Annual Report 2010-2011 - Gammon India

The cash compensation on account of multiple entries of cars has been accounted on accrual basis as per the order of Government
of Kerala for which Supplementary Concession Agreement is being worked out between the Government of Kerala, Greater Cochin
Development Authority and Cochin Bridge Infrastructure Company Limited. (a subsidiary of the Company).
The annuity income earned from Build, Operate, Transfer (‘BOT’) projects is recognised on a time basis over the period during which
the annuity is earned. Revenues from bonus and other claims are recognised upon acceptance from customer/counterparty.
(ii) Berth Operations:
Revenue by way of berth hire charges, dust suppression charges, cargo handling charges, plot rent, wharfage, barge freight, other
charges etc. are recognised on an accrual basis and is billed as per the terms of the contract with the customers at the rates approved
by Tariff Authority for Marine Ports (TAMP) as the related services are performed.
Other operating income is recognised on an accrual basis when the same is due.
(g) Cargo freight income:
Cargo freight income is recognized at the time of booking of the consignment and is being accounted net of rebates, discounts and booking
commission.
(h) Revenue for design and assemblies are recognized on the basis of work progress reports provided for each contract.
(i) Interest income is recognised on time proportion method basis taking into account the amounts outstanding and the rate applicable.
(j) Dividend Income is accounted when the right to receive the same is established. The dividend declared by the subsidiary companies after
the date of Balance Sheet are also included if they are in respect of accounting period which closed on or before the date of Company’s
Balance Sheet.
4. Turnover
Turnover represents work certified upto and after taking into consideration the actual cost incurred and profit evaluated by adopting the
percentage of the work completion method of accounting.
Turnover in respect of the BOT contracts, governed by Service concession agreements with government authorities (grantor), is considered as
exchanged with the grantor against toll collection rights/annuities receivable and not eliminated.
Turnover also includes the revenue from the supply of material in the transmission tower contracts in accordance with the terms of contract
and revenues in respect of the infrastructure development business.
5. Research and Development Expenses
The Costs of research are charged at the moment they are borne.
The Costs for development in relation to a specific project are capitalized only when the Company is able to show the technical possibility of
carrying out the intangible asset in order to make it available for use and sale, its intention to make it available for use and sale, the modalities
the activity can provide for future economic benefits, the availability of technical, financial, as well as any other kind of resources in order to
carry out development and its capacity to reliably assess the cost attributable to the activity during its development.
After the original recognition, the costs of development are assessed net of the corresponding quotas of amortization and of the impairment
loss. Further capitalized costs for development are amortized with reference to the period of time where it is expected that the project thereof
will produce revenue for the Company.
6. Joint Venture
(a) Joint Venture Contracts under Consortium are accounted as independent contracts to the extent of work completion.
(b) In Joint Venture Contracts under Profit Sharing Arrangement, services rendered to Joint Ventures are accounted as income on accrual basis,
profit or loss is accounted as and when determined by the Joint Venture and net Investment in Joint Venture is reflected as investments or
loans & advances or current liabilities.
7. Employee Retirement Benefits
The companies of the Group have both defined contribution plans and defined benefit plans.
Retirement benefits in the form of provident fund and superannuation is a defined contribution scheme and contributions are charged to the
Profit and Loss Account for the year/period when the contributions are due.
Gratuity, a Defined Benefit Obligation is provided on the basis of an actuarial valuation made at the end of each year/period on projected Unit
Credit Method.
Leave encashment is recognised on the basis of an actuarial valuation made at the end of each year on projected Unit Credit Method.
Actuarial gains/losses are immediately taken to Profit and Loss Account and are not deferred.
In case of certain subsidiaries and a joint venture the entitlement of employee’s retirement benefit is based upon the employee’s final salary
and length of service, subject to the completion of a minimum service period based on the laws of the respective country. The expected costs
of these benefits are accrued over the period of employment. The terminal benefits are paid to employees’ on their termination or leaving
employment. Accordingly, the Company does not expect settlement against terminal benefit obligation in the near future.
8. Fixed Assets
Fixed Assets are valued and stated at cost of acquisition less accumulated depreciation thereon. Revalued assets are stated at the revalued
amount. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition of its intended use. Borrowing
costs relating to acquisition of fixed assets which take a 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.
Assets held by virtue of financial lease agreements, through which the risks and benefits associated with ownership thereof are essentially
transferred to the Group, are recognised as Group assets and accounted for at their current value or, if lower, the current value of the minimum
payments due for the leasing, including any sum to be paid for exercising the purchase option. The corresponding liability to the lessor is
represented in the accounts under financial payables.
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