ITD CEMENTATION INDIA LIMITED
ANNUAL REPORT 2010
NOTES ON ACCOUNTS
1. Significant accounting policies:
1.1 Basis of preparation of financial statements:
The financial statements have been prepared to comply in all material
respects with the notified accounting standards by the Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant provisions
of the Companies Act, 1956 ('the Act'). The financial statements are
prepared under the historical cost convention, on an accrual basis of
accounting. The accounting policies applied are consistent with those used
in the previous year,
1.2 Accounting estimates:
The preparation of financial statements in confirmity with the generally
accepted accounting principles requires management to make estimates and
assumption that affect the reported amounts of assets and liabilities and
disclosure of contingent liability at the date of the financial statements
and the results of operation during the reported period. Although these
estimates are based upon management's best knowledge of current events and
actions, actual result could defer from these estimates.
1.3 Fixed assets and depreciation:
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for its
intended use. Borrowing costs relating to acquisition of fixed assets which
takes 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.
Depreciation is provided as per the written-down value method for assets
acquired on or after April 1, 1993, and as per the straight-line method for
assets acquired up to March 31, 1993. On additions and disposals,
depreciation is provided for from/upto the date of addition/disposal. The
rates of depreciation are determined on the basis of useful lives of the
assets estimated by the management, which are at rates specified in
schedule XIV to the Companies Act, 1956.
Leasehold improvements are depreciated over the lease period of 5 years,
which is lower of the period of the lease or their estimated useful lives
as determined by management.
1.4 Impairment:
i. The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/ external
factors. An impairment loss is recognized wherever the carrying amount of
an asset exceeds its recoverable amount. The recoverable amount is the
greater of the assets net selling price and value in use. In assessing
value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value and the risk specific to the assets.
ii. Depreciation on impaired assets is provided on the revised carrying
amount of the assets over its remaining useful life.
iii. A previously recognized impairment loss is increased or reversed
depending on changes in circumstances. However the carrying value after
reversal is not increased beyond the carrying value that would have
prevailed by charging usual depreciation if there was no impairment.
1.5 Investments:
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Current investments
are carried at lower of cost and fair value determined on an individual
investment basis. Long term investments are carried at cost. However,
provision for diminution in value is made to recognize a decline other than
temporary in the value of the investments.
1.6 Inventories:
Construction materials are valued at cost. Identified direct materials
remaining on completion of contract are valued at their estimated scrap
value. Cost is determined on a first-in, first-out method and comprises the
purchase price including duties and taxes (other than those subsequently
recoverable by the enterprise from the taxing authorities).
Tools and equipment are stated at cost less the amount amortised. Tools and
equipment are amortised over their estimated useful lives ranging from 3 to
10 years. Cost is determined by the weighted average method.
Machinery spares are valued at lower of cost and net realisable value. Cost
is determined by the weighted average method.
1.7 Revenue recognition:
- On contracts:
Contracts are either of fixed contract price or of fixed rate per unit of
output and are at times subject to price escalation clauses. Revenue from
contracts is recognised on the basis of percentage completion method, the
level of completion depends on the nature and type of each contract and is
measured based on the physical proportion of the contract work including:
* Unbilled work-in-progress valued at lower of cost and net realisable
value upto the stage of completion. Cost includes direct material, labour
cost and appropriate overheads; and
* Amounts recoverable in respect of the price and other escalation, bonus
claims adjudication and variation in contract work required for performance
of the contract to the extent that it is probable that they will result in
revenue.
In addition, if it is expected that the contract will make a loss, the
estimated loss is provided for in the books of account.
Contractual liquidated damages, payable for delays in completion of
contract work or for other causes, are accounted for as costs when such
delays and causes are attributable to the Company or when deducted by the
client.
- On insurance claims:
Insurance claims are recognized as revenue based on certainty of receipt.
1.8 Advances from customers, progress payments and retention:
Advances received from customers in respect of contracts are treated as
liabilities and adjusted against progress billing as per terms of the
contract.
Progress payments received are adjusted against amount receivable from
customers in respect of the contract work performed.
Amounts retained by the customers Until the satisfactory completion of the
contracts are recognised as receivables. Where such retention has been
released by customers against submission of bank guarantees, the amount so
released is adjusted against receivable from customers and the value of
bank guarantees is disclosed as a contingent liability.
1.9 Foreign currency transactions:
i. Initial Recognition:
Foreign currency transactions are recorded in the reporting currency, by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the transaction.
ii. Conversion:
Foreign currency monetary items are reported using the closing rate. Non-
monetory items which are carried in terms of historical cost denominated in
a foreign currency are reported using the exchange rate at the date of the
transaction.
iii. Exchange Differences:
Exchange differences arising on the settlement of monetary items or on
reporting company's monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous
financial statements, are recognised as income or as expenses in the year
in which they arise. Exchange differences arising in respect of fixed
assets acquired from outside India before accounting period commencing on
or after December 7, 2006 are capitalized as a part of fixed asset.
iv. Forward exchange contracts not intended for trading or speculation
purposes:
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the contract.
Exchange differences on such contracts are recognised in the profit and
loss account in the year in which the exchange rates change. Any profit or
loss arising on cancellation or renewal of forward exchange contract is
recognised as income or as expense for the year.
1.10 Retirement and other employee benefits:
Retirement benefits in the form of superannuation is a defined contribution
scheme and the contributions are charged to the profit and loss account of
the year when the contributions to the respective funds are due. The
Company does not have any other obligations in respect of superannuation.
The Company has a provident fund scheme, a defined benefit plan, for
employees and a group gratuity and life assurance scheme for employees. The
group gratuity and life assurance scheme are defined benefit obligations
and are provided for, on the basis of an independent actuarial valuation on
projected unit credit method made at the end of each financial year.
Provision for leave encashment, is made based on an independent actuarial
valuation on projected unit credit method made at the end of each financial
year.
Actuarial gains/losses are immediately taken to profit and loss account and
are not deferred.
1.11 Taxation:
Tax expense comprises of current, deferred and fringe benefit tax. Current
income tax and fringe benefit tax is measured at the amount expected to be
paid to the tax authorities in accordance with the Indian Income Tax Act.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year and
reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets are
recognised only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. If the Company has unabsorbed
depreciation or carry forward tax losses, deferred tax assets are
recognised only if there is virtual certainty supported by convincing
evidence that such deferred tax assets can be realised against future
taxable profits.
At each balance sheet date the Company re-assesses unrecognised deferred
tax assets. It recognises unrecognised deferred tax assets to the extent
that it has become reasonably certain or virtually certain as the case may
be that sufficient future taxable income will be available against which
such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred tax
asset to the extent that it is no longer reasonably certain or virtually
certain, as the case may be, that sufficient future taxable income will be
available against which deferred tax asset can be realised. Any such write-
down is reversed to the extent that it becomes reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available.
Minimum Alternative Tax (MAT) credit is recognised as an asset only when
and to the extent there is convincing evidence that the company will pay
normal income tax during the specified period. In the year in which the MAT
credit becomes eligible to be recognized as an asset in accordance with the
recommendations contained in Guidance Note issued by the Institute of
Chartered Accountants of India, the said asset is created by way of a
credit to the profit and loss account and shown as MAT Credit Entitlement.
The Company reviews the same at each balance sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no longer
convincing evidence to the effect that Company will pay normal Income Tax
during the specified period.
1.12 Leases:
Leases, where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as operating
leases. Operating lease payments are recognized as an expense in the profit
and loss account on a straight-line basis over the lease term.
1.13 Provisions, Contingent Liabilities and Contingent Assets:
A provision is recognised when an enterprise has a present obligation as a
result of past event; it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable estimate
can be made. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
Contingent Liability is disclosed in case of:
i. a present obligation arising from a past event, when it is not probable
that an outflow of resources will be required to settle the obligation.
ii. a possible obligation, unless the probability of outflow of resources
is remote.
Contingent Assets are neither recognized nor disclosed.
Contingent Liabilities and Contingent Assets are reviewed at each balance
sheet date.
1.14 Earnings Per Share:
Basic earnings per share are calculated by dividing the net profit or loss
for the period attributable to equity shareholders by the weighted average
number of equity shares outstanding during the period. Partly paid equity
shares are treated as a fraction of an equity share to the extent that they
were entitled to participate in dividends relative to a fully paid equity
share during the reporting period. The weighted average number of equity
shares outstanding during the period are adjusted for events of bonus
issue; bonus element in a rights issue to existing shareholders; share
split; and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net profit
or loss for the period attributable to equity shareholders and the weighted
average number of shares outstanding during the period are adjusted for the
effects of all dilutive potential equity shares.
1.15 Accounting for Joint Venture Contracts:
In respect of contract executed in Integrated Joint Ventures under profit
sharing arrangement (assessed as AOP under Income Tax laws), the services
rendered to the Joint Ventures is accounted as income on accrual basis. The
share of profit/loss is accounted based on the audited financial statements
of Joint Ventures and is reflected as Investments.
1.16 Cash and cash equivalents:
Cash and cash equivalents in the cash flow-statement comprise cash at bank
and in hand and short-term investments with an original maturity of three
months or less.
NOTES TO ACCOUNTS:
2010 2009
(i) COMMITMENTS:
Estimated amount of contracts remaining
to be executed on capital accounts and
not provided for (net of advances) 2,262.53 101.07
(ii) CONTINGENT LIABILITIES:
a) Guarantees given by banks in respect
of normal contracting commitments given
in the normal course of business. 17,767.28 17,230.27
(b) Corporate Guarantee given to bank
on behalf of Joint Venture. - 1,500.00
(c) The Company has a number of claims
on customers for price escalation and
/ or variation in contract work. In
certain cases which are currently under
arbitration, the customers have raised
counter-claims. The Company has
received legal advice that none of
the counter-claims are legally tenable.
Accordingly no provision is considered
necessary in respect of these
counterclaims. 21,058.14 21,074.14
Sales tax matters pending in appeals 505.05 310.74
Income tax matters pending in appeals 2,262.89 2,276.48
Excise matter pending in appeal 52.00 52.00
(iii) PARTICULARS OF UNHEDGED FOREIGN CURRENCY EXPOSURES AT THE BALANCE
SHEET DATE:
Buyers credit, 2010 2009
Sundry creditors
& Acceptances Foreign Exchange INR in Foreign Exchange INR in
Currency Rate lakhs Currency Rate lakhs
US Dollar
Exposure 11,440 45.28 5.18 2,663 47.12 1.25
Euro Exposure 700,037 60.45 423.17 7,607 67.97 5.17
GBP Exposure - - - 414,176 75.98 314.69
TOTAL 428.35 321.11
(iv) GRATUITY AND OTHER POST EMPLOYMENT BENEFITS:
The following tables summarise the components of net benefit expense
recognised in the profit and loss account and the funded status and amounts
recognised in the balance sheet for the respective plans.
Gratuity
Profit and loss account 2010 2009
The net employee benefit expense
(recognised in personnel cost) during
the year is as follows:
Current Service Cost 127.58 102.83
Interest Cost 74.29 61.99
Expected return on Plan Assets (81.21) (54.86)
Net Actuarial (Gains)/Losses
for the period 91.24 (69.50)
Past Service Cost - -
Net benefit expense 211.90 40.46
Actual return on plan assets 94.90 134.42
Balance Sheet:
The details of provision for
gratuity is summarised below:
Defined benefit obligation 1,260.30 1,027.51
Fair value of plan assets 1,085.40 814.01
Plan liability 174.90 213.50
There is no unrecognised past
service cost
Changes in the present value of
the defined benefit obligations
during the year are as follows:
Defined Benefit Obligation at
beginning of the period 1,027.51 918.54
Current Service Cost 127.58 102.83
Interest Cost 74.29 61.99
Net Actuarial Loss 104.95 10.05
Benefit Payments (74.03) (65.90)
Present value of Defined
Benefit Obligation at end
of period 1,260.30 1,027.51
Changes in the fair value of the
plan assets of the gratuity plan,
during the year are as follows:
Plan assets at beginning of
the period 814.01 539.53
Expected return on Plan Assets 81.21 54.86
Contributions by employer 250.50 205.96
Benefit Paid (74.03) (65.90)
Actuarial Gain on Plan Assets 13.71 79.56
Fair value of Plan Assets at
end of the period 1,085.40 814.01
The Company expects to contribute Rs. 75.00 lakhs to gratuity in the next
year (2009 - Rs. 250.00 lakhs).
The amount of defined benefit obligation, plan assets, the defecit thereof
and the experience adjustments on plan assets and plan liabilities for the
current and previous three years are as follows:
2010 2009 2008 2007
Defined Benefit
Obligation 1,260.30 1,027.51 918.54 655.26
Plan Assets 1,085.40 814.01 539.53 425.80
Deficit (174.90) (213.50) (379.01) (229.46)
Experience adjustments
on plan assets 13.71 - - -
Experience adjustments
on plan liabilities (104.95) - - -
The information on the allocation of the gratuity fund into major asset
classes and the expected return on each major class is not readily
available. However, the gratuity fund is invested in a Group Gratuity
policy invested with the Life Insurance Corporation and Birla Sunlife
Insurance. The fair value of plan assets with Life Insurance Corporation
and Birla Sunlife Insurance at December 31, 2010 are Rs. 21.24 lakhs (2009
- Rs. 79.20 lakhs) and Rs. 1,064.16 lakhs (2009 - Rs. 734.82 lakhs)
respectively. The management understands that the assets in these
portfolios are well diversified and as such the long term return thereon is
expected to be higher than the rate of return on Government Bonds.
The overall expected rate of return on assets is determined based on the
market prices prevailing on that date, applicable to the period over which
the obligation is to be settled.
The principal assumptions used in determining the gratuity obligations are
as follows:
2010 2009
Discount rate 8.30% 7.50%
Expected rate of return - -
on plan assets
Expected rate of salary increase 5.50% 5.50%
Attrition rate 2% 2%
Withdrawal rates Upto age 44-2% Upto age 44-2%
45 years & 45 years &
above - 1% above - 1%
Expected average remaining service 22.13 years 21.74 years
The estimates of future salary increases, considered in actuarial valuation
take account of inflation, seniority, promotion and other relevant factors
such as supply and demand in the employment market.
In respect of provident funds, the Guidance issued by the Accounting
Standards Board ('ASB') of ICAI on implementing AS 15 states that provident
funds trust set up by employers, which requires interest shortfall to be
met by the employer, needs to be treated as a defined benefit plan. The
Company's provident fund does not have any existing deficit or interest
shortfall. In regard to any future obligation arising due to interest
shortfall (ie. government interest to be paid on provident fund scheme
exceeds rate of interest earned on investment), pending the issuance of the
Guidance Note from the Actuarial Society of India, the Company's actuary
has expressed his inability to reliably measure the same.
The Company's expense for the superannuation, a defined contribution plan
aggregates Rs. 191.61 lakhs during the year ended December 31, 2010 (2009 -
Rs. 141.75 lakhs)
The Company's expense for the provident fund aggregates Rs. 488.72 lakhs
during the year ended December 31, 2010 (2009-Rs. 439.25 lakhs).
2010 2009
(v) SUPPLEMENTARY PROFIT AND
LOSS INFORMATION:
Managerial remuneration for Directors
included in the profit and loss
account comprises:
Remuneration to Directors:
Salaries 24.00 44.50
Perquisites (at monetary value) 15.60 41.54
Gratuity & leave encashmnet -
paid to retired director - 13.07
Rent 9.68 3.07
Contribution to Provident fund
and Superannuation fund 2.88 10.75
Commission to non executive
directors 6.00 6.00
58.16 118.93
Note: As the liability for gratuity
and leave encashment are provided
on an actuarial basis for the
Company as a whole, the amounts
pertaining to the directors are
not included above.
Computation of net profits in
accordance with the Companies
Act, 1956:
Profit before taxation per profit
and loss account 1,223.49 766.32
Add: Directors' remuneration
(including Managing Director) 58.16 118.93
Directors' fees 2.65 3.15
Provision for doubtful debts 1,496.95 810.24
Depreciation provided in the books 3,075.15 3,060.01
5,856.40 4,758.65
Less: Depreciation under Section
350 of the Companies Act, 1956 3,075.15 3,060.01
Less: Bad debts written off 1,125.28 134.68
4,200.43 3,194.69
Net Profit under Section 198 of
the Companies Act, 1956 1,655.97 1,563.96
Salaries, perquisites and commission
to managing and wholetime directors
at 5% / 10% of the net profit as
calculated above 82.80 156.40
Remuneration 58.16 118.93
Commission to Non-executive directors
at 1% of the net profit as
calculated above 16.56 15.64
Restricted by the Board of Directors
of the Company to 6.00 6.00
Notes :
The above remuneration by way of salary and perquisites payable to Mr. Adun
Saraban, Managing Director which is in accordance with the limits
prescribed in Schedule XIII to the Companies Act, 1956, is subject to
approvals by the shareholders, which are proposed to be obtained in the
forthcoming Annual General Meeting.
2010 2009
Expenditure in foreign currency:
(on cash basis):
Foreign travel 5.07 5.73
Professional and consultancy fees 0.08 12.17
Interest on External Commercial Borrowings 119.95 144.25
Membership & subscription - 2.14
Bank Guarantee commission 1.10 -
Royalty expense 415.67 359.11
541.87 523.40
c) Payment to Auditor: As auditor:
Audit fee 22.85 22.13
Tax audit fee (including tax accounts) 9.97 9.94
Limited Review 11.62 9.29
Out-of-pocket expenses 1.03 0.83
In other manner:
Certification 5.22 3.33
50.69 45.52
d) Amount remitted in foreign
currency for dividend:
Number of non-resident shareholders 1 1
Number of shares held 8,011,318 8,011,318
(Equity shares of Rs, 10/- each)
Dividend Remitted 80.11 80.11
Year to which dividend relates 2009 2008
Value of imports on CIF basis:
Spare parts 65.00 408.79
Tools and equipments 263.61 15.49
Construction Materials 581.09 1,585.15
Capital goods (including capital
work-in-progress) 2,201.38 1,297.73
3,111.08 3,307.16
f) Consumption of spare parts, tools & equipment and raw materials:
2010 2009
% Value % Value
Spare parts:
Imported 6.16 65.00 35.49 408.79
Indigenous 93.84 990.63 64.51 741.91
100.00 1,055.63 100.00 1,150.70
Tools and equipment:
Imported 23.80 263.61 1.56 15.49
Indigenous 76.20 844.13 98.44 978.96
100.00 1,107.74 100.00 994.45
Construction material:
Imported 1.39 581.09 4.24 1,585.15
Indigenous 98.61 41,232.02 95.76 35,770.48
100.00 41,813.11 100.00 37,355.63
(vi) SEGMENT REPORTING:
The activities of the Company comprise only one business segment viz
Construction. The Company operates in only one geographical segment viz
India. Hence the Company's financial statements also represents the
segmental information.
(vii) RELATED PARTY TRANSACTIONS:
(a) Name of related parties where control exists irrespective of whether
transactions have occurred or not.
Italian-Thai Development Public Company Limited - Holding Company
ITD Cementation Projects India Limited - Wholly Owned Subsidiary Company
(b) Other entities with whom transactions have taken place:
Name of Related Parties Nature of Relationship
ITD Cemindia JV Joint Venture
ITD - ITDCem JV Joint Venture
ITD - ITDCem JV
(Consortium of ITD - ITD Cementation) Joint Venture
AVR Infra Pvt. Ltd. Associate
(c) Remuneration to Key Management Personnel 2010 2009
Mr. Adun Saraban - Managing Director 52.16 17.88
Mr. P.B. Patwardhan - Chief Financial Officer 38.30 33.51
Mr. S.S. Singh (ceased to be Managing Director
w.e.f. 1st January 2010) - 66.58
Mr. S. Mukundan - Deputy Managing Director
(resigned on 12th June 2009) - 28.47
90.46 146.44
(d) Transactions with Related Parties, referred to in items (a) and (b)
above:
Previous year figures are given in brackets.
Nature of Transactions Holding Joint Associate
Company Venture
Revenues earned from 980.08
contract execution (771.31)
Balance receivables for 795.53
contract execution (505.26)
Dividend paid 80.11
(80.11)
Plant hire charges 611.61
(2,416.35)
Salary and related 388.52
expenses of the employees (955.94)
deputed to Joint Ventures
Sale of construction 21.59
material & spares (511.87)
Purchase of construction 499.49
material & spares (123.89)
Sale of fixed assets 28.08
(-)
Purchase of fixed assets 155.34
(71.72)
Share of profit net of 1,424.04
tax in joint ventures (1,014.90)
(included in investments)
Investment in equity shares 0.26
(-)
Royalty expense 536.67
(463.50)
Balance royalty payable 246.93
(182.45)
Balances on current account 6,797.52
with joint ventures (8,992.84)
Balance receivable
Corporate guarantee 5,000.00
issued by (6,000.00)
Corporate guarantee issued -
to ITD-ITD Cem JV (1,500.00)
The Company has not given any loans or advances in the nature of loans to
its subsidiary or to firms/companies in which directors are interested.
(e) Disclosure in respect of transactions, which are more than 10% of the
total transactions of the same type with related parties during the year:
Nature of Transactions/Related Parties 2010 2009
Plant hire charges:
ITD Cemindia JV 377.79 609.75
ITD-ITDCem JV 95.08 -
ITD-ITDCem JV
(Consortium of ITD-ITD Cementation) 138.74 1,693.42
Purchases of Construction materials
and spares:
ITD Cemindia JV - 30.14
ITD-ITDCem JV 254.60 83.55
ITD-ITDCem JV
(Consortium of ITD-ITD Cementation) 196.67 -
Sale of Construction materials
and spares:
ITD-ITDCem JV 10.36 54.04
ITD-ITDCem JV
(Consortium of ITD-ITD Cementation) 9.64 439.81
Salary and related expenses of the
employees deputed to joint ventures:
ITD Cemindia JV 388.50 452.32
ITD-ITDCem JV - 474.37
Sale of fixed assets:
ITD-ITDCem JV 28.08 -
Purchase of fixed assets:
ITD-ITDCem JV 155.34 71.48
Share of profit net of tax in
joint ventures
(included in investments):
ITD-ITDCem JV 638.32 581.89
ITD-ITDCem JV (Consortium of
ITD-ITD Cementation) 796.86 575.46
Balances on current account
with joint ventures:
- Balance receivable:
ITD Cemindia JV 8,111.98 7,253.23
ITD-ITDCem JV - 1,452.31
- Balance payable:
ITD-ITDCem JV 1,348.26 -
Corporate guarantee issued to:
ITD-ITDCem JV - 1,500.00
(viii) DETAILS OF JOINT VENTURES:
a) Details of Joint Ventures entered into by the Company:
Name of the Joint Venture % of % of Nature of
Participation Participation business
as at Dec. as at Dec.
31, 2010 31, 2009
ITD Cemindia JV 80% 80% Construction
ITD - ITDCem JV 49% 49% Construction
ITD - ITDCem JV
(Consortium of
ITD - ITD Cementation) 40% 40% Construction
All the above are unincorporated jointly controlled entities in India
b) Details of share of Assets, Liabilities, Income, Expenditure, Capital
Commitments and Contingent Liabilities in Joint Ventures:
Previous year figures are given in brackets
ITD Cemindia ITD - ITDCem ITD-ITDCem
JV JV JV
(Consortium
of ITD-ITD
Cementation)
Share of Assets 6,398.30 3,164.47 2,188.19
(5,721.65) (2,876.40) (692.64)
Share of Liability 6428.08 783.92 813.64
(5740.29) (1,134.18) (114.92)
Share of Income 7,048.14 15,981.47 16,872.42
(10,019.31) (27,338.85) (13,729.75)
Share of Expenditure 7,059.28 15,343.15 16,075.56
(10,161.76) (26,756.96) (13,154.29)
Share of Capital - 194.29 3.44
Commitment (-) (59.01) (45.18)
Share of Contingent - 900.91 3,808.40
Liabilities (-) (6,453.71) (4,813.61)
2010 2009
(ix) EARNINGS PER SHARE:
(a) Net Profit after taxation 938.51 540.53
(b) Calculation of weighted average
number of equity shares of Rs. 10/-
each Number of shares at the
beginning of the year 11,515,790 11,515,790
Number of shares issued during the year - -
Number of shares at the end of the year 11,515,790 11,515,790
Weighted averagenumberof equity
shares outstanding during the year 11,515,790 11,515,790
c) Basic and diluted earnings per share
(nominal value of Rs. 10/- each
(2009-nominal value ofRs. 10/-each)) 8.15 4.69
(x) (a) Sundry debtors at December 31, 2010 include Rs. 1,140 lakhs
(December 31, 2009 - Rs. 1,140 lakhs) relating to price escalation claims
which are disputed by the customer. The Company has received favourable
verdict from Dispute Redressal Board and also thereafter in Arbitration in
respect of these claims. The Customer has appealed against the Arbitration
Award. Management is reasonably confident of recovery of this amount based
on the above and independent legal advice from eminent legal counsel in the
matter. These contracts have been completed and hence during the year ended
December 31, 2010, the Company has not recognised any turnover or
escalation claims on these road contracts.
(b) Sundry debtors at December 31, 2010 include variation claims of
Rs.1,515 lakhs (December 31, 2009-Rs. 1,515 lakhs) for which the Company
had received an arbitration award in its favour which has subsequently been
upheld by the district court. The Customer has challenged this Court Order.
However on the basis of above arbitration award and Court Order management
is reasonably confident of recovering of these amounts.
(c) Sundry debtors at December 31, 2010 include variation claims of Rs. 309
lakhs (December 31, 2009 - Rs. 309 lakhs) for which the Company had
received an arbitration award in its favour which has subsequently been
upheld by the district court. The Customer has challenged this Court Order.
However on the basis of above arbitration award and Court Order management
is reasonably confident of recovering of these amounts.
(xi) Work-in-progress at December 31, 2010 include Rs. 1,812 lakhs, in
respect of a contract which has been rescinded by the Company and Rs. 2,174
lakhs in respect of another contract where the Company has received a
notice from the customer withdrawing from the Company the balance works to
be executed under the contract; besides the Company has also issued
guarantees aggregating Rs. 616 lakhs and Rs. 2,227 lakhs. The Company
intends to pursue these matters, if necessary, through legal action. Based
upon legal/expert advice received, management is reasonably confident of
recovery of these amounts of work in progress.
(xii) Sundry debtors at December 31, 2010 include variation claims of
Rs.3,910 lakhs (December 31, 2009 - Rs. 5,042 lakhs) recognised upto
December 31, 2010, which are disputed by the customer. Out of this, claims
amounting to Rs. 2,346 lakhs (December 31, 2009 - Rs. 2,801 lakhs) are a
subject matter of arbitration. The Company has received arbitration awards
in its favour in respect of the balance amount of Rs. 1,564 lakhs (December
31, 2009 - Rs. 2,241 lakhs) of which, an amount of Rs. 1,109 lakhs
(December 31, 2009 - Rs. 2,241 lakhs) have since been challenged by the
customer. During the year ended December 31, 2010, no variation claim was
recognised by the Company. Considering the contractual tenability and legal
advice from Company's counsel in the matter, the management is reasonably
confident of recovery of the same.
(xiii) Sundry debtors at December 31, 2010 include Rs 3,384 lakhs (December
31, 2009 - Rs. 3,384 lakhs) representing interim work bills for work done
which have not been certified by customers beyond normal periods of
certification provided in the respective contracts. The management is
reasonably confident of the certification and recovery of the same
progressively on these contracts based on past experience of the Company,
assessment of work done and the fact that these amounts are not disputed by
the customer.
(xiv) The disclosures as per provisions of Clauses 38, 39 and 41 of
Accounting Standard 7 'Construction Contracts' notified by the Companies
(Accounting Standards) Rules 2006, (as amended) are as under:
2010 2009
a) Contract revenue recognised as revenue
in the period Clause 38 (a) 106,633.24 95,847.46
b) Aggregate amount of costs incurred and
recognised profits up to the reporting
date on Contract under progress
Clause 39 (a) 341,646.66 272,503.51
c) Advance received on Contract under
progress Clause 39 (b) 10,317.46 10,127.26
d) Retention amounts on Contract under
progress Clause 39 (c) 6,332.82 4,400.51
e) Gross amount due from customers for
contract work as an asset Clause 41 (a) 29,865.54 25,362.43
(xv) As per the information available with the Company, there are no Micro,
Small and Medium Enterprises, as defined in the Micro, Small, Medium
Enterprises Development Act, 2006, to whom the Company owes dues on account
of principal or interest.
The above information regarding Micro, Small and Medium Enterprises has
been determined to the extent such parties have been identified on the
basis of information available with the Company This has been relied upon
by the auditors.
(xvi) OPERATING LEASES:
a. The Company has taken various residential/commercial premises and
construction equipments on cancellable operating lease. These lease
agreements are normally renewed on expiry. Rental expenses in the profit
and loss account for the year includes lease payments towards premises of
Rs. 1,077.54 lakhs (2009 - Rs. 938.00 lakhs). Plant hire expense relates to
the lease payment for construction equipments.
b. The Company, in addition to the above, has taken construction equipments
on leases (non-cancellable operating leases). The future minimum lease
payments in respect of which at 31 December 2010 are as follows:
Minimum Lease Payments 2010 2009
i. Payable not later than 1 year 390.32 967.22
ii. Payable later than 1 year and
not later than 5 years 30.46 399.46
iii. Payable later than 5 years - -
Total 420.78 1,366.68
These leases have no escalation clauses.
Rental expenses in the statement of profit and loss for the year includes
Rs. 1,027.04 lakhs (2009 - Rs. 1,034.82 lakhs) towards such non-cancellable
leases.
c. General descriptions of non-cancellable lease terms:
i. Lease rentals are charged on the basis of agreed terms.
ii. Assets are taken on lease over a period of 3-5 years.
iii. The Company did not sub lease any of its assets and hence did not
receive any sub leases payments during the current or previous year.
(xvii) Prior year figures have been reclassed wherever necessary to confirm
to the current year's presentation.
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates Adun Saraban Managing Director
Firm registration number: 101049W
Chartered Accountants P. Chakornbundit Director
per Amit Majmudar P.B. Patwardhan Chief Financial
Partner Officer
Membership No.: 36656
R.C. Daga Company Secretary
Place : Mumbai Place : Mumbai
Date : February 24, 2011 Date : February 24, 2011
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