Annual Report 2010-2011 - Gammon India

12. Retention Bonus for employees:
During the previous years, the Compensation Committee of the Board of Directors of GIPL has implemented a scheme of Retention Bonus
for its employees. Under this scheme, employees (excluding the managing Director), to whom stock options were offered in the current year
are entitled to a cash alternative to the options which would be payable in lieu of their not exercising the right to apply for the shares against
the options granted under the ESOP schemes. During the year, a provision of ` 1.14 Crores (P.Y. ` 1.11 Crores) against Cash Compensation in
accordance with guidance note on accounting of employees share based payments.
13. Disclosure in accordance with Accounting Standard-7 (Revised), in respect of contracts entered into on or after 1 st April, 2003:
A NNUAL R EPORT I 2010/11
(` in Crores)
Particulars 2010-2011 2009-2010
Turnover for the year 4,435.88 3,630.94
Aggregate Expenditure (Net of inventory adjustments) for contracts existing as at the year end 13,413.20 12,301.64
Aggregate Contract Profits/Losses recognized for contracts existing as at the year end 1,554.00 1,541.07
Contract Advances (Net) 753.16 807.75
Gross Amount due from Customers for contract work 1,028.10 1,163.12
Gross Amount due to customers for contract work 43.56 59.30
Disclosure under AS-7 has been done only for the parent Company and the Indian Subsidiaries in the absence of similar disclosure information
being available from the other component companies in those financial statements especially the overseas subsidiaries and joint ventures.
14. Metropolitan Infrahousing Private Limited (MIPL)
(a) The Company (MIPL) held Non Convertible Debentures (NCDS) of Pal Peugeot carrying a coupoun rate of 15% per annum. The se
debentures are secured by First Mortgage and Charge in favour of the Debenture Trustees over the Pal Peugeot’s movable and immovable
properties situated at Kalyan in the state of Maharashtra. The said Pal Peugeot had defaulted in payment of interest pursuant to which
the trustees to the debentures field a suit in Mumbai High Court. The Court Receiver was appointed to settle the claims of the creditors
including debentures holders. Pal Peugeot went into liquidation on account of uncertainty and the default in payment of interest by Pal
Peugeot, the Company (MIPL) was not accruing interest on these debentures.
(b) Pursuant to the suit filed by the Court receiver in the Mumbai High Court, auction of the property of the said Pal Peugeot had been carried
out under a court directive during the year ended 31st March, 2011. The Company (MIPL) was declared as the highest bidder by the Court
Receiver, which was confirmed by the Mumbai High Court.
(c) In terms of directive of the Mumbai High Court, the Company (MIPL) is entitled to set off the principal and the accrued interest on these
NCDs against its liability for the acquisition of land which it won pursuant to the auction. The amount due to the Company (MIPL) on its
debentures and the amount of set off have been determined by the court based on which the Company has recognised accrued interest on
its debentures as income in its amounts for the year ended 31.03.2011, since the uncertainty over the receipt of interest no longer exists.
Accordingly an amount of ` 416.38 has been recognised as interest income in the accounts for the year ended 31st March, 2011. The actual
extinguishment of the debentures and the final conveyance and the transfer of title of the land in favour of the Company will take place
in the following year i.e. in the year ending 31st March, 2012.
(d) The amount to be paid towards the balance consideration for the acquisition of land has been shown as capital commitment at
` 148.72 Crores.
15. The group undertakes various projects on build-operate-transfer basis as per the Service Concession Agreements with the government authorities.
The construction cost incurred by the operator on contracts with the group companies are considered as exchanged with the grantor against toll
collection/annuity rights from such agreements and therefore the profits from such intra-group contracts is considered realized by the group and
not eliminated for consolidation under AS-21 Consolidated Financial Statements. The revenue and profit during the year from such contracts not
eliminated in the above results is ` 602.4 Crores (P.Y. ` 432.57 Crores) and ` 101.60 Crores (P.Y. ` 49.31 Crores) respectively.
16. Disclosure relating to Employee Benefits
As per Accounting Standard-15 “Employee Benefits” and as defined in the accounting standard the summarized components of net benefit
expense recognized (Gratuity) in the profit and loss account and the funded status and amounts recognized in the balance sheet are given
herein below:
(` in Crores)
Sr.
No.
Particulars Gratuity
2010-11
Gratuity
2009-10
I. Change in Benefit Obligation
Liability at the beginning of the year. 6.98 6.29
Interest cost. 0.55 0.52
Current Service Cost. 0.99 0.74
Past Service Cost (Non Vested Benefit) — —
Past Service Cost (Vested Benefit) 0.04 —
Benefit Paid (1.05) (0.57)
Actuarial (gain)/loss on obligations 2.37 0.01
Curtailments and Settlements — —
Liability at the end of the year 9.88 6.99
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