Annual Report 2010-2011 - Gammon India

92
B. The Company has carried out its impairment test of the investments of Franco Tosi Meccanica , Sofinter and SAE Italy. Considering the
business plans of these entities and the results of the tests and the fact that all these entities have healthy order book positions and
adequate references in international markets notwithstanding the turbulent market conditions in Europe, the management is of the view
that there is no impairment in its investments in these companies.
C. The Company through its step down subsidiary P. Van Eerd Beheersmaatschappij B.V., Netherlands (PVAN) held a 50% shareholding
in Sadelmi S.p.A for Euro 7.5 million, Italy (Sadelmi) with the remaining 50% held by Busi Impianti S.p.A, Italy since April 2008. Due
to the economic conditions prevailing in different parts of the world where Sadelmi was present some of the projects under execution
encountered serious contractual problems. Sadelmi therefore sought creditors’ protection through a Court in Italy and simultaneously,
as part of scheme, applied for transferring the remaining projects and leased all references standing in its name since inception to a new
Company Busi Power S.r.l. wholly held by Busi Group. By an Agreement dated 2nd March, 2009, Busi Group agreed to give PVAN 50% stake
in lieu of its stake in Sadelmi for a consideration of Euro 1 and convert the S.r.l. status into an S.p.A. to facilitate the same. Consequently
PVAN will cease to be a shareholder of Sadelmi from that date and will become a shareholder of Busi Power. The compliances is expected
to be reached in ensuing year, at which time Busi Group will duly capitalize its wholly owned subsidiary in India with an equity infusion
of Euro 2.5 million and will also permit it to freely draw up the references to undertake future projects in India, as was mentioned in
the previous year consequent upon this arrangement. The management’s assessments of the references indicate that the value of such
references and the infusion of Euro 2.5 million by Busi Group would be in excess of the acquisition cost of such stake.
Consequent upon this arrangement, Busi Group will be wholly responsible for the operations and all future funding of Busi Power S.r.l. and
Gammon will be wholly responsible for the operations and future funding of the Indian subsidiary for the projects undertaken by them in
the territories identified respectively for them. The results of these operations will be consolidated in the Company after the Court scheme
is given effect to and the fresh set of financial are drawn up.
30. The break up of Deferred Tax Liability and Assets are as follows:
(` in Crores)
Particulars Year ended
31st March, 2011
Deferred Tax Liability:
A NNUAL R EPORT I 2010/11
Year ended
31 st March, 2010
– On Account of Depreciation 87.59 74.30
– On Foreign Exchange Translation Reserve
Deferred Tax Assets:
4.75 8.78
– On Account of Gratuity/Leave Encashment Provision 5.85 4.20
– On Account of Interest on NCD — 0.27
– On Account of Other Disallowances 5.06 6.88
Net Balance 81.43 71.73
31. Unpaid dividend includes ` 0.14 Crores (Previous Year – ` 0.10 Crores) and accrued interest includes ` 0.05 Crores (Previous Year – ` 0.16 Crores)
towards interest on fixed deposits to be transferred to the Investor Education & Protection Fund.
32. CONTINGENT LIABILITIES:
Sr.
No.
Particulars As at
31 st March, 2011
(` in Crores)
As at
31 st March, 2010
1. Liability on contracts remaining to be executed on Capital Accounts 12.59 73.83
2. Counter Guarantees given to Bankers for Guarantees given by them and Corporate
Guarantees, on behalf of subsidiary, erstwhile subsidiary, associate Companies stand at 6,531.96 5,436.41
3. Corporate Guarantees and Counter Guarantees given to Bankers towards Company’s share
in the Joint Ventures for guarantees given by them to the Joint Venture Project Clients 556.31 463.36
4. Disputed Sales Tax liability for which the Company has gone into Appeal is 24.66 23.88
5. Claims against the Company not acknowledged as debts 47.26 47.76
6. Disputed Excise Duty Liability 0.03 0.03
7. Disputed Customs Duty Liability 0.32 0.32
8. Disputed Service Tax Liability 18.61 29.21
9. Contingent Liability on partly paid shares — —
10. There is a disputed demand of UCO Bank pending since 1986, of US$ 436,251 i.e. ` 1.72 Crores. Against this, UCO Bank has unilaterally
adjusted the Company’s Fixed Deposit of US$ 30,584 i.e. ` 0.12 Crores, which adjustment has not been accepted by the Company.
11. The Company had deposited customs duty of ` 2.20 Crores under protest in respect of certain machineries imported for the project
in Sikkim. The Company contends that the import of machinery is duty free as per the Project Import regulations prevailing then. The
Company has preferred an appeal against the levy of Custom Duty. Pending outcome of the appeal, the said amount is carried under
Advances recoverable in cash or in kind.
12. In respect of Joint Venture and operations in Oman, Gammon India Limited – AL Matar JV, refer note no. 37.
13. Counter claims in arbitration matters referred by the Company – liability unascertainable.