand letter dated 20th May,2010 from the office of the Commissioner of Service Tax-IMumbai (pursuant to the Show Cause Notice dated 19th September, 2008) for Rs.6,03,94,143/- and interest thereonand penalty for similar account towards availing and utilising the Cenvat credit by the Company which alleged to benot eligible. An Appeal has been filed by the Company before the Appellate Tribunal as the Company has been advisedthat the demand is untenable and likely to be quashed.During the year under review, Company's income tax assessment for the assessment year 2007-08 (relevant to theaccounting year 2006-07) was completed. The assessing officer made disallowances aggregating to Rs.8,59,70,901/-thereby raising a demand of tax of Rs.3,91,50,756/-. An appeal has been filed by the Company before the appellateauthorities and is confident it will be decided in favour of the Company.Company had in earlier year, provided Corporate Guarantees to Axis Bank Limited, Singapore Branch as a Collateralsecurity for providing Loans to Joint Venture Companies as under:(a)US$ 20 Mn (Equivalent to Rs. 891,600,000/- if converted at the exchange rate prevailing as on 31/03/2011) loanby Axis Bank Ltd., Singapore to Discovery Drilling Pte Ltd, a Joint Venture Company, (This corporate guaranty isbacked by Sub - Servient Charge on fixed assets of the Company) and(b) US$ 22.50 Mn (Equivalent to Rs.1,003,050,000/- if converted at the exchange rate prevailing as on 31/03/2011)loan by Axis Bank Ltd., Singapore to Virtue Drilling Pte Ltd., a Joint Venture Company3. Joint VenturesDiscovery Drilling Pte Ltd (DDPL) and Virtue Drilling Pte Ltd (VDPL) continue to be Joint Ventures of the company.4. Sundry Debtors(i)Last year, Rs. 1,39,38,188/- with regard to following two cases under arbitration were considered good of recovery asthe arbitration cases were pending.(a)With regard to rig Ed-Holt (Rs.95,29,456/-) was settled during the year, partially (for Rs.52,21,962/-) in favour of theCompany and partially (for Rs.43,07,494/- against it. The Company has received Rs.138 Lacs (Rs.52,21,962/- alongwith interest since 1994). The remaining amount of Rs.43,07,494/- has been written off during the year under review.(b) With regard to rig PN3 (Rs. 4,408,732/-), the matter was kept in abeyance during the whole year. However since themanagement is confident to win the case, this has been shown as considered good for recovery.(ii)In earlier year, a sum of US$ 14,772,408.55 (in Indian Rupee re-stated on 31-3-2011 at Rs. 658,553,972/- ) was withheldby ONGC in relation to certain claim made on another body corporate, which is being contested by the company. Basedon the legal opinion obtained, the company is not liable for the aforesaid amount, and therefore the same has beenconsidered good and recoverable. The Company has initiated Arbitration proceedings against ONGC.49