Annual Report FY 2009-10 - Welspun

C rp Ltdf) Joint VenturesI. The Group has adopted and accounted for interest in the following Joint Ventures in this CFS, using the “ProportionateConsolidation Method” as per AS-27 issued by ICAI.II.III.No adjustment is made for the difference in accounting policy for providing depreciation under written down valuemethod. The written down value of such assets as at 31 March 2010 is Rs. 1.22 million (Rs. 1.23 million).Name of the Enterprise Nature of Business Country of Incorporation Extent of HoldingAdani Welspun Exploration Limited(Held through Welspun NaturalResources Private Limited)Dahej Infrastructure Private LimitedOil and Gas Exploration India 35%Development of Jetty India 50%The Parent Company's share of capital commitments in the Joint Ventures as at 31 March 2010 is Rs. 16.08 million (Rs.98.45 million)The Parent Company's share of contingent liabilities in the Joint Ventures as at 31 March 2010 is Rs. Nil.IV. Contingent liabilities in the form of Corporate Guarantees of Rs. 287 million (Rs.280 million) have been incurred as at 31March 2010 in relation to the Parent Company's interest in the Joint Venture along with other venturer.2. Use of EstimatesThe preparation of CFS in accordance with the generally accepted accounting principles requires the management to makeestimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as of thedate of financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from theseestimates. Any revision of such accounting estimate is recognized prospectively in current and future periods.3. Comparabilitya) Previous year figures have been regrouped, rearranged or recasted wherever necessary to confirm to this year'sclassification. Figures in brackets pertain to previous year.b) The CFS for the previous year does not include the financial statements of subsidiaries acquired during the year hence figuresof current year are not comparable.4. Fixed Assetsa) Fixed assets are stated at original cost of acquisition / installation (net of cenvat / credit availed) net off accumulateddepreciation, amortization and impairment losses except land which is carried at cost. The cost of fixed assets include cost ofacquisition, construction and installation, taxes, duties, freight, other incidental expenses related to the acquisition includingtrial run expenses (net of revenue) and borrowing cost incurred during Pre-operational period.b) Capital Work-In-Progress is stated at the amount expended upto the date of Balance Sheet including pre-operativeexpenditure and advances on capital account.c) Cost of Software includes license fees, cost of implementation and system integration and capitalized as intangible assets inthe year in which the relevant software is put to use.d) Goodwill arising out of acquisition is amortized over a period of three years from the year of acquisition.e) Capital Work in Progress, includes Capital Advances of Rs. 936.87 million (Rs. 439.85 million) and Pre-operative expensesRs.622.48 million (Rs. 586.60 million)f) Pre-operative Expenses (including accumulated borrowing costs of Rs.378.87 million) of Rs. 488.98 million (Rs. 1,373.01million) in respect of projects capitalized during the year have been allocated proportionately to the direct cost of respectivebuilding and plant and machinery.g) In case of a Joint venture, expenditure related to and incurred during the exploration period are included under “Capital WorkIn Progress” and in case of discovery, the same will be allocated/ transferred to the respective producing properties.However, in case there is no discovery, expenditure incurred for the exploration work will be charged to revenue.5. Borrowing Costsa) Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalized as part of cost of suchassets. All other borrowing costs are charged to revenue.b) Borrowing costs (net) capitalized / allocated to fixed assets / Capital work in progress is Rs. 80.44 million (Rs. 571 million).95