2 The Company has invested in GGAL which has further invested in step down subsidiaries and joint ventures. Further, the Company has outstanding loan (including accrued interest) amounting to Nil (March 31 2022: Nil) recoverable from GGAL as at March 31, 2023. Also, the Company together with GGAL and GMR Energy Projects Mauritius Limited ('GEPML') has investments in GEL amounting to ' 895.74 crore and has outstanding loan (including accrued interest) amounting to ' 1,768.36 crore in GEL as at March 31, 2023. GEL has certain underlying subsidiaries/ associates/ joint ventures which are engaged in energy sector as further detailed in note 5(3), 5(4), 5(5) and 5(6) below which have been incurring losses resulting in substantial erosion in their net worth. Based on its internal assessment with regard to future operations and valuation assessment by an external expert during the year ended March 31, 2023, the management of the Company has fair valued its investments and for reasons as detailed in 5(3), 5(4), 5(5) and 5(6) below, the management is of the view that the fair values of the Company's investment in GEL is appropriate.
3 GMR Warora Energy Limited ('GWEL'), a subsidiary of GEL, is engaged in the business of generation and sale of electrical energy from its coal-based power plant of 600 MW situated at Warora. GWEL had accumulated losses of ' 753.07 crore as at March 31, 2022 and the same has been reduced to ' 585.44 crore as at March 31, 2023, which has resulted in substantial erosion of GWEL's net worth. There have been delays in receipt of the receivables from customers which has resulted in delays in meeting its financial liabilities.
Further, GWEL received notices from one of its customer disputing payment of capacity charges of ' 132.01 crore for the period March 23, 2020 to June 30, 2020 as the customer had not availed power during the said period sighting force majeure on account of COVID 19 pandemic. GWEL responded and
clarified that the said situation is not covered under the force majeure clause in view of the clarification by the Ministry of Power stating that Discoms will have to comply with the obligation to pay fixed capacity charges as per PPA. The customer is of the view that the aforesaid clarification by the Ministry of Power cannot override the terms of the PPA and continue to dispute the payment thereof.
Accordingly, during the year ended March 31,2021, GWEL filed petition with Central Electricity Regulatory Commission ('CERC') for settlement of the dispute. During the quarter ended March 31, 2022, the said petition was decided in favour of GWEL vide CERC order dated January 20, 2022 wherein CERC directed the customer to pay the aforesaid outstanding capacity charges along with delayed payment surcharge within 60 days from the date of the aforesaid order. The customer has filed an appeal against the said CERC order before Appellate Tribunal for Electricity ('APTEL') during the quarter ended June 30, 2022, APTEL issued an interim order and directed the customer to pay 25% of the principal amount within a period of one week from the date of its interim order to GWEL and deposit the balance outstanding amount in an interest-bearing fixed deposit receipt with a nationalized bank. However, GWEL has not received any amount from the customer and the matter is pending conclusion. The management based on its internal assessment and petition filed with CERC, is of the view that the aforesaid capacity charges are fully recoverable.
However, GWEL has certain favorable interim orders towards the aforementioned claims. Also, during the year ended March 31, 2022, GWEL has entered into a new PPA with Gujarat Urja Vikas Nigam Limited ('GUVNL') for the supply of 150 MW of power from October 2021 to July 2023. Further, GWEL on the basis of requisite approval of the lenders, has invoked resolution process as per Resolution Framework for COVID-19 related stress
prescribed by RBI on December 30, 2020 in respect of all the facilities (including fund based, non-fund based and investment in non-convertible debentures) availed by GWEL as on the invocation date. Further most of the borrowing facilities of GWEL had become Special Mention Account-2/ Non-Performing Assets, accordingly resolution process under Prudential Framework for Resolution of Stressed Assets, as prescribed by the RBI on June 07, 2019 has been invoked on June 29, 2021 by default. ICA has been executed on July 27, 2021 by majority of lenders The lead lender issued a sanction letter dated April 05, 2022 for restructuring of loan facilities. As per the RBI circular as stated above, a minimum approval of lenders representing 75% by value of total outstanding loan facilities and 60% of lenders by number are required for approval of the Resolution plan.
During the quarter ended June 30, 2022, GWEL received the approvals from the aforesaid requisite lenders on the Resolution plan and consequently the Resolution plan was adopted in the board of directors meeting dated June 23, 2022 and approved by the shareholders of GWEL in the Extraordinary General Meeting dated June 24, 2022. Accordingly, GWEL has given effect to the Resolution plan and effect of the same has been disclosed as an exceptional item in the financial statement of GWEL. In the consortium meeting held on January 11, 2023 all the lenders have confirmed the implementation of the resolution plan in their respective books of accounts. GWEL had claimed compensation for coal cost pass through and various "change in law" events from its customers under the Power Purchase Agreements ('PPA') and has filed petitions with the regulatory authorities for settlement of such claims in favor of GWEL. GWEL has trade receivables, other receivables and unbilled revenue (including claims) of ' 882.22 crore and the payment from the customers against the claims including Interest on such claims which are substantially pending receipt. Based on certain favorable interim regulatory orders, the management is confident of a favorable outcome towards the outstanding receivables.
Accordingly, GWEL has generated profit after tax of ' 167.87 crore during the year ended March 31, 2023 and the management of GWEL expects that the plant will generate sufficient profits in the future years and will be able to recover the receivables and based on business plans and valuation assessment by an external expert during the year ended March 31, 2023, considering key assumptions such as capacity utilization of plant in future years based on current levels of utilization including merchant sales and sales through other long term PPA's and management's plan for entering into a new longterm PPA to replace the PPA earlier entered with one of its
customers which has expired in June 2020 and the implementation of the Prudential Framework for resolution of stressed assets with the lenders of GWEL, the management is of the view that the carrying value of the net assets in GWEL by GEL as at March 31, 2023 is appropriate.
4 GWEL entered into a PPA with Maharashtra State Electricity Distribution Company Limited ('MSEDCL') for sale of power for an aggregate contracted capacity of 200 MW, wherein power was required to be scheduled from power plant's bus bar. MSEDCL disputed place of evacuation of power with Maharashtra Electricity Regulatory Commission ('MERC'), wherein MERC has directed GWEL to construct separate lines for evacuation of power through State T ransmission Utility ('STU') though GWEL was connected to Central Transmission Utility ('CTU'). Aggrieved by the MERC Order, GWEL preferred an appeal with APTEL. APTEL vide its interim Order dated February 11, 2014 directed GWEL to start scheduling the power from GWEL's bus bar and bear transmission charges of inter-state transmission system towards supply of power. GWEL in terms of the interim order scheduled the power from its bus bar from March 17, 2014 and paid inter-state transmission charges. APTEL vide its final Order dated May 08, 2015 upheld GWEL's contention of scheduling the power from bus bar and directed MSEDCL to reimburse the inter-state transmission charges hitherto borne by GWEL as per its interim order. Accordingly, GWEL has raised claim of ' 616.33 crore towards reimbursement of transmission charges from March 17, 2014 till March 31, 2023. MSEDCL preferred an appeal with the Hon'ble Supreme Court of India and the matter is pending conclusion. Pursuant to notification No. L-1/250/2019/CERC, the transmission charges (other than the deviation charges) are being directly billed to the respective customers (DISCOMS) by Power Grid Corporation of India Limited and accordingly, GWEL has not received transmission charges (other than the deviation charges) related invoices for the period December 2020 to March 2023. The final obligation towards the transmission charges will be decided based on the order of the Hon'ble Supreme Court of India as stated above.
In view of the favorable Order from APTEL, receipt of substantial amount towards reimbursement of transmission charges and legal expert advice, GWEL has recognized the reimbursement of transmission charges of ' 616.33 crore relating to the period from March 17, 2014 to March 31, 2023. Further the cost of transmission charges as stated with effect from December 2020 is directly invoiced by Power Grid Corporation of India Limited to DISCOMS and has been disclosed as contingent liability in the financials of GWEL pending the final outcome of the matter in the Hon'ble Supreme Court of India.
5 GMR Kamalanga Energy Limited ('GKEL'), a subsidiary of GEL, is engaged in development and operation of 3*350 MW under Phase I and 1*350 MW under Phase II, coal based power project in Kamalanga village, Orissa and has commenced commercial operation of Phase I of the project. GKEL has accumulated losses of ' 1,386.84 crore as at March 31, 2023 (' 1,672.49 crore in March 31, 2022), which has resulted in substantial erosion of GKEL's net worth due to operational difficulties faced during the early stage of its operations. Further, GKEL has trade receivables, other receivables and unbilled revenue (including claims) of ' 1,662.04 crore as at March 31, 2023, for coal cost pass through and various "change in law" events from its customers under the PPAs and have filed petitions with the regulatory authorities for settlement of such claims in favour of GKEL. The payment from the customers against the claims is substantially pending receipt as at March 31, 2023. Based on certain favorable interim regulatory orders with regard to its petition for 'Tariff Determination' and 'Tariff Revision' with its customers, the management is confident of a favorable outcome towards the outstanding receivables of GKEL.
GKEL in view of the Supreme Court Order in Energy Watchdog vs CERC and others and CERC order in its own case for Haryana Discoms had sought legal opinion from the legal counsel on certainty of the claims with Bihar Discom. Considering opinion received from legal counsels that GKEL has good tenable case with virtual certainty with respect to coal cost pass through and favourable Order from APTEL dated December 21, 2018 and CERC judgment in GKEL's own case for Haryana Discom where the computation methodology of coal cost pass through was decided, the management was virtually certain on receipt of the GKEL's claim of revenue on coal cost pass through and was of the opinion that no contingency was involved in this regard. GKEL has received a favourable order on September 16, 2019 whereby the CERC has allowed the coal cost pass through to be charged to the Bihar Discom, based on a certain methodology. The Hon'ble Appellate Tribunal passed an Order in Appeal no -423 on August 06, 2021 allowing GKEL to recover expenditure incurred in procurement of alternate coal due to short fall in domestic coal supply corresponding to schedule generation pertaining to Bihar PPA and further allowed GKEL to recover the carrying cost from the date of Change in Law events till the dues are paid.
Further, as detailed below there are continuing litigations with SEPCO Electric Power Construction Corporation (SEPCO) ('Capital Creditors') which are pending settlement. Further during the previous year, GKEL has won the bid for supply of balance 150 MW to Haryana Discom. GKEL has signed fuel supply agreement
with Coal India Limited for supply of coal from its Mahanadi Coal Field Mines for 0.36 crore ton which is within a distance of 15 KM from the plant site. In addition to above, GKEL has won the bid (Shakti-III) for supply of 0.04 crore ton of coal for balance 150 MW. GKEL is actively pursuing its customers for realization of claims and selling its untied capacity in exchange market to support the GKEL's ability to continue the business without impact on its operation.
Further, GKEL had entered agreement with SEPCO in 2008 for the construction and operation of coal fired thermal power plant. There were certain disputes between the parties in relation to the delays in construction and various technical issues relating to the construction and operation of the plant. SEPCO served a notice of dispute to GKEL in March 2015 and initiated arbitration proceedings. The Arbitral Tribunal has issued an opinion (the Award) on September 07, 2020 against GKEL. Since there were computation/ clerical/ typographical errors in the Award, both parties (GKEL and SEPCO) immediately applied for correction of the award under Section 33 of the Arbitration & Conciliation Act 1996 (as amended). The Arbitral Tribunal considered the applications of both the parties and has pronounced the corrected award on November 17, 2020. GKEL already accounted for the aforementioned liability as per the award pertaining to the retention money, unpaid invoices and the Bank Guarantee revoked. GKEL has challenged the award under section 34 of the Arbitration and Conciliation Act, 1996 before the Hon'ble High Court of Orissa on February 15, 2021 and December 31,
2021 respectively.
The High Court vide its judgement and order dated June 17,
2022 has dismissed the petition filed by GKEL on February 15, 2021 to put aside the Final Award on the basis that impugned award does not fall under the category which warrants interference under Section 34 of the Arbitration Act. GKEL has challenged judgement by filing special leave petition before the Supreme Court of India on grounds; a) Violation of Principles of Natural Justice, b) Judgement is in violation of the guidelines laid by Supreme Court for timely pronouncing of judgements c) Violation of due process of law and others. Based on legal advice obtained, GKEL seems to have a good arguable case to challenge section 34 judgement and have it set side. Therefore, GKEL is not expecting any cash outflow in this matter in the foreseeable future. GKEL has in its books made provisions in view of the disputes between SEPCO and GKEL and taken into consideration the Award and the Final Award passed by the Arbitral Tribunal based on generally accepted accounting practices. Irrespective of the heads under which they appear or their nomenclature/ heading/title/narration, etc., such provisions do not make GKEL liable for payment since liability is disputed.
In view of these matters, business plans (including expansion and optimal utilization of existing capacity), valuation assessment by an external expert during the year ended March 31, 2023, the management is of the view that the carrying value of the investments in GKEL held by GEL as at March 31, 2023 is appropriate.
6 GMR Bajoli Holi Hydropower Private Limited ('GBHHPL'), a subsidiary of GEL has set up 180 MW hydro based power plant in Chamba, District of Himachal Pradesh. It had experienced delays in the completion of construction and incurred costs overruns. During the current year, GBHHPL has commenced commercial operations. Further, during the current year i.e. with effect from July 13, 2022, GBHHPL has terminated its agreement with Gammon Engineers and Contractors Private Limited ('the contractor') in respect of the hydropower project as GBHHPL noticed repeated slippages by the contractor in achieving the targets and multifarious breaches under the work orders.
The construction had to be completed by June 2018, however the project was delayed and as a part of one time settlement with the contractor, extension was granted till May 31, 2020. Even after such time extension and payment of huge unadjusted advances, the contractor could not finish the critical components of civil works within the extended date and further delayed the completion of the project. As a consequence of such delay, GBHHPL had recovered its dues including due to liquidated damages and unadjusted advances from the contractor by way of invoking available bank guarantees (BGs) provided by the contractor, amounting to ' 128.89 crore and accordingly GBHHPL has adjusted it against such advances.
Further, during the current year on June 10, 2022, GBHHPL invoked arbitration against the contractor to recover their further dues, however counter claims was also filed by the contractor before the arbitration tribunal towards costs and damages on account of prolongation of the Contract. GBHHPL filed its reply to the Statement of Defence and counter claims on March 01, 2023. Currently, the matter is pending adjudication before the Arbitral Tribunal.
Based on the assessment of such claims and upon consideration of advice from the independent legal consultant, the management believes that GBHHPL has reasonable chances of recovery of its dues from the contractor in the future and accordingly, based on the valuation assessment carried out by an external expert during the year ended March 31, 2023, is of the view that the carrying value of its investments in GBHHPL held by GEL as at March 31, 2023 is appropriate.
7. The Company together with GMR Highway Limited ("GMRHL") a subsidiary of the Company, has invested in GMR Hyderabad Vijayawada Expressways Private Limited ('GHVEPL') amounting to ' 1,087.80 crore. Based on its internal assessment with regard to future operations and valuation assessment by an external expert during the year ended March 31, 2023, the management of the Company has fair valued its investments and for reasons as detailed below, the management is of the view that the fair values of the Company's investments in GHVEPL is appropriate.
GHVEPL a step down subsidiary of the Company, has been incurring losses since the commencement of its commercial operations and has accumulated losses of ' 1,653.86 crore as at March 31, 2023. The management believes that these losses are primarily due to loss of revenue arising as a result of drop in commercial traffic on account of bifurcation of State of Andhra Pradesh and ban imposed on sand mining in the region. The management of the Group based on its internal assessment and a legal opinion, believes that these events constitute a Change in Law as per the Concession Agreement and GHVEPL is entitled to a claim for losses suffered on account of the aforementioned reasons and accordingly filed its claim for the loss of revenue till the year ended March 31, 2017 with National Highways Authority of India ('NHAI').
The claim of GHVEPL was rejected by NHAI and accordingly during the year ended March 31, 2018, GHVEPL had decided to proceed with arbitration and accordingly Arbitral Tribunal was constituted and claims were filed.
On October 09, 2009 GHVEPL and National Highways Authority of India (NHAI) entered into the concession agreement for the project highway. The project was initially developed from existing 2 lanes to 4 lanes to be further developed to 6 laning subsequently (before 14th anniversary of the appointed date). If 6 laning is not carried out (if so required by NHAI/desired by GHVEPL), concession period would be restricted to 15 years as against 25 years. GHVEPL has been amortising intangible assets over the concession period of 25 years.
The Arbitral Tribunal vide its order dated March 31, 2020, had pronounced the award unanimously, upholding GHVEPL's contention that bifurcation of state of Andhra Pradesh and ban on sand mining in the region constitutes Change in Law event and GHVEPL is entitled for compensation for the loss of revenue arising as a result of drop in commercial vehicles. Majority of the Tribunal members have directed NHAI to constitute a committee for determining the claim amount based on data/ records available with GHVEPL and NHAI. The minority member in the Tribunal however was of the opinion that Tribunal should have constituted the Committee instead of directing NHAI, which
is against the principle of natural justice. GHVEPL, aggrieved by the findings, had filed applications under Section 9 and 34 of the Arbitration Act, 1996, before the Hon'ble Delhi High Court challenging the award on the limited ground of (i) constitution of the committee by NHAI for quantification of compensation and (ii) for interim measures by restraining NHAI, demanding premium and taking coercive / precipitate measures under the Concession Agreement. Vide order dated August 04, 2020, the Hon'ble Delhi High Court upheld the decision of the Arbitral Tribunal that there was a change in law due to ban on sand mining and State bifurcation.
The Hon'ble Delhi High Court on August 04, 2020 had passed an Order wherein it upheld the decision of the Arbitral Tribunal that there was a change in law due to ban on sand mining and State bifurcation.The Hon'ble Delhi High Court has also held that GHVEPL is entitled for compensation due to Change in Law and the application of NHAI was dismissed. For quantification of claim of GHVEPL, the committee to be appointed by NHAI has been struck down and in its place the Court has appointed a retired judge of Supreme Court as sole arbitrator to quantify the claims.
On February 28, 2022, the Sole Arbitrator had submitted his report to the Hon'ble Delhi High Court by determining the claim amount at ' 1,672.20 crore, as against claimed amount of ' 1,676.34 crore, up to March 31, 2020 with direction to follow the same methodology and formula for claims for the financial year ended March 31, 2021 and onwards. Further, the Sole arbitrator has also granted interest on claim amount in terms of Clause 47.5 of the Concession Agreement. The report submitted by the Sole arbitrator has been taken on record by the Hon'ble Delhi High Court and the Court has fixed the next hearing on July 07, 2023. On March 29, 2022, NHAI has made an application before the Sole arbitrator seeking correction of computational error in his report submitted to the Hon'ble High Court. On October 20, 2022 the sole arbitrator has passed an order dismissing the application made by NHAI. NHAI, in the interim has also filed an application u/s 34 of Arbitration Act before Hon'ble Delhi High Court against the report of Sole Arbitrator.
NHAI has challenged the aforesaid Order dated August 04, 2020 before divisional bench of Hon'ble Delhi High Court, wherein the Hon'ble Delhi High Court has clarified that the sole arbitrator shall continue to discharge his duties subject to final outcome of the appeal however in the interim order dated September 14, 2021 the Hon'ble Court has formed a prima facie view that it would only be fair that NHAI should secure the Premium payable by the GHVEPL till the issues are resolved. Aggrieved the said order of Divisional Bench, the GHVEPL filed a Special leave
petition before the Hon'ble Supreme Court, wherein the Supreme Court vide its Order dated March 10, 2022 has quashed the impugned interim order with the request directing the Hon'ble Delhi High Court to decide the matter as expeditiously as possible. The matter is now listed before the Hon'ble Delhi High Court on July 04, 2023.
On May 08, 2020, GHVEPL has received a notice from NHAI stating that it is satisfied that six-laning is not required for the project highway and four laning is sufficient for operating the project highway thereby restricting the concession period to 15 years pursuant to Clause 3.2.2 of the Concession Agreement dated October 09, 2009. GHVEPL has filed a response with NHAI on May 26, 2020, June 16, 2020, August 31, 2020 and October 19, 2020 seeking material on record on the basis of which NHAI has decided that six-laning is not required, since in terms of GHVEPL's assessment, six-laning shall be required considering the current traffic flow on the project highway. NHAI, however vide its letter dated June 24, 2020 and October 15, 2020 has stated that the contention of GHVEPL is unmerited and due reasons have been conveyed, even though no substantial information is provided on the basis of which such decision is taken. In this regard, GHVEPL has obtained a legal opinion from its Counsel handling NHAI matter in the Honorable Delhi High Court which has opined that with the majority findings of the Arbitral Award in favour of GHVEPL, issuance of Notice dated May 8, 2020 and letter dated June 24, 2020 / October 15, 2020 by NHAI is in bad light and arbitrary.
Legal Counsel opined that NHAI being aware of the financial implications of the Notice dated May 08, 2020 trying to somehow avoid quantifying and making any payment of the claim to GHVEPL under Change in Law. The Counsel further opined that, NHAI after having failed in its series of coercive steps including the notices for recovery of alleged Premium, suspension notice and notices in relation to non-compliance of O & M requirements has, on May 08, 2020, issued the Notice under Article 3.2.2 of the Concession Agreement and that too in the middle of extensive arguments in the aforesaid petitions before the Hon'ble Delhi High Court, only to make GHVEPL to somehow give up its claims and avoid determination of claims. GHVEPL on October 30, 2020 has issued Notice of Dispute under Article 44.2 read with Clause 44.1.2 of the Concession Agreement to NHAI for amicable settlement as a first step in dispute resolution, which has been declined by NHAI on December 04, 2020. Pursuant to the notice dated April 06, 2021, the Arbitrators have been appointed and the Arbitral T ribunal has held its first hearing setting procedural timelines for hearing the litigation.
The Hon'ble Tribunal vide interim order dated September 29,
2021 has stayed the letter and the matter is in process. NHAI subsequently has suggested resolving all the disputes through the process of conciliation and the matter was referred to Committee of Conciliation of Independent Experts (CCIE-III) constituted by NHAI on approval from GHVEPL. The Committee has held two hearings and in the hearing held on April 25, 2022, GHVEPL had given a proposal for amicable settlement to which the Committee granted one month's time to NHAI to discuss internally and inform the Committee of its decision, which has not reached any effective conclusion and hence discontinued. In view of the same, the Arbitral Tribunal recommenced the proceedings and the hearing has been fixed for July 20, 2023 for cross examination of the witnesses. The legal counsel has also opined that GHVEPL is in good position to assert for concession period of 25 years. Accordingly, considering the matter is sub-judice, concession life of 25 years with six laning has been considered for the purposes of the amortization of Intangibles considering the initiation of Arbitration Proceedings challenging the communication/notice by NHAI / Regulator restricting the period to 15 years with four-laning. GHVEPL has been recognizing a provision of additional concession fees (premium) of ' 1,291.57 crore including interest payable thereon till March 31, 2023 (March 31, 2022: ' 1,007.83 crore), which is unpaid pending finality of litigation proceedings as detailed below.
Further, the valuation expert based on the assumptions that it would be receiving the compensation in the future and expected future traffic flow over a concession period of 25 years had determined value in use of GHVEPL assets as at December 31,
2022 (i.e. valuation date) which is higher than the carrying value of assets.
The management, based on its internal assessment, legal opinion, certain interim favourable orders and valuation assessment made by an external expert, is of the view that the carrying value of the aforesaid investment of the Company together with GMRHL in GHVEPL, taking into account the matters described above is appropriate and accordingly, no adjustments to the aforesaid balance have been made in the standalone financial statements for the year ended March 31, 2023.
8 i) During the year ended March 31, 2023 ;
a) The Company has invested in the 67,894,200 shares of ' 10/- each in GMR Highways Limited during the year purchased from GMR Generations Assets Limited. Pursuant to the sanctioned Composite Scheme of Arrangement for Amalgamation amongst GMR Tuni-Anakapalli Expressways Limited, GMR Tambaram Tindivanam Expressways Limited (Transferor
Companies), GMR Highways Limited ("Transferee Company") and their respective Shareholders and Creditors sanctioned vide Order dated August 03, 2022 by Hon'ble National Company Law Tribunal, Mumbai Bench (NCLT), allotment of 67,894,200 equity shares of ' 10/- each was made to GMR Generations Assets Limited on September 06, 2022.
b) Investment in 50,000 shares of ' 10/- each in GGEL during the year.
c) GPUIML has bought back 147,655,405 equity shares at USD 1.48 per share during the year.
d) The Company has sold the 4,900 equity shares of ' 10/- each in GMR (Badrinath) Hydro Power Generation Private Limited.
e) DSL has issued 22,702,703 equity shares to the Company for early conversion of existing 8% compulsorily convertible preference shares of ' 10 each at ' 18.50 per equity share.
f) The Company has purchased Non Convertible Debentures from Synergy Metals & Mining Investment Holdings Limited ('Synergy') worth ' 500 crore issued by GRSPPL .
g) The Company has investment in subsidiary GPUIML and GPUIML has further invested in step down subsidiary GCRPL including other overseas entities. During the year ended March 31, 2023, GCRPL, has entered into a Share Purchase Agreement ('SPA') with PT Radhika Jananta Raya ("Buyer") a subsidiary of PT ABM Investama Tbk ("PTABM") and PTABM to divest its 30% equity stake in PT Golden Energy Mines Tbk ("PT GEMS"), an associate of GCRPL, following a competitive bidding process. On closing, GCRPL has received a gross consideration of USD 42.00 crore. Further, GCRPL is also entitled to receive a deferred consideration based on mutually agreed milestones. The transaction was subject to certain conditions precedent, which have been completed.
The Company has recorded a decline of ' 59.83 crore in the fair value of equity (including the impact of the aforesaid SPA) in GPUIML (the holding company of GCRPL which held investments in PT GEMS as mentioned above) in "Other Comprehensive Income" during the year ended March 31, 2023 respectively.
Above downside has been recorded primarily due to investment in PTGEMS was carried at Fair Value
through Other Comprehensive income (FVTOCI) in accordance with Ind AS 109 (Financial Instruments).
ii) During the year ended March 31, 2022 ;
a) Investment in 142, 12% unsecured Optionally Convertible Cumulative Debentures of ' 1,000,000/-each in GMR Krishnagiri SIR Limited redeemed during the year.
b) Investment in 0.01% optionally convertible debentures of ' 10,000,000/- each and 0.01% optionally convertible debetures (OCDs) of ' 1,00,000 each in GMR SEZ Port Holding Limited redeemed during the year.
c) During the year, the Company has transferred the Compulsorily Convertible Debentures in GMR Bajoli Holi Hydropower Private Limited (a joint venture of
GEL) to GMR Rajam Solar Power Private Limited (a joint venture of GEL) under the novation agreement.
d) The Company has invested in 100,000,000, 0.001% compulsory convertible debenures ('CCDs') at a face value of ' 10 each in GASL.The CCDs are compulsorily convertible into equity shares at the face value after 5 years from the date of the allotment. The CCDs are compulsorily convertible at the option of the holder.
9 The Company does not hold any shares in these entities. The value of investment represents investments in additional equity on account of financial guarantees.
10 This amount pertains to equity component of 8% compulsorily convertible preference shares issued by DSL, the same has been converted into equity. Refer note 5(8).
11 This includes share held by others on behalf of the Company.
- No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.
- Trade receivables are non-interest bearing.
1. Includes retention money (net of impairment allowances) of ' 0.83 crore (March 31, 2022: ' 0.88 crore). These payments are deducted by customer to ensure performance of the Company's obligations and hence are receivable on the completion of contract or after the completion of defect liability period as defined in the respective contract and accordingly no discounting has been done for the same.
2. Refer note 16 for information on trade receivables pledged as security against borrowings.
3. Payment is generally received from customers (excluding retention money) in due course as per agreed terms of contract with customers which usually ranges from 0 - 30 days.
(ii) The Company has made a provision for diminution in the value of loan of ' 977.44 crore as at March 31, 2023 (March 31, 2022: ' 776.60 crore). Further, provision for diminution in the value of loan during the year has been disclosed as an 'exceptional item' in the standalone financial statements of the Company for the year ended March 31, 2023.
(iii) No loans are due from directors or other officers of the Company either severally or jointly with any other person. Nor any loans are due from firms or private companies respectively in which any director is a partner, a director or a member.
(iv) The above loans have been given for business purpose.
(v) The loans that fall under the category of "Loans - Non current" are repayable after one year.
(i) The National Company Law Tribunal ("NCLT"), Mumbai vide its order pronounced on December 22, 2021 had sanctioned the Composite Scheme of Arrangement. The Scheme has been made effective from December 31, 2021 and as per the Scheme the existing paid up share capital of ' 0.10 crore held by GMR Airports Infrastructure Limited (formerly GMR Infrastructure Limited) ('GIL') stands cancelled. In terms of the Scheme the Company had alloted 1 shares of ' 5/- each to shareholders of GIL for every 10 shares held in GIL. Accordingly on January 31, 2022 603,594,528 equity shares of ' 5/- each aggregating ' 301.80 crore have been alloted and the shares held by GIL stands cancelled. (refer note 45)
c. Terms/rights attached to equity shares
The Company has only one class of equity shares having par value of ' 5 per share. Every member holding equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the equity shareholders.
*Includes shares held as karta of HUF and trustee of trust
# The total promoters and promoters group shareholding as on March 31, 2023 is 361,116,914 shares constituting 59.83% (March 31, 2022: 361,116,914 shares constituting 59.83%) of the paid up equity share capital of the Company.
g. Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date:
The Company has not made any buy-back of shares, nor has there been an issue of shares by way of bonus share without payment being received in cash since the incorporation of the Company.
Pursuant to the composite scheme of arrangement (refer note 45), the Company on January 31, 2022 allotted 603,594,528 equity shares of ' 5/- each to the shareholders of GIL. These shares were issued for consideration other than cash.
h. Shares reserved for issue under options
For details of shares reserved for issue on conversion of foreign currency convertible bonds ('FCCB'), refer note 16(1) related to terms of conversion/ redemption of FCCB.
1. Equity component of related party loan has been created on interest free loan provided by related parties. The same has been converted into interest bearing loans during the current year resulting in extinguishment of equity component of related party loan.
2. The Company recognises changes in the fair value of investments in equity securities in other comprehensive income. These changes are accumulated within the FVTOCI reserves within equity.
3. Capital reserve created pursuant to composite scheme of amalgamation and arrangement. [refer note 14(b)(i)]
4. Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
5. Retained Earnings are the profits of the Company earned till date net of appropriations.
6. FCMTR represents unamortised foreign exchange differences arising on translation of long-term foreign currency monetary items.
1. GMR Airports Infrastructure Limited ('GIL') (formerly GMR Infrastructure Limited) had issued 6 (six) Foreign Currency Convertible Bonds (FCCBs) of USD 50,000,000 each, aggregating to USD 300 million due in 2075 to the Kuwait Investment Authority ("KIA") on December 10, 2015. The National Company Law Tribunal (NCLT), Mumbai vide its order dated on December 22, 2021 had approved the Composite Scheme of Amalgamation and Arrangement amongst GMR Power Infra Limited, GIL and the Company ("Scheme"). The Scheme inter-alia provides for Demerger of EPC and Urban Infra business of GIL into the Company. In accordance with the requirements of Section 2(19AA) of the Income Tax Act, 1961, part of the liability pertaining to the outstanding FCCBs of GIL attributable to the Demerged Undertaking stands vested to the Company pursuant
to the Demerger. Thus, upon effectiveness of the Scheme, subject to necessary regulatory approval, FCCBs of USD 275 million stands vested to the Company. To give effect to the split of FCCBs between GIL and the Company, GIL, KIA and the Company had entered into an agreement on January 12, 2022 inter-alia for redenomination of the FCCBs into a total of 300 FCCBs, each having a face value of USD 1,000,000, from 6 FCCBs of USD 50,000,000 each and split of FCCBs between GIL and the Company such that GIL will retain FCCBs of USD 25 million and remaining FCCBs of USD 275 million which stands vested to the Company. The tenure of FCCBs is 60 years from the date of allotment by GIL and the USD 275 million FCCBs outstanding in the Company if converted shall account for 111,241,666 equity shares of the Company. The right of conversion of any or all of
the FCCBs to equity shares of GIL and / or GPUIL, will need to be simultaneously exercised in the equivalent ratio.
The outstanding amount as at March 31,2023 is ' 2,214.34 crore (March 2022: ' 2,042.41 crore). Interest is payable on annual basis. As at March 31, 2023, FCCB holders have not exercised the conversion option. The Company needs to take necessary steps in case the bondholders direct the Company to list the FCCBs on the Singapore Exchange Trading Limited. Also refer note 16(18) below.
2. Indian rupee term loan from a bank of ' Nil (March 31, 2022: ' 19.05 crore) carries interest @ base rate of lender plus spread of 1.25% p.a. (March 31, 2022: base rate of lender plus spread of 1.25% p.a.) and interest is payable on a monthly basis. The loan is secured by i) 10% of cash margin on the outstanding amount in the form of lien on fixed deposits in favour of the lender ii) an exclusive charge on assets created out of underlying facility by GMR Infrastructure (Singapore) Pte Limited ('GISPL') in favour of lender approved correspondent bank iii) second charge on cash flows of GISPL from coal trading under Coal Sales and Purchase Agreement with GCRPL iv) exclusive charge on loans given to GEL v) DSRA covering interest payment for the next three months and vi) securities as set out in note 16(17). The loan is repayable in fourteen unequal semi-annual instalments commencing after twelve months from the date of first disbursement. Further the lender has certain mandatory prepayment rights as per the terms of the agreements, including amendments thereof. Further during the current year the Company has repaid the entire loan.
3. Indian rupee term loan from a bank of ' Nil (March 31, 2022: ' 509.95 crore) carries interest @ lender's marginal cost of funds based lending rate ('MCLR') plus spread of 3.10% p.a. (March 31, 2022: MCLR plus spread of 3.10% p.a.) and interest is payable on a monthly basis. The loan is secured by (i) first charge on the assets taken on loan by the Company to provide minimum cover of 1.00 times of the facility outstanding (ii) extension of pledge over 20% shares of GEL along with all beneficial/economic voting rights (already cross collateralized for existing term loan facilities at the Company, RSSL, GGAL (Term Loan-I) GMRHL (Term Loan-I)) (iii) additional pledge over 8% shares of GEL along with all beneficial/economic voting rights and non disposal undertaking over 2% shares of GEL (prior to disbursement) (iv) pledge over 26% shares of GMR Airports Limited along with all beneficial/ economic voting rights (v) margin of 19.14% of outstanding amount (in form of FD/cash or any other instrument to the satification of the lender). The loan is repayable in fourteen half yearly structured instalments commencing after a moratorium period of one year from the date of first disbursement. Further
the lender has certain mandatory prepayment rights as per the terms of the agreements. Further during the current year the Company has repaid the entire loan. Also refer note 16(17) below.
4. Indian rupee term loan from a bank of ' Nil (March 31, 2022: ' 208.10 crore) carries interest @ MCLR plus spread of 1.45% p.a. (March 31,2022: MCLR plus spread of 1.45% p.a.) and interest is payable on a monthly basis. The loan is secured by i) first charge on assets created out of this facility ii) 10% of cash margin on the outstanding amount in the form of lien on fixed deposits in favour of the lender and iii) securities as set out in note 16(17). The loan is repayable in twenty eight structured quarterly instalments commencing from October 2017. Further the lender has certain mandatory prepayment rights as per the terms of the agreements, including amendments thereof. Further during the current year the Company has repaid the entire loan.
5. Indian rupee term loan from a bank of ' 14.42 crore (March 31, 2022: ' 26.86 crore) carries interest @ base rate of lender plus spread of 4.75% p.a. (March 31, 2022: base rate of lender plus spread of 4.75% p.a.) payable on a monthly basis. The loan is secured by (i) first pari passu charge on 121.07 acres of land held by GKSIR and (ii) . The loan is repayable in twelve structured quarterly instalments commencing from April 25, 2021 and ending on January 25, 2024 as per the revised agreement dated May 27, 2016. (ii) first ranking pledge/NDU over 49% of equity shares of GGAL iii) DSRA covering interest payment for the next three months Further the lender has certain mandatory prepayment rights as per the terms of the agreements, including amendments thereof.
6. Indian rupee term loan from a financial institution of ' 87.62 crore (March 31, 2022: ' 131.04 crore) carries interest @ 12.15% p.a. (March 31, 2022: 12.15% p.a.) payable on a quarterly basis. The loan is repayable in six equal annual instalments commencing at the end of five years from the date of first disbursement. The loan is secured by an exclusive first charge on certain immovable properties located in the State of Telangana owned by Namitha Real Estate Private Limited (NREPL), a subsidiary of the Company, Corporate Infrastructure Services Private Limited ('CISPL'), a fellow subsidiary, Varalaxmi Jute & Twine Mills Private Limited, Vijay Niwas Real Estates Private Limited and Smt. G. Varalakshmi.
7. Loan of ' 44.70 crore (March 31, 2022: ' 44.68 crore) from a fellow subsidiary, GMR Airport Developers Limited ('GADL') carries interest @ 12.95% p.a. (March 31,2022: 12.95% p.a.) and is payable on a monthly basis. The loan is to be repaid on June 30, 2024.
8. Loan of ' 203.45 crore (March 31, 2022: ' 409.64 crore) from a fellow subsidiary, GMR Infra Developers Limited ('GIDL') carries interest 17.25% p.a, 18.25% and 19.46% p.a (March 31, 2022: 19.46% and 17.25%) and is payable along with the principal. The loan is repayable after 3 years from the date of disbursement of the loan.
9. Loan of ' 175.00 crore (March 31, 2022'175.00 crore), from a fellow subsidiary, GMR Corporate Affairs Limited ('GCAL') which carried interest @ 17% p.a. (March 31, 2022: 17%) payable on monthly basis. The principal is repayable on July 07, 2023.
10. Loan of ' 216.00 crore (March 31, 2022'216.00 crore) from a fellow subsidiary, GMR Airports Limited ('GAL') which carried interest @ 16% p.a. (March 31, 2022: 16%) payable on monthly basis. The principal is repayable on June 30, 2024.
11. Loan of ' 327.01 crore (March 31, 2022'153.61 crore) from a fellow subsidiaries, which carried interest ranging between @ 11% p.a and 12.25% p.a. (March 31, 2022: 0% to 11%) and is payable along with repayment of principal or on such intervals as may otherwise be agreed upon by the parties.
12. Loan of ' Nil (March 31,2022 ' 113.55 crore) from its subsidiaries, which carried interest ranging between @ 10% p.a to 12% p.a (March 31, 2022: 10% to 12%) and is payable along with repayment of principal or on such intervals as may otherwise be agreed upon by the parties.
13. Loan of ' 48.84 crore (March 31, 2022'48.84 crore) from its subsidiary, GMR Pochanpalli Expressways Limited which carried interest @ 10% p.a. (March 31,2022: 10%) payable at the end of the term. The principal is repayable on March 30, 2024.
14. Loan of ' 94.87 crore (March 31, 2022'90.72 crore) from its subsidiaries, which carried interest @ 10% p.a. (March 31,2022: 10%) payable at the end of the term. The principal is repayable on March 30, 2024.
15. Loan of ' 31.20 crore (March 31, 2022'31.20 crore) from its subsidiaries, which carried interest @ 17% p.a. (March 31,2022: 17%) payable at the end of the term. The principal is repayable on June 07, 2025.
16. Out of Bank overdrafts of ' 114.50 crore, overdrafts amounting to ' 108.96 crore (DFCC Project Package 201'59.82 crore, DFCC Project Package 202'49.14 crore) {(March 31, 2022: ' 176.70 crore (DFCC Project Package 201 ' 63.21 crore, DFCC Project Package 202'109.10 crore and Other ' 4.39 crore)} and working capital loan amounting to ' 93.00 crore (DFCC Project Package 201) {March 31, 2022: ' 93.13 crore (DFCC Project Package 201)} is secured by
A) First pari passu charge on current assets of GIL SIL-JV and the Company (DFCC Project Package 202) with IDBI Bank,
B) First charge ranking Pari-Passu on the Escrow Account (in the name of GIL-SIL JV) maintained for the purpose of Project Package 202 along with other working capital as well as term loan lenders and first pari-passu charge on equipment financed by Laksmi Vilas Bank ('LVB') (Note : Loan with LVB has fully repaid by the Company hence the charge may be treated as first charge against earlier 2nd pari passu charge).
C) First mortgage on the Company's and GIL-SIL JV entire fixed assets pertaining to DFCC Package 201 (if any) and first charge by way of hypothecation on all movable assets (excluding all equipments funded by central bank) including but not limited to all current / non-current assets in respect of project (Package 201) both present and future ranking pari-passu with other working capital and NFB / BG Lenders.
D) First charge on all company's and GIL-SIL JV's bank accounts including, without limitation, the TRA/ Escrow/ Designated account and each of the other accounts as required to be created by company for this project under any project document or contract.
E) A first charge / assignment/ security interest on the Company's rights under the Engineering, Procurement & Construction (EPC) agreement, major project documents and contracts and all licenses, permits, approvals, consents and insurance policies in respect of the present project.
F) Assignment of contractor guarantees, liquidated damages, letter of credit, guarantee or performance bond that may be provided by any counter party under any project agreement or contract in favor of the Company and insurance policies etc. pertaining to this project.
The aforesaid security would rank pari-passu with all the security
created/ to be created in favour of the lenders and working
capital lenders, if any for securing the fund based and non-fund
based working capital limits for the project (DFCC Package 201).
Collateral Security:
(1) Exclusive charge by way of mortgage of around 208.835 acres vacant land situated at Ayyarnpalli and Nagamangalam, villages near Hosur, Tamil Nadu. The land stands in the name of GMR Krishnagiri SIR Limited ('GKSIR').
(2) Exclusive charge by way of mortgage of residential property at Jaynagar 4th block, Bengaluru standing in the name of B V Nageswara Rao measuring 2,494 Sq.ft.
(3) Pari Passu charge on fixed assets of DFCC Project Package 201 present and future.
(4) Exclusive charge on 70 acres of land owned by GMR Krishnagiri SIR Limited.
(5) The cash credit facility is further secured by personal/ corporate guarantee
Mr . B V Nageswara Rao, Group Director, (to the extent of the
value of the property offered as collateral security i.e ' 5.80 crore);
GKSIR, Lilliam Properties (P) Limited and Suzone Properties (P)
Limited and GMR Krishnagiri Special Investment Region Ltd,
being the owner of the collateral security offered.
17. Securities for the facilities mentioned in note 3,4,5
a) First charge over 30% pledge of shares of RSSL and 70% shares under Non Disclosure Undertaking ('NDU') arrangement to be kept in lender's demat account.
b) Charge over 30% pledge of shares of GGAL.
c) Pledge over 30% shares of GMRHL held by the Company along with DSL.
d) Undertaking from the Company to hold majority stake in GMRHL.
e) Pledge/charge on the advances/CCPS invested by GISPL in GCRPL in favour of lender/ lender approved correspondent bank.
f) Mortgage on office space at Bandra Kurla Complex, Mumbai.
g) Pledge over 26% shares of GMR Airport Limited (GAL) along with all beneficial/economic voting rights.
18. Detail of period and amount of delays;March 31,2023
The Company had dues to bonds holders as on March 31, 2023 amounting to ' 795.37 crore which were overdue for more than 90 days.
March 31,2022
The Company had dues to bonds holders as on March 31, 2022 amounting to ' 528.03 crore which were overdue for more than 90 days.
1. In July 2010, IDFC and Temasek ('PE investors') had made certain investments through preference shares in GMR Energy Limited (GEL). There were certain amendments to the original arrangement between the Company, GEL and the PE investors. Per the latest amended Subscription and Shareholder Agreement executed in May 2016, preference shares held by the PE investors were converted into equity shares of GEL. Post conversion, the PE investors held 17.85% of equity shares in GEL with an exit option within the timelines as defined in the aforesaid amended agreement. As the said timelines have expired, the PE investors have sought for an exit without any further extensions and consequently, the Company has recognized the financial liability of ' 996.93 crore (March 31, 2022: ' 1,086.93 crore) in the standalone financial statements.
Out of the 17.85% additional stake 2.13% holding has been transferred to GPUIL as at March 31, 2023. (0.84% holding transferred to GPUIL as at March 31, 2022).
1. Includes retention money of ' 134.32 crore (March 31, 2022: ' 104.02 crore). Retention money is payable on the completion of the contracts or after the completion of the defect liability period as defined in the respective contracts.These payments are kept as retention to ensure performance of the vendor obligation and hence are not discounted for present value of money
2. Terms and conditions of the above financial liabilities:
- Trade payables are non-interest bearing
- For explanations on the Company's credit risk management processes, refer note 36(c)
- The dues to related parties are unsecured.
29. Income tax
Business loss can be carried forward for a maximum period of eight assessment years immediately succeeding the assessment year to which the loss pertains. Unabsorbed depreciation can be carried forward for an indefinite period.
On September 30, 2019 the Taxation Laws (Amendment) Ordinance 2019 ('the Ordinance') was passed introducing section 115BAA of the IT Act which allowed domestic companies to opt for an alternative tax regime from financial year 2019-20 onwards. As per the regime, companies can opt to pay reduced income tax @22% (plus surcharge and cess) subject to foregoing of certain exemptions. Central Board of Direct taxes vide circular number 29/2019 clarified that companies opting for lower rates of taxes will not be allowed to carry forward minimum alternate tax (MAT) credit and also will not be allowed to offset brought forward losses on account of additional depreciation.
At the time of filing income tax return for financial year ended March 31, 2022, the Company has decided to opt for the aforementioned regime. Deferred tax is the effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
The Company has not recognised deferred tax asset on unused tax losses and unabsorbed depreciation of ' 1,384.90 crore (March 31, 2022 : ' 1,630.45 crore) and other deductible temporary differences of ' 1,009.41 crore (March 31,2022 : ' 808.57 crore).The unused tax losses will be adjustable till assessment year 2031-32.
Pursuant to Composite Scheme of Amalgamation and Arrangement as sanctioned by the Hon'ble National Company Law Tribunal, Bench at Mumbai vide its order dated December 22, 2021, GIL has allocated the business losses and unabsorbed depreciation between GMR Airports Infrastructure Limited (formerly GMR Infrastructure Limited) ("the Demerged Company") and GMR Power and Urban Infra Limited ("the Resulting Company").
30. Earnings per share (EPS)
Basic EPS is calculated by dividing the profit/ loss for the year attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year. 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 year. The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
Diluted EPS is calculated by dividing the profit attributable to equity shareholders (after adjusting for interest on the convertible securities) by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.
(i) During the year ended March 31, 2016, the Company had issued FCCB's, however, the same have not been included in the calculation of diluted earnings per share for period ended March 31, 2023 and March 31, 2022 respectively since those are antidilutive.
31 Significant accounting judgements, estimates and assumptions
The preparation of the Company's standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
Significant judgements and estimates relating to the carrying values of assets and liabilities include fair value measurement of investments in subsidiaries, joint ventures and associates, provision for employee benefits and other provisions, recoverability of deferred tax assets, commitments and contingencies and recognition of revenue on long term contracts.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below. The Company based its assumptions and estimates on parameters available when the Standalone Financial Statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
a. Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the same can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. Refer note 10 and 29 for further disclosures.
b. Fair value measurement of financial instruments
When the fair values of financial assets and financial
liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The cash flow projections used in these models are based on estimates and assumptions relating to conclusion of tariff rates, operational performance of the plants and coal mines, life extension plans, availability and market prices of gas, coal and other fuels, restructuring of loans etc in case of investments in entities in the energy business, estimation of vehicle traffic and rates and favourable outcomes of litigations etc. in the expressway business which are considered as reasonable by the management. Fair value of investment in SEZ sector is determined based on available data for similar immovable property/ investment or observable market prices less incremental cost for disposing of the immovable property/ investments. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility, as applicable. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer note 5 and 36 for further disclosures.
c. Contingencies
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal and contractual claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events.
In respect of financial guarantees provided by the Company to third parties, the Company considers that it is more likely than not that such an amount will not be payable under the guarantees provided. Refer note 34 for further disclosure.
d. Revenue recognition
The Company recognises revenue from contracts with customers when it satisfies a performance obligation by transferring promised good or service to a customer.
The Company uses the percentage of completion method in accounting for its fixed price contracts. Use of the percentage of completion method requires the Company
to estimate the costs incurred till date as a proportion of the total cost to be incurred. Costs incurred have been used to measure progress towards completion as there is a direct relationship. Provision for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.
e. Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in
the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds.
The mortality rate is based on publicly available mortality tables for India. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
Further details about gratuity obligations are given in note 37.
a. The Company has provided securities by way of pledge of investments for loans taken by certain companies.
b. The Holding Company has pledged certain shares held in the Company as security towards the borrowings of the Company and related parties. (refer note 5)
c. Also refer note 5 on non-current investments and current investments.
d. Also refer note 16 for long term borrowings and short term borrowings as regards security given by related parties for loans availed by the Company.
e. As the liability for gratuity and leave encashment is provided on actuarial basis for the Company as a whole, the amount pertaining to the directors are not included.
f. In the opinion of the management, the transactions reported herein are on arm's length basis.
g. the amount of the outstanding balances as shown above are unsecured and will be settled in due course.
d) Increase/ decrease in net contract balances:
The movement in receivables and in contract assets is on account of invoicing and collection during the year.
e) Revenue recognised during the year from the performance obligation satisfied upto previous year (arising out of contract modifications) amounts to ' 256.03 crore (March 2022: ' 701.42 crore).
g) The Company has a process whereby periodically long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under the law/accounting standards for the material foreseeable losses on such long term contracts has been made in the books of accounts. The Company does not have any derivative contracts at the end of the year.
h) The Company and SEW Infrastructure Limited had incorporated a Joint venture, GIL- SIL JV (the "JV") and entered into a contract with Dedicated Freight Corridor Corporation of India Limited ("DFCCIL") in 2015 for execution of design and construction of civil, structures and track Works for double line railway involving formation in embankments/ cuttings, ballast on formation, track works, bridges, structures, buildings, yards, integration with existing railway system and testing and commissioning on design-build lump sum basis for Mughalsarai-New Karchana Station (including) of Eastern Dedicated Freight Corridor Project (Contract Package - 201) and New Karchana (excluding) - New Bhaupur Station (excluding) of Eastern Dedicated Freight Corridor Project (Contract Package - 202) (hereinafter together referred as 'DFCC project') to the JV.
Subsequently the JV had sub-contracted significant portion of such contract to the Company. During the execution of the project, DFCCIL failed to fulfil its obligations in a timely manner and as a consequence of such non-fulfilment, the execution of DFCC project got significantly delayed. In view of the aforementioned delay, the JV sought extension as per Clause 8.4 of the General Conditions to the Contract and DFCCIL had granted such extensions from time to time.
During the current year, the JV has submitted its claim against DFCCIL for the period of delay i.e. January 2019 to December 31, 2021, DFCCIL has rejected such claim citing the amendments made in the contract, while granting against the extension of time granted. JV has invoked the dispute resolution process and accordingly Dispute Adjudicating Board (DAB) is constituted. JV is in the process of submission of its claim before DAB.
Based on internal assessment and review of the technical and legal aspects by independent experts, the managements of the JV and the Company is confident on the favourable outcome of such claims and has accordingly recognized such claim in its books of account and basis back to back agreement with the JV, the Company has also included an incremental budgeted contract revenue of ' 406.00 crore (out of total claim amount of ' 734.00 crore) for determination of the revenue to be recognized in accordance with Ind AS 115.
i) Also refer note 35(iii).
34. Leases, Commitments and Contingent liabilities I LeasesCompany as lessee
Based on the exception of short term leases or lease of low value underlying assets, none of the lease has been identified for which right-of-use asset and a lease liability is required to be created.
II Contingent liabilities
In the ordinary course of business, the Company faces claims and assertions by various parties. The Company assesses such claims and assertions and monitors the legal environment on an ongoing basis with the assistance of external legal counsel, wherever necessary. The Company records a liability for any claims where a potential loss is probable and capable of being estimated and discloses such matters in its financial statements, if material. For potential losses that are considered possible, but not probable, the Company provides disclosure in the Standalone Financial Statements but does not record a liability in its accounts unless the loss becomes probable.
The indirect taxes under dispute against the Company primarily represent ongoing litigation related to the Service Tax matters. These claims are mainly on account of ineligible input tax credit, reverse tax charge liability tax, etc. These matters are pending before various indirect tax authorities and the Management including its tax advisors expect that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Company's financial position and results of operations.
The following is a description of claims and assertions where a potential loss is possible, but not probable. The Company believes that none of the contingencies described below would have a material adverse effect on the Company's financial condition, results of operations or cash flows.
Pursuant to Composite Scheme of Amalgamation and Arrangement ('the scheme') as sanctioned by the Hon'ble National Company Law
Tribunal, Bench at Mumbai vide its order dated December 22, 2021, the Company is in the process of executing guarantee agreements
with the lenders, giving effect to the transfer of guarantees from GIL to the Company as may be applicable.
1. During the year ended March 31, 2019, the Company and its subsidiaries had entered into a Framework agreement in favour of IDBI Bank Ltd (as the Lead Bank) wherein the Company had guaranteed the obligations of unsustainable debt of GMR Rajahmundry Energy Limited in form of Cumulative Redeemable Preference Shares (CRPS) amounting to ' 940.59 crore. Redemption of CRPS is due on March 31, 2035 for ' 235.15 crore, March 31,2036 for ' 235.15 crore, March 31, 2037 for ' 235.15 crore and March 31, 2038 for ' 235.14 crore. Hence there is no immediate contingent liability on the Company.
2. This includes, certain corporate guarantees extended by GIL amounting to ' 2,353.20 crore and outstanding balance ' 1,910.08 crore (discounted value ' 1,427.53 crore) [March 31, 2022 : ' 4,784.71 crore and outstanding balance ' 3,153.01 crore (discounted value ' 2,618.40 crore)] pertaining to the demerged undertaking which has been transferred to the Company pursuant to the Scheme. However, GIL has passed board resolutions/ executed undertakings with the Company pursuant to which it is in the process of executing guarantees wherein both, the Company and GIL shall jointly continue to remain liable for the aforementioned guarantees. This guarantee is not yet executed and the same is in further discussion with the lenders.
3. This includes, corporate guarantees jointly extended by GIL and the Company (sanctioned amount of ' 2,092.20 crore and outstanding amount of ' 1,569.10 crore) [ March 31, 2022 : ' 2,502.38 crore (outstanding amount of ' 1,971.42 crore)] in favour of lenders of its subsidiaries and fellow subsidiaries.
4. Interest accrued, if any, and unpaid is not included above.
5. Subsequent to year end, the Company has repaid outstanding loan amounting to ' 80.02 crore. Considering the said development, the Company has not considered the outstanding corporate guarantees towards such borrowing as at March 31, 2023.
In addition to above table, following are the additional contingent liabilities:
1. There are numerous interpretative issues relating to the Hon'ble Supreme Court (SC) judgement on provident fund dated February 28, 2019. As a matter of caution, the Company has evaluated the same for provision on a prospective basis from the date of the SC order and is of the view that no such provision is required. The Company will update its provision, on receiving further clarity on the subject.
2. The Company has provided guarantee to Dedicated Freight Corridor Corporation of India Limited ('DFCCIL') on behalf of GIL SIL JV. The Company has agreed to settle the claims upto ' 252.41 crore (March, 31 2022 ; ' 184.00 crore) of DFCCIL immediately on demand, irrespective of any dispute between GIL SIL JV and DFCCIL and to pay the claim amount to DFFCIL under the guarantee. The Company has agreed to be the principal obligor in respect of all payments due to DFCCIL.
1 The Company has extended comfort letters to provide continued financial support to certain subsidiaries/ joint ventures/ associates to ensure that these subsidiaries are able to meet their debts, commitments (including commitments towards investee entities) and liabilities as they fall due and they continue as going concerns.
2 The Company has entered into agreements with the lenders of subsidiaries/ joint ventures/ associates wherein it has committed to hold directly or indirectly at all times at least 51% of the equity share capital of the subsidiaries/ joint ventures/ associates and not to sell, transfer, assign, dispose, pledge or create any security interest except pledge of shares to the respective lenders as covered in the respective agreements with the lenders.
3 The Company has certain long term unquoted investments which have been pledged as security towards loan facilities sanctioned to the Company and the investee companies.
4 For commitment relating to FCCB refer note 16.
Other claims
35. Company and its subsidiaries, joint ventures, associates have received certain favorable orders on various ongoing matters in energy,
highway and DFCC which involve significant value of claims. Management is optimistic of such favorable orders and believes that such
claims will further improve its cash flows and profitability. The details of such claims have been enumerated below: -
(i) GCORRPL has received award of ' 341.00 crore plus interest against Government of Tamil Nadu ('GOTN') which is challenged by GOTN in the Hon'ble Madras High Court. The Hon'ble Judge after hearing the counsels for both the parties has upheld the Arbitration Award. In addition, the Hon'ble Madras High Court has also awarded interest @ 9.00% p.a. from the date of filing of claim till date of award. Further, The Hon'ble Supreme Court confirmed the arbitral award plus interest@18% p.a aggregating to ' 510.47 crore (interest calculated upto November 2022) and issued notice confining to the issue of pendent lite interest awarded by the Single Judge (Also refer note 48).
(ii) GHVEPL has received award for arbitration for compensation for Change in Law on account of bifurcation of state of Andhra Pradesh and change in policies as detailed in note 6. While Change in Law is upheld, amount of compensation was to be calculated by a Sole Arbitrator. GHVEPL has raised a claim of ' 1,676.00 crore plus interest up to March 31, 2020. After hearing both the parties and based on the report of an independent expert, Sole Arbitrator has completed the quantification and has issued his final report on February 28, 2022 wherein he has quantified the claims of GHVEPL at ' 1,672.20 crore. Single Judge of Delhi High Court has taken the final report issued by Sole Arbitrator on record. NHAI has challenged the Award before Divisional Bench of the Hon'ble Delhi High Court, hearing for which is in progress.
(iii) In case of DFCC, the Company has made a claim for increase in labour cost due to changes carried out in Minimum Wages Act, 1948. Company has filed the claim before Dispute Adjudication Board (DAB), which gave the judgment in favor of the Company, upholding that changes carried out in Minimum Wages Act, 1948 by Central Government is Change in Law and the Company is entitled for reimbursement of additional cost incurred. However, DFCCIL did not accept the judgement of DAB and the matter was referred to the Arbitration Tribunal, which has given the award in favor of the Company for an amount of ' 62.21 crore (calculated upto June 2021) plus interest @ SBI MCLR from date of DAB Award till the actual date of payment. The Arbitration Tribunal has also specified the principles to determine the amount of claim for future as well, which will be payable by DFCCIL till completion of the Project.
(iv) In case of DFCC, there are various claims under various heads which have been either agreed by DFCCIL or Group has got the award through Dispute Adjudication Board (DAB). Total amount of claim is approximately ' 299.71 crore which will be received progressively based on the work to be carried out.
(v) The Company had also raised a claim on DFCCIL under change in law on account of mining ban in the state of Uttar Pradesh and has invoked arbitration after DFCCIL declined to accept the DAB award which was in favor of the Group. Arbitral Tribunal has given its award on April 22, 2023 wherein it has quantified the claims up to December 2019 for a sum of ' 45.20 crore. Based on the principles laid down by the Arbitration Tribunal for quantification, total claim on account of change in law for the entire project period is estimated at ' 91.16 crore. Company is yet to receive the claim amount which is expected shortly.
(vi) In case of DFCC, DFCCIL failed to fulfill its obligations in a timely manner and as a consequence of such non-fulfillment, the execution of DFCC project got significantly delayed. In the view of the aforementioned delay, the Company sought extension as per clause 8.4 of the general conditions to the contract. During the current year, the Company has submitted its claim against DFCCIL for the period of delay i.e January 2019 to December 31, 2021. DFCCIL has rejected such claim citing the amendments made in the contract, while granting against the extension of time granted. The Company has invoked the dispute resolution process and accordingly Dispute Adjudicating Board (DAB) is constituted. The Company is in the process of submission of its claim before DAB. The Company has also included an incremental budgeted contract revenue of ' 406.00 crore (out of total claim amount of ' 734.00 crore) for determination of the revenue to be recognized in accordance with Ind AS 115.
(vii) Certain other claims in energy sector as detailed in note 5(2), 5(3), 5(4), 5(5) and 5(6).
36. Disclosures on Financial instruments
This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.
The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2.2 (b) and 2.2 (n), to the standalone financial statements.
(i) Investments in mutual funds and derivative instruments are mandatorily classified as fair value through statement of profit and loss.
(b) Fair value hierarchy
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below:
Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of investment in quoted equity shares, and mutual fund investments.
Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
(ii) Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of the amounts that the Company could have realised or paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.
(iii) The fair values of the unquoted equity shares have been estimated using a discounted cash flow model except in case of fair value of investment in SEZ sector which has determined based on available data for similar immovable property/ investment or observable market prices less incremental cost for disposing of the immovable property/ investments. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management's estimate of fair value for these unquoted equity investments. Based on the inputs provided by the management the independent external valuer performs the valuation of Investments in subsidiaries, associates and joint ventures.
(iv) There have been no transfers between Level 1, Level 2 and Level 3 for the year ended March 31, 2023 and March 31, 2022.
(v) Fair value of mutual funds is determined based on the net asset value of the funds.
(c) Financial risk management objectives and policies
In the course of its business, the Company is exposed primarily to fluctuations in foreign currency exchange rates, interest rates, equity prices, liquidity and credit risk, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which not only covers the foreign exchange risks but also other risks associated with the financial assets and
liabilities such as interest rate risks and credit risks. The risk management policy is approved by the Board of Directors. The risk management framework aims to:
(i) create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the Company's business plan.
(ii) achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.
i) Market risk
Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
(a) Market risk- Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long-term debt obligations with floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.
(b) Market risk- Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's investing and financing activities. The Company's exposure to foreign currency changes from operating activities is not material.
ii) Credit risk
Credit risk is the risk of financial loss arising from counterpart's failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of credit worthiness as well as concentration risks. The Company has a policy of dealing only with credit worthy counter-parties and obtaining sufficient collateral, where appropriate as a means of mitigating the risk of financial loss from defaults.
Financial instruments that are subject to credit risk and concentration thereof principally consist of trade receivables/unbilled revenue, loans receivables, investments in debt securities of group companies, balances with bank, bank deposits, derivatives and financial guarantees provided by the Company. None of the financial instruments of the Company result in material concentration of credit risk except investment in preference shares/debentures made by the Company in its group companies and loans provided to its group companies. The credit risk in respect of such investments in preference shares/ debentures and loans are assessed on the basis of the fair value of the respective group companies determined based on their business plans. Also refer note 32 for the details of such instruments.
The carrying value of financial assets represents the maximum credit risk. The maximum exposure to credit risk was ' 6,608.87 crore as at March 31, 2023 (March 31, 2022: ' 8,192.43 crore ), being the total carrying value of investments, loans, trade receivables, balances with bank, bank deposits and other financial assets.
Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. An impairment analysis is performed at each reporting date on an individual basis for major customers. The Company does not hold collateral as security. Further, the top 5 customers of the Company in the EPC segment contributes to more than 90% of the trade receivables during the year ended March 31, 2023 and March 31, 2022.
Credit risk from balances with bank and financial institutions is managed by the Company's treasury department in accordance with the Company's policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.
In respect of financial guarantees provided by the Company to banks and financial institutions, the maximum exposure which the Company is exposed to is the maximum amount which the Company would have to pay if the guarantee is called upon. Based on the expectation at the end of the reporting period, the Company considers that it is more likely than not that such an amount will not be payable under the guarantees provided.
iii) Liquidity risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs, non-convertible debentures and other debt instruments. The Company invests its surplus funds in bank fixed deposit and in mutual funds, which carry no or low market risk.
The Company monitors its risk of shortage of funds on a regular basis. The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, debentures, preference shares, sale of assets and strategic partnership with investors, etc.
The following table shows a maturity analysis of the anticipated cash flows (excluding interest obligations) for the Company's financial liabilities on an undiscounted basis, which therefore differ from both carrying value and fair value.
b) Defined benefit plan
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (based on last drawn basic) for each completed year of service.
The fund provides a capital guarantee of the balance accumulated and declares interest periodically that is credited to the fund account. Although we know that the fund manager invests the funds as per products approved by Insurance Regulatory and Development Authority of India and investment guidelines as stipulated under section 101 of Income Tax Act, the exact asset mix is unknown and not publicly available. The Trust assets managed by the fund manager are highly liquid in nature and we do not expect any significant liquidity risks. The Trustees are responsible for the investment of the assets of the Trust as well as the day to day administration of the scheme.
The following tables summarise the components of net benefit expense recognised in the standalone statement of profit or loss and the funded status and amounts recognised in the standalone balance sheet for gratuity benefit.
1. Plan assets are fully represented by balance with the Life Insurance Corporation of India.
2. The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets and the Company's policy for plan asset management.
3. The estimates of future salary increase in compensation levels, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
4. As per Indian Assured Lives Mortality (2006-08) (modified) Ultimate
5. Plan Characteristics and Associated Risks:
The Gratuity scheme is a Defined Benefit Plan that provides for a lump sum payment made on exit either by way of retirement, death, disability or voluntary withdrawal. The benefits are defined on the basis of final salary and the period of service and paid as lump sum at exit. The Plan design means the risks commonly affecting the liabilities and the financial results are expected to be:
a. Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.
b. Salary Inflation risk : Higher than expected increases in salary will increase the defined benefit obligation
c. Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that include mortality,
withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
38. Capital management
The Company's capital management is intended to create value for shareholders by facilitating the meeting of long term and short term goals of the Company.
The Company determines the amount of capital required on the basis of annual business plan coupled with long term and short term strategic investment and expansion plans. The funding needs are met through equity, cash generated from operations and sale of certain assets, long term and short term bank borrowings and issue of non-convertible debt securities and strategic partnership with investors.
For the purpose of the Company's capital management, capital includes issued equity capital, convertible preference shares and debentures, share premium and all other equity reserves attributable to the equity holders of the Company.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is total debt divided by total capital plus total debt. The Company's policy is to keep the gearing ratio at an optimum level to ensure that the debt related covenant are complied with .
42. The Company is in the process of conducting a transfer pricing study as required by the transfer pricing regulations under the IT Act ('Regulations') to determine whether the transactions entered during the year ended March 31, 2023, with the associated enterprises were undertaken at "arm's length price". The management confirms that all the transactions with associated enterprises are undertaken at negotiated prices on usual commercial terms and is confident that the aforesaid regulations will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
43. GMR Airports Infrastructure Limited (formerly GMR Infrastructure Limited) (the 'Demerged Company') had signed definitive share sale and purchase agreement ('SSPA') on September 24, 2020 which had been subsequently amended on March 31, 2021 for the sale of equity owned by its wholly owned subsidiary GMR SEZ & Port Holdings Limited ("GSPHL") of its entire 51% stake in Kakinada SEZ Limited ("KSEZ") to Aurobindo Realty and Infrastructure Private Limited ("ARIPL"). As part of the transfer of stake of KSEZ ("transaction"), the 74% equity stake of Kakinada Gateway Port Limited ("KGPL") held by KSEZ would also be transferred to ARIPL. The consideration for the aforementioned transaction comprised of ' 1,692.03 crore upfront payment to be received on or before the closing date and ' 1,027.18 crore to be received in next 2 to 3 years from the transaction date which is contingent upon achievement of certain agreed milestones primarily related to the sale of 2,500 acres of the land parcels by KSEZ at specified prices during the financial years ended March 31, 2023 and March 31, 2024 basis the expectation of significant development Kakinada SEZ.
Based on assessment of the achievement of the aforementioned milestones by an independent property consultancy agency as at March 31,2022, management had estimated the expected recoverable amount from such contingent consideration. Considering as at March 31, 2023, the aforementioned milestones have not been achieved, the management has reassessed the current situation and has provided for the balance consideration receivable amounting to ' 313.21 crore during the current year, which has been charged to Statement of Profit and Loss and disclosed under exceptional items.
44. The Code of Social Security, 2020 ("Code") relating to employee benefits during employment and post employment received Presidential assent in September 2020. Subsequently the Ministry of Labour and Employment had released the draft rules on the aforementioned code. However, the same is yet to be notified. The Company will evaluate the impact and make necessary adjustments to the financial statements in the period when the code will come into effect.
45. The composite scheme of amalgamation and arrangement for amalgamation of GMR Power Infra Limited (GPIL) ("Transferor Company") with GMR Airports Infrastructure Limited (formerly GMR Infrastructure Limited) ('GIL') ("Demerged Company") and demerger of Engineering Procurement and Construction (EPC) business and Urban Infrastructure Business of the Demerged Company (including Energy business) into the Company ("Scheme") was approved by the Hon'ble National Company Law Tribunal, Mumbai bench ("the Tribunal") vide its order dated December 22, 2021 (formal order received on December 24, 2021). The said Tribunal order was filed with the Registrar of Companies by GIL, GPIL and the Company on December 31,2021 thereby the Scheme becoming effective on that date. Accordingly, the Standalone Financial Statements for the year ended March 31, 2022 have been prepared by giving effect to the Composite scheme of amalgamation and arrangement in accordance with Appendix C of Ind AS 103 "Business Combination" from the earliest period presented consequent upon receipt of approval to the Scheme from National Company Law Tribunal (NCLT).
Pursuant to the composite scheme of arrangement becoming effective on December 31, 2021, the existing paid up share capital of ' 0.10 crore held by Demerged Company stands cancelled. Further, the Company had alloted one share of ' 5/- each to the shareholders of GIL for every 10 shares held by them in GIL. Accordingly, on January 12, 2022, 603,594,528 equity shares of ' 5/- each aggregating ' 301.80 crore have been alloted and the shares held by GIL stand cancelled.
46. Operating segments are reported in such a manner which is consistent with the internal reporting provided to the Chief Operating Decision Maker ('CODM'). As per the evaluation carried out by CODM, the Company has only one reportable business segment, viz., Engineering, Procurement and Construction ('EPC'). Accordingly, the amounts appearing in the standalone financial statements relate to the single business segment.
48. Government of Tamil Nadu (GoTN) had awarded an annuity based highway project to GMR Chennai Outer Ring Road Private Limited ('GCORR'). GOCRR had awarded EPC contract to Boyance Infrastructure Private Limited (BIPL) for the construction of highway project. Subsequently BIPL had sub-contracted significant portion of such contract to the Company. On May 30, 2015, BIPL and the Company entered into a novation agreement whereby all the right and obligation related to the execution of EPC contract lies with the Company. Due to various reason the project got delayed. Since the delay in completion of EPC Contract is due to factors which were attributable to GoTN and were beyond the control, time to time, GPUIL has raised claim to GCORR and in turn GCORR, has raised the claim on GoTN for an amount of ' 675.00 crore plus interest. GoTN has disputed the amount claimed, hence GCORR has invoked Arbitration.
The Hon'ble Tribunal vide its order dated January 30, 2020, against a claim of ' 675.00 crore have directed GoTN to pay ' 340.97 crore within 3 months from the date of award failing which the same shall be payable with interest at 18% p.a. from the date of Award till date of realization. Time for payment by GoTN expires on April 30, 2020. GCORR had filed an application under section 34 of Arbitration Act, 1996, before Madras High Court restricting the challenge to non-grant of pendente lite interest as per contract.
GoTN has also challenged the award by filing an application under section 34 of Arbitration Act, 1996. The Ld. Single judge of Hon'ble Madras High Court, vide order dated November 17, 2021, has dismissed the challenge of Government of Tamil Nadu thereby upholding the Award in its entirety. The Ld. Single Judge has also partly upheld the challenge of GCORR by awarding pendent-lite interest at the rate of 9% p.a from the date of filing Statement of Claim till the date of Award and thereafter @ 18% p.a. as ordered by the Tribunal. Total amount (including interest) estimated to be received by virtue of the above order is ' 597.00 crore approx.
GCORR has filed execution petition u/s 36 of the Arbitration and Conciliation Act, 1996 on January 05, 2022 before the Madras High Court for enforcement of Arbitral Award. Against the dismissal of appeal u/s 37 of Arbitration and Conciliation Act 1996 by Hon'ble Division Bench of Madras High Court vide order dated August 11, 2022, GoTN had filed Special Leave Petition. , The Hon'ble Supreme Court confirmed the Arbitral Award for an amount of ' 340.97 crore plus interest @ 18% p.a., aggregating to ' 510.47 crore (interest calculated upto November 02, 2022) and issued notice confining to the issue of Pendente Lite interest awarded by the Single Judge.
GCORR in the execution petition filed u/s 36 of the Arbitration and Conciliation Act, 1996 on January 05, 2022 , requested the Madras High Court for enforcement of the Award. GCORR also filed an application for directions to GoTN to deposit 100% of the amount confirmed by Hon'ble Supreme Court i.e. ' 510.47 crore. Vide order dated November 08, 2022, the Hon'ble Madras High Court directed GoTN to deposit a sum of ' 510.47 crore with Registrar by February 20, 2023.
GCORR, based on the judgement of the Hon'ble Supreme Court dated November 03, 2022 confirming the claim amount of ' 510.47 crore, have recognized the amount pertaining to its portion of claim in the award along with Interest up to the date of order and consequential provision for amount payable to the Company amounting to ' 418.55 crore (including Interest calculated up to November
02, 2022) in the books of accounts of GCORR. Accordingly, pursuant to aforesaid novation agreement, the Company has recognized an exceptional gain of ' 418.55 crore (including Interest calculated up to November 02, 2022) during the financial year ended March 31, 2023.
49. Additional disclosure pursuant to schedule III of Companies Act 2013
i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the group for holding any Benami property.
ii) The Company does not have any transactions/ balances with companies struck off under section 248 of Companies Act, 2013 to the best of knowledge of group's management.
iii) The Company has not traded or invested funds in Crypto currency of Virtual currency.
iv) Except for the information given in the table below, the Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall
(a) directly or indirectly lend or invest in other persons or entities identified in any manner by or on behalf of the Group (Ultimate Beneficiaries) or
The Management committee of the Board of directors of the company in its meeting held on July 02, 2022 has approved promoter contribution/ support upto ' 160.00 crore over the period of 4 years in the form of inter corporate loan/ convertible instrument as per resolution plan of GMR Warora Energy Limited in favour of the consortium banks led by State Bank of India (lenders).
v) The Company has not received any fund from any person(s) or entity(ies), including foreign entities(Funding Party) with the understanding (whether recorded in writing or otherwise) that the Group shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
vi) The Company has used borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date.
vii) The Company has not been declared willful defaulter by any bank of financial institution of other lender.
ix) The Company does not have any such transaction which is not recorded in books of account that has been surrendered or disclosed as income during the year in the tax assessments (such as, search or survey or any other relevant provisions) under Income Tax Act, 1961.
x) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
xi) The Company has not granted any loans or advances in nature of loan, either repayable on demand or without specifying any terms or period of repayment, to promoters, directors, KMPs and the related parties.
xii) The Company is in compliance with the requirement of Section 2(87) of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017.
50. Certain amounts (currency value or percentages) shown in the various tables and paragraphs included in the standalone financial statements have been rounded off or truncated as deemed appropriate by the management of the Company.
51. Previous year's figures have been regrouped/ reclassified, to conform to the classification adopted in the current year classification. The impact of the same is not material to the users of the financial statements.
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