Annual Report 2010-2011 - Gammon India

134
(c) The above figures pertaining to the Joint Venture Companies are based on the audited accounts for the year ended 31 st March, 2011 except
for BWIOTPL, HBPL, SEZAL GCT, GOM and JG which are based on the un-audited management accounts.
(d) Sofinter – The entry into force of the agreement executed on 1 st December, 2009 between credit institutions and a number of companies
part of the Sofinter Group for the restructuring of debts and signature credit lines (the “Agreement”) has involved:
• acomplex series of compliance requirements and contractual conditions, including a commitment to implement a number of actions
aimed at strengthening the equity of the Sofinter Group;
• the execution of operations to strengthen the capital through capital increases, including by third parties, and through the exploitation
of the equity investments in the subsidiaries Ansaldo Caldaie and Itea;
• the compliance with specific financial covenants throughout the entire term of the Agreement.
Aspart of the agreement with credit institutions , The sofinter group assessed the offers received for the acquisition of a shareholding in the
subsidiary Ansaldo Caldaie and selected an offer from a New Investor by which the New Investor is required to make investments which
in addition to strengthening the groups equity structure, should bring a concrete contribution to developing activities on international
markets, more specifically the Indian market. The agreement reached, which was authorised on 27 th May, 2011 by the Italian Antitrust
Authority, should be executed shortly.
The requests contained in the offer made by the new investor and the partial failure to comply with certain provisions contained in the
Agreement made it necessary to re-start negotiations with the banks in January, 2011. Said negotiations are mainly about the extension of
the term of the Agreement and the confirmation of the credit lines, including the increase thereof, as specified in the Report on Operations
under “Corporate Transactions” and the re-negotiation of new financial covenants. The cited increase is necessary in order to implement
the new 2011/2014 strategic plan of the Sofinter Group.
Inconnection with the re-negotiation of the new strategic plan, an expert appointed pursuant to art. 67 of Italian Law will assess the plan’s
reasonableness and suitability to allow repayment of debts and to restore the Group’s financial position.
Theeconomic forecast contained in the aforesaid strategic plan involve a consolidation of Ansaldo Caldaie’s position in its historic markets
as well as a development of new markets, also thanks to a number of agreements between the Sofinter Group and its new investors.
The positive market trends as regards demand for the products offered by the Sofinter Group, which have been recently observed and
are forecast for the near future by major sector analyst, lead the Directors to believe that the targets set by the new strategic plan may
reasonably be met, although within the limits which are normally intrinsic to the degree of probability that future events take place in line
with the forecasts made.
Achievement of the plan’s targets therefore ultimately depends on the support of the banks, which have not yet signed the new agreement,
and for this reason an uncertainty still exists that may cast significant doubt on the Group’s ability to continue operating as a going
concern. However, in the light of the development of the negotiations with the credit institutions currently being finalised, an agreement
having been reached on the key terms of the new agreement, and considering that the matters still pending will not prevent a successful
completion of the negotiations, also in light of the favourable attitude of credit institutions, the Directors believe it is reasonable to expect
that the new agreement, while not yet executed, will be executed in the month of July. The here above mentioned uncertainty is deriving,
at the date of approval of this financial statement, from the pending undersigning of the bank Agreement, and will be effectively overcome
upon the signature of the Agreement expected to happen during this month of July, 2011.
Therefore, after carrying out the necessary checks and assessing the degree of occurrence of the uncertain events referred to above, as well
as obtaining appropriate comfort from credit institutions about the likely outcome of the negotiations on the new agreement, in drawing
up these Financial Statements, the Directors have deemed it appropriate to adopt the going concern basis of accounting.
3. Associates
The following Associates have been accounted on one line basis applying the Equity Method in accordance with Accounting Standard (AS) – 23
“Accounting for Investment in Associates in Consolidated Financial Statements”.
(` in Crores)
Name of Company % Share
Held
A NNUAL R EPORT I 2010/11
Original Cost of
Investments
Goodwill/
(Capital
Reserve)
Adjusted/
Accumulated
Profit/(Loss)
upto previous
period
Profit
for the
Current
Period
Other
Adjustments
Carrying
Amount of
Investment
Itro PTE Limited * 24.50% 7.26 0.00 -8.81 -6.66 8.21 0.00
Ecopower S.r.l.* 10.00% 0.16 0.00 0.57 0.05 0.00 0.78
SWS G&B * 25.00% 0.03 0.00 0.00 0.00 0.00 0.03
Europower Middle East * 24.50% 0.15 0.00 0.00 0.00 0.00 0.15
Cons Ansaldo energie riun.* 12.50% 0.08 0.00 0.00 0.00 0.00 0.08
Multiservice * 17.50% 0.11 0.00 0.00 0.00 0.00 0.11
Oristano Ambiente *
Eversun Sparkle Maritime Services
20.00% 0.13 0.00 0.00 0.00 0.00 0.13
Pvt. Limited (‘ESMSPL’) ** 25.12% 1.70 0.44 -1.17 0.55 0.00 1.08
Modern Toll Roads Limited ** 36.92% 0.02 0.00 0.00 0.00 0.00 0.02
Fin est S.p.A. 50.00% 19.52 7.57 0.27 0.38 0.00 20.17
TOTAL 29.16 8.01 -9.14 -5.68 8.21 22.55
* Marked companies are associates of Joint Venture, Sofinter Group and hence proportionate share of its investments and share of profit/
(loss) is taken.
** Marked companies are associates of subsidiary GIPL.