2.2.16 Provisions, contingent assets and contingent liabilities Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions recognised by the Company include provisions for Maintenance, Demobilisation, Legal Cases, Corporate Social Responsibility (CSR), Onerous Contracts and others.
If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
These provisions are reviewed at each reporting date and adjusted to reflect the current best estimates.
Onerous contracts
If the Company has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Company recognises any impairment loss that has occurred on assets dedicated to that contract.
These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
Contingent liabilities
Contingent liabilities are disclosed when there is a possible obligation or present obligations that may but probably will not, require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Contingent assets
Contingent assets are not recognised though are disclosed, where an inflow of economic benefits is probable.
2.2.17 Leases
If the contract conveys the right to control the use of an identified asset for a period in exchange for consideration, it is treated as lease.
a) Company as a lessee
The Company recognises a right-of-use asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and leases for low value underlying assets.
i) Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment.
ii) Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company's lease liabilities are included in financial liabilities.
iii) Short term lease and leases of low value assets
The Company applies the short-term lease recognition exemption to its shortterm leases contracts including lease of residential premises and offices (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
b) Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating
lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
2.2.18 Financial instruments
The Company recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument.
a) Financial assets
Initial recognition and measurement
All financial assets (excluding trade receivables which do not contain a significant financing component, being measured at transaction price) are recognised initially at fair value plus transaction costs that are directly attributable to the acquisition of financial asset. Transaction costs directly attributable to the acquisition of financial assets carried at fair value through profit or loss (FVTPL) are expensed in statement of profit and loss.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in below categories based on the Company's business model and the cash flow characteristics of the asset:
• Financial assets at amortised cost
• After initial measurement, the financial assets that are held for collection of contractual cash flows where those cash flow represent solely payments of principal and interest (SPPI) on the principal amount outstanding are measured at amortised cost using the effective interest rate (EIR) method. Interest income from these financial assets is included in other income.
• Financial assets at fair value through other comprehensive income (FVTOCI):
• A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cashflows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal and interest on the principal amount outstanding.
• Financial assets at fair value through profit or loss (FVTPL):
Assets that do not meet the criteria for amortised cost or FVTOCI are measured at fair value through profit or loss (FVTPL). Debt instruments included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.
Impairment of financial assets
The Company applies the expected credit loss (ECL) model for recognising impairment loss on financial assets measured at amortised cost or financial assets measured at FVTOCI.
The Company follows ‘simplified approach' for recognition of impairment loss allowance on:
• Trade receivables or contract revenue receivables; and
• All lease receivables resulting from transactions within the scope of Ind AS 116
Under simplified approach, impairment loss allowance is recognised based on lifetime ECLs at each reporting date.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the statement of profit and loss.
The balance sheet presentation of impairment for various financial instruments is described below:
• Financial assets measured as at amortised cost, contractual revenue receivables and lease receivables: ECL is presented as an allowance. The impairment allowance reduces the net carrying amount. Until the asset meets writeoff criteria, the Company does not reduce impairment allowance from the gross carrying amount.
• Loan commitments and financial guarantee contracts: ECL is presented as a provision in the balance sheet i.e., as a liability.
• Debt instruments measured at FVTOCI: For debt instruments measured at FVTOCI, the expected credit losses do not reduce the carrying amount in the balance sheet, which remains at fair value. Instead, an amount equal to the allowance is recognised in other comprehensive income as the 'accumulated impairment amount'.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109.
The difference between the carrying amount and the amount of consideration received / receivable is recognised in the statement of profit and loss.
b) Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs.
The Company's financial liabilities includes trade payables, borrowings and other financial liabilities etc.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
• Financial liabilities at fair value through profit or loss.
The company has not designated any financial liabilities at FVTPL.
• Financial liabilities at amortised cost
Borrowings, trade payables and other financial liabilities
After initial recognition, borrowings, trade payables and other financial liabilities are subsequently measured at amortised cost using the EIR method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Derecognition of financial liabilities
A financial liability (or a part of a financial liability) is derecognised from the Company's Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
c) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
d) Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet if there is a currently enforceable contractual legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
2.2.19 Fair value measurement
The Company measures financial instruments at fair value at each reporting period.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy and are disclosed accordingly in the financial statements.
External valuers are involved for valuation of significant assets and liabilities, if any. At each reporting date, the Company analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Company's accounting policies.
9-9-20 Earnings per Share
In determining basic earnings per share, the company considers the net profit attributable to equity shareholders. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period.
In determining diluted earnings per share, the net profit attributable to equity shareholders and weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares. The Company does not have any dilutive potential equity shares.
2.2.21 Non - current asset held for sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. The sale is considered highly probable only when the asset or disposal group is available for immediate sale in its present condition, it is unlikely that the sale will be withdrawn, and sale is expected within one year from the date of the classification. Disposal groups classified as held for sale are stated at the lower of carrying amount and fair value less costs to sell. Property, plant and equipment, investment property and intangible assets are not depreciated or amortised once classified as held for sale. Assets classified as held for sale/distribution are presented separately in the balance sheet.
If the criteria stated by IND AS 105 “Non-current Assets Held for Sale" are no longer met, the disposal group ceases to be classified as held for sale. Non-current asset that ceases to be classified as held for sale are measured at the lower of (i) its carrying amount before the asset was classified as held for sale, adjusted for depreciation that would have been recognised had that asset not been classified as held for sale, and (ii) its recoverable amount at the date when the disposal group ceases
to be classified as held for sale. The depreciation reversal adjustment related property, plant and equipment, investment property and intangible assets is charged to statement of profit and loss in the period when non-current assets held for sale criteria are no longer met.
2.2.22 Prior Period Adjustment
Errors/omissions discovered in the current year relating to prior periods are treated as immaterial and adjusted during the current year, if all such errors and omissions in aggregate does not exceed 0.50% of total operating revenue as per last audited financial statement of the Company.
2.2.23 Significant accounting estimates and judgments
The preparation of Standalone Financial Statements requires the management to make judgements, accounting estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. 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.
This policy provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.
Significant areas of estimation and judgements as stated in the respective accounting policies that have the most significant effect on the financial statements are as follows:
Allowances for uncollected trade receivables
Trade receivables do not carry interest and are stated at their nominal values as reduced by appropriate allowances for estimated irrecoverable amount are based on ageing of the receivables balances and historical experiences. Individual trade receivables are written off when management deems not be collectible.
Defined benefit plans
The costs of post-retirement benefit 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, mortality rates and future pension increases. 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.
Contingencies
In the normal course of business, contingent liabilities may arise from litigation and other claims
against the Company. There are certain obligations which managements have concluded based on all available facts and circumstances are not probable of payment or difficult to quantify reliably and such obligations are treated as contingent liabilities and disclosed in notes.
Impairment of financial assets
The impairment provision for financial assets is based on assumptions about risk of default and expected loss rates. The company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
Taxes
Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the nature of business differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective domicile of the companies.
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 losses 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.
Impairment of non-financial assets
The entity assesses at each reporting date whether there is an indication that an asset may be impaired. Determining the recoverable amount of the assets is judgmental and involves the use of significant estimates and assumptions. The estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and do not reflect unanticipated events and circumstances that may occur.
Non-current asset held for sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. The sale is considered highly probable only when the asset or disposal group is available
for immediate sale in its present condition, it is unlikely that the sale will be withdrawn, and sale is expected within one year from the date of the classification.
Leases - Estimating the incremental borrowing rate
The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
Determining the lease term of contracts with renewal and termination options - Company as lessee
The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. After the commencement date, the Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold improvements or significant customisation to the leased asset).
Revenue recognition
The Company's revenue recognition policy is central to how the Company values the work it has carried out in each financial year.
These policies require forecasts to be made of the outcomes of Contracts, which require, assessments and judgements to be made on changes in scope of work and claims and variations.
There are several long term and complex projects where the Company has incorporated significant judgements over contractual entitlements. The range of potential outcomes could result in a materially positive or negative change to underlying profitability and cash flow.
Estimates are also required with respect to the below mentioned aspects of the contract:
• Determination of stage of completion
• Estimation of project completion date
• Provisions for foreseeable losses
• Estimated total revenues and estimated total costs to completion, including claims and variations.
These are reviewed at each reporting date and adjust to reflect the current best estimates.
(i) (a) BoD has approved the Equity participation (committed), not exceeding ? 10.00 crore in Wholly Onwned
Subsidiary, Ircon Vadodara Kim Expressway limited (IVKEL) Further, BoD has approved interest free loan not exceeding ? 195.74 crore for IVKEL which has been paid. Further, this includes fair value of the financial guarantee of ?0.24 crore issued by IRCON to Bank of Baroda on behalf of and in respect of term loan facility availed by IVKEL.
(b) Board of Directors have approved Interest free loan, of ? 114.11 crore (31st March, 2023: ? 114.11 crore) in favour of Jharkhand Central Railway Limited (JCRL).
(c) Includes fair value of the financial guarantee of ?0.83 crore (as on 31st March, 2023 ? 0.83 crore) issued by IRCON to Punjab National Bank on behalf of and in respect of term loan facility availed by Ircon Davangere Haveri Highway Limited ( IDHHL), Wholly Owned Subsidiary. Further, BoD has approved interest free loan not exceeding ? 13.86 crore for IDHHL which has been paid.
(d) BoD has approved the Equity participation (committed), not exceeding ? 5 Lakh in Wholly Owned Subsidiary, Ircon Gurgaon Rewari Highway Limited(IGRHL). Further, BoD has approved interest free loan not exceeding ? 103.18 crore for IGRHL out of which ? 88.35 crore (31st March, 2023: 71.35 crore) has been paid. Additionally, this includes fair value of the financial guarantee of ? 0.07 crore issued by IRCON to Indian Overseas Bank on behalf of and in respect of term loan facility availed by IGRHL.
(e) BoD has approved interest free loan not exceeding ? 30.60 crore (31st March, 2023 15.60 crore) for Chhattisgarh East Railway Limited (CERL) which has been paid accordingly.
(f) BoD has approved the Equity participation (committed), not exceeding ? 3.80 crore in Ircon Renewal Power Limited (IRPL). Further, BoD has approved interest free loan not exceeding ? 108.03 crore in IRPL out of which ? 88.24 crore (31st March, 2023: ? 38 crore) has been paid.
(g) Includes fair value of the financial guarantee of ? 0.19 crore (31st March, 2023 ? 019 crore) issued by Ircon to State Bank of India on behalf of and in respect of term loan facility availed by Ircon Shivpuri Guna Tollway Limited (ISGTL).
(h) The Company vide board approval dated 12th August, 2021 has waived interest on its loan given to IRCON PB Tollway Limited for the period 1st October, 2019 till 31st March, 2024 and deferment of balance interest till repayment of principal. The said waiver has been considered as Investment in subsidiary by the Company in accordance with provision of Ind AS. Accordingly ? 60.75 crore (31st March, 2023: ? 65.62 crore) has been included in above.
(i) BoD has approved the Equity participation (committed), not exceeding ? 17.16 crore, out of which 4.34 crore has been paid to Ircon Akloli-Shirsad Expressway Limited (IASEL). Further, BoD has approved interest free loan not exceeding ? 154.43 crore for IASEL out of which ?51.54 crore (31st March, 2023 ? 51.44 crore) has been paid. Additionally, this includes fair value of the financial guarantee of ? 0.18 crore issued by IRCON to Bank of Baroda on behalf of and in respect of term loan facility availed by IASEL.
(j) BoD has approved the Equity participation (committed), not exceeding ? 14.27 crore, out of which 3.62 crore has been paid to Ircon Ludhiana Rupnagar Highway Limited (ILRHL). Further, BoD has approved interest free
loan not exceeding ? 128.43 crore for ILRHL out of which ? 54.42 crore (31st March, 2023 ? 0.89 crore) has been paid. Additionally, this includes fair value of the financial guarantee of ? 0.18 crore issued by IRCON to Bank of Baroda on behalf of and in respect of term loan facility availed by ILRHL.
(k) BoD has approved the Equity participation (committed), not exceeding ? 20.58 crore, out of which 5.20 crore has been paid Ircon Bhoj Morbe Expressway Limited (IBMEL). Further, BoD has approved interest free loan not exceeding ? 185.27 crore for IBMEL out of which ? 51.42 crore (31st March, 2023 ? 6.73 crore) has been paid. Additionally, this includes fair value of the financial guarantee of ? 0.13 crore issued by IRCON to Bank of Baroda on behalf of and in respect of term loan facility availed by IBMEL.
(l) BoD has approved the Equity participation (committed), not exceeding ? 5 lakh for WOS, Ircon Haridwar Byepass Limited (IHBL). Further, BoD has approved interest free loan not exceeding ? 111.85 crore for IHBL out of which ? 82.37 crore (31st March, 2023 ? 82.17 crore) has been paid. Additionally, this includes fair value of the financial guarantee of ? 0.23 crore issued by IRCON to State Bank of India on behalf of and in respect of term loan facility availed by IHBL.
(m) Board of Directors have approved Interest free loan, of ? 84.50 crores (31st March, 2023 ? 52 crore) in favour of Mahanadi Coal Railway Limited (MCRL) which has been paid. Further, It has been decided to handover Phase- I (Angul - Balram, 14 KM already operational) and Phase- II (Balram-Putgadia-Tentuloi,54 KM under construction)of MCRL Project to Ministry of Railways (MoR). The legal formalities, pricing and related modalities are in process and the Company does not foresee any impairment in the value of investment at this stage.
(n) BoD has approved interest free loan not exceeding ? 16.12 crore for Chhattisgarh East-West Railway Limited (CEWRL) which has been paid accordingly.
(o) The Interest free loan as per "(i) a to n" above will be repaid only on winding up of the SPVs/JV or end of concession period which ever is later.
(ii) Includes fair value of the financial guarantee for ? 0.28 crore issued by IRCON to Punjab National Bank on behalf of and in respect of term loan facility availed by ISTPL. Loan outstanding as on 31st March, 2024 is Nil (as on 31st March, 2023 Nil).
(iii) "Ministry of Railways" (MoR) vide its letter No. 2011/LMB/22/1/39 dated 18.10.2021 had communicated ‘inprinciple' decision for closure of Indian Railway Station Development Corporation Limited (IRSDC) and transfer/ handover of its business to RLDA/MoR. Accordingly, as part of the closure activities, all assets and liabilities (except investments in SITCO and GARUD) are to be transferred to RLDA/MoR on slump sale basis for a consideration not less than the book value as on the cutoff date to be mutually agreed upon as approved in the 59th BoD meeting held on 07.11.2022 of IRSDC. Closure related activities initiated in FY 2021-22 are yet to be completed. The Liquidation process shall commence on completion of these activities and handing over of assets and liabilities to RLDA/MoR. Financial statement of IRSDC has been prepared on liquidation basis and the Company does not foresee any impairment in the value of investment at this stage.
(iv) Ministry of Railway (MoR) has granted in-principle approval for closure of Bastar Railway Private Limited, a joint venture company and transfer of its assets and liabilities to MoR. The legal formalities, pricing and related modalities are in process and the Company does not foresee any impairment in the value of investment at this stage.
(ii) Nature and Purpose of Other Reserves:
(a) Retained Earnings
Retained Earnings represents the undistributed profits of the Company.
(b) General Reserve
General Reserve represents the statutory reserves, this is in accordance with Corporate Law wherein a portion of profit is apportioned to General Reserve. Under Companies Act, 2013, the transfer of any amount to General Reserve is at the discretion of the Company.
(c) Capital Redemption Reserve
The Company has created Capital Redemption Reserve out of the profits after Buy Back of shares on 26th December 2017.
(d) Items of Other Comprehensive Income
Other Comprehensive Income represents balance arising on account of exchange difference on translation of foreign operations.
19.2 Other Provisions :
Disclosures as per Ind AS 37 regarding nature of provisions and movements in provisions are as follows :
a) Demobilisation Provisions
The Company has made provision for demobilisation to meet the expenditure towards demobilisation of manpowerand plant & equipment in respect of foreign projects.
b) Maintenance Provisions
- In Cost Plus contract, no provision for maintenance is required to be made where cost is reimbursable.
- Item Rate and Lump Sum turnkey contracts, provision is made for maintenance to cover company's liability during defect liability period keeping into consideration the contractual obligations, obligations of the subcontractor, operating turnover and other relevant factors
c) Onerous Contracts
The Company has a contract where total contract cost exceeds the total contract revenue. In such situation as per Ind AS 115 and Ind AS 37 the Company has to provide for these losses. The provision is based on the estimate made by the management.
d) Legal Cases
Provision for legal cases represents liabilities that are expected to materialise in respect of matters in courts, arbitrations and appeal.
e) Provisions for Other Expenses
Provision for other expenses represents expected liabilities in respect of indirect taxes and Others
(i) (a) Terms and Conditions of the unsecured Loan :
The Company has raised a loan from Indian Railway Finance Corporation ("IRFC") of ? 3200 crore as on 28th March 2018 which in turn have been paid to Railway Land Development Authority ("RLDA") in terms of lease agreement. As per the Memorandum of understanding ("MOU") entered between RLDA and the Company, all instalments of principal and interest, as also any default or additional interest, and other costs, expenses and charges associated with the loan (or otherwise payable under or pursuant to the Loan Agreement), shall be paid by RLDA to the Company. The repayment of principal of the Loan Amount shall be made in 5 (five) equal instalments commencing from April 15, 2019. [Refer note 8.3 (Foot note (ii)].Companies Act has been complied with for such transactions and the transactions are not violative of any applicable Act.
(b) Rate of Interest :
(i) The Company will pay interest on the principal amount of the Loan advanced and outstanding from time to time, at the rate of 8.77% (Eight point seven seven percent) per annum ("Applicable Interest rate") (exclusive of
applicable interest tax, service tax and / or any such other taxes / levies / duties). Such taxes / levies / duties, if any, applicable, shall be payable (in the same manner and time as the principal and interest) by the Borrower to the Lender over and above the rates specified above.
(ii) The Applicable Interest Rate shall be fixed for currency of loan term.
(c) Termination of the Memorandum of understanding (MOU) :
Upon the occurrence of certain identified events the MOU would stand terminated, whereupon Ircon would be substituted by such entity as agreed to between IRFC, IRCON, RLDA & Ministry of Railways (MoR). MoR would be entitled to pre pay the entire outstanding under the Loan Agreement on termination of this agreement.
(d) Offsetting the Loan from IRFC and Recoverable from RLDA :
As per para 2.4 of the Memorandum of understanding (“MOU") entered between RLDA and the Company, all instalments of principal and interest, as also any default or additional interest, and other costs, expenses and charges associated with the loan (or otherwise payable under or pursuant to the Loan Agreement), shall be paid by RLDA to the Company.
Company has a legally enforceable right to set off the loan liability regarding IRFC and recoverable from RLDA as per MOU and have the financial arrangement to settle the loan from IRFC with the proceeds realised from RLDA simultaneously. Accordingly, as per provision of IND AS-32 amount recoverable from RLDA and loan from IRFC has been offset and the net amount presented in the balance sheet.
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties. The following methods and assumptions were used to estimate the fair values:
i) The fair value of investments in mutual fund units is based on the Net Asset Value (‘NAV') as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors
ii) Investment in subsidiaries and joint ventures are classified as equity investments have been accounted at historical cost. since these are scope out of Ind AS 109 for the purposes of measurement, the same have not been disclosed in the tables above.
* During the financial year 2023-24 and 2022-23, there were no transfer between Level 1, Level 2 and Level 3 fair value measurements.
31 B. Financial Risk Management
The Company's principal financial liabilities comprise borrowings, trade, lease liability and other payables. The Company's principal financial assets include loans to related parties, trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Company also holds investment in mutual funds, tax free bonds and Government securities. The Company's activities expose it to some of the financial risks: market risk, credit risk and liquidity risk.
a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of changes in market prices. Market risk comprises Foreign currency risk and Interest rate risk. Financial instruments affected by market risk includes borrowings, trade receivables, trade payable and other non derivative financial instruments.
(i) Foreign Currency Risk
The Company operates internationally and is exposed to insignificant foreign currency risk (since receipts & payments in foreign currency are generally matched) arising from foreign currency transactions, primarily with respect to the USD, EURO, BDT, DZD, LKR, JPY, MMK and ZAR. Significant foreign currency risk of group are naturally hedged.
As of March 31, 2024 and March 31, 2023, every 5% increase or decrease of the respective foreign currency would impact our profit before tax by approximately ? 2.45 crore and ? 5.67 crore respectively.
(ii) Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of change in market interest rate. The company manages its interest risk in accordance with the companies policies and risk objective. Financial instruments affected by interest rate risk includes tax free bonds, Govt. Securities and deposits with banks. Interest rate risk on these financial instruments are very low as interest rate is fixed for the period of financial instruments. Also, the Company does not have any interest risk on loans / borrowings as it bears fixed rate of interest.
b) Credit Risk
The Company's customer profile include Ministry of Railways, Public Sector Enterprises, State Owned Companies in India and abroad. Accordingly, the Company's customer credit risk is low. The Company's average project execution cycle is around 24 to 36 months. General payment terms include mobilisation advance, monthly progress payments with a credit period ranging from 45 to 60 days and certain retention money to be released at the end of the project. In some cases retentions are substituted with bank / corporate guarantees. The Company has a detailed review mechanism of overdue customer receivables at various levels within organisation to ensure proper attention and focus for realisation.
c) Liquidity risk
The Company manages liquidity risk by maintaining sufficient cash and marketable securities and by having access to funding through an adequate amount of committed credit lines. The treasury department regularly monitors the position of Cash and Cash Equivalents vis-a-vis projections. Assessment of maturity profiles of financial assets and financial liabilities and maintenance of Balance Sheet liquidity ratios are considered while reviewing the liquidity position.
The Company's investment policy and strategy are focused on preservation of capital and supporting the Company's liquidity requirements. The senior Management of the Company oversees its investment strategy and achieve its investment objectives. The Company typically invests in government of India debt bonds and mutual funds. The policy requires investments generally to be investment grade, with the primary objective of minimising the potential risk of principal loss.
The NHAI bonds bear a fixed rate of interest thus they are not affected by the change in bond yield rates and the mutual funds are highly liquid assets which are paid out monthly and re-invested.
d) Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company's performance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the Company's policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
31 C. Capital Management
The Company objective to manage its capital in a manner to ensure and safeguard their ability to continue as a going concern so that the Company can continue to provide maximum returns to shareholders and benefit to other stakeholders. The Company has paid dividend as per the guidelines issued by Department of Investment and Public Asset Management (DIPAM) as follows :-
The BoD has recommended a final Dividend of ? 1.30 per equity share on face value of ?2/- for the financial year 202324, subject to the approval of the shareholders at the AGM. This is in addition to Interim Dividend paid @ 1.80 per equity share on face value of ? 2/-.
Further, the Company manages its capital structure to make adjustments in light of changes in economic conditions and the requirements of the financial covenants.
32. Employee Benefits
Disclosures in compliance with Ind AS 19 “Employee Benefits" are as under:
(a) Defined Contribution Plans - General Description
Pension
The Company has implemented IRCON Defined Contribution Superannuation Pension Scheme, 2009 i.e. April 01, 2009, for all regular employees drawing pay in IDA scale irrespective of their length of service except for those employees who joined before January 01, 2017 but would superannuate/resign after January 01, 2017, before completing 15 years of service, in such case Employer contribution towards pension would be effective from January 01, 2017 only. The scheme was managed by a Separate Trust formed in the year 2015-16 for this purpose and approved by the Income Tax Authorities.
In FY 2023-24, the Board of Directors in its 286th meeting held on 11th May, 2023 has approved for shifting of IRCON Defined Contribution Superannuation Pension Scheme, 2009 maintained with LIC to National Pension Scheme (NPS).
Company's share of contribution amounting to ? 9.35 crore (? 9.17 crore) has been paid and accounted for during the FY 2023-24 out of which ? 4.72 crore for the period from October 1st ,2023 to March 31st, 2024 has been paid to NPS.
(b) Defined Benefit Plans - General Description
Provident fund
The Company pays fixed contribution of Provident Fund at a pre-determined rate to a separate trust ( IRCON Contributory Provident Fund Trust), which invests the funds in permitted securities. The trust is required to pay a minimum rate of interest on contribution to the members of the trust. The trust is approved by the Income Tax Authorities. The Company has an obligation to make good the shortfall, if any, between the return form the investment of the trust and the interest payment based on the notified interest rate.
During the period, the Company has contributed ? 15.78 crore (? 13.64 crore) to the trust towards employer's contribution for providend fund.
Gratuity
The Company has implemented IRCON Employees Group Gratuity Scheme to provide financial assistance to the employees of the Company as a social security measure on the termination of their employment due to superannuation, retirement, resignation, physical incapacitation or death. The scheme is managed by a separate trust formed in the year 2015-16 for this purpose and approved by the Income Tax Authorities. Funds of the Trust are managed by LIC of India. As at March 31, 2024 a liability of ? 3.81 crore (? 7.17 crore) has been booked in the books of accounts based on the actuarial valuation.
Post Retirement Medical Benefit (PRMB)
The Company had established an irrevocable trust by initial one-time contribution of ? 12.00 crore during the year 2000-01 for providing annuity, medical and other benefits to the spouse of employees who die in harness as a voluntary welfare measure for which the Company is not liable for providing such benefit to its employees. Further, the Company provides medical benefits to its emolpyees (and spouse) who superannuate from the Company. The Company has contributed ? 5.17 crore (? 5.26 crore) based on DPE guidelines on Superannuation Benefits.
Other Retirement Benefits - General Description
Other retirement benefits include settlement at home-town or to the place where he/she or his/her family intends to settle in India including Baggage Allowance. The liability on this account is recognized on the basis of actuarial valuation.
The summarised position of various employee benefits recognised in the statement of profit and loss and balance sheet as on March 31, 2024 is as under:
Risk analysis
Company is exposed to a number of risks in the defined benefit plan. Most significant risks pertaining to defined benefits plan, and management's estimation of the impact of these risks are as follows:
a) Interest risk
A decrease in the interest rate on plan assets will increase the plan liability.
b) Longevity risk/ Life expectancy
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.
c) Salary growth risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.
(vi) Government Related Entities:
The Company is a Central Public Sector Enterprise (CPSE) under the Ministry of Railways. The Company is controlled by Government of India (GOI), by holding 65.17 % of equity shares in the name of President of India as at 31st March, 2024. Pursuant to Para 25 and 26 of Ind AS 24, entities over which the same government has control or joint control of, or significant influence, then the reporting entity and other entities shall be regarded as related parties. Transactions with these parties are carried out at market terms at arm length basis. The Company has applied the exemption available for government related entities and have made limited disclosures in the financial statements.
35. Earnings Per Share
Disclosure as per Ind AS 33 ‘Earnings per share'
Basic EPS is calculated by dividing the profit for the year attributable to equity holders by the weighted average number of equity shares outstanding during the year.
Diluted EPS is calculated by dividing the profit for the year attributable to the equity holders after considering the effect of dilution by 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.
36. Impairment of Assets
During the year, Company has carried out assessment on impairment of individual assets by working out the recoverable amount based on lower of the net realizable value and carrying cost in terms of Ind AS 36, “Impairment of Assets" notified under section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian accounting standards) Amendment Rules 2016. Accordingly, impairment loss of Nil (Nil) has been provided for."
37. Provisions, Contingencies and Commitments
(i) Provisions
The nature of provisions provided and movement in provisions during the year as per Ind AS 37 ‘Provisions, Contingent Liabilities and Contingent Assets' are disclosed in Note 19.
(ii) Contingent Liabilities
Disclosure of Contingent Liabilities as per Ind AS 37 ‘Provisions, Contingent Liabilities and Contingent Assets' are as under:
Foot Note:
1. The Income Tax Authority have raised demands on account of various disallowances pertaining to different assessment years. Many of these matters were adjudicated in favour of Company but are disputed before higher authorities by the concerned departments. The Company is contesting these demands, which are pending at various appellate levels. Based on the advice from the independent tax experts and the developments on the appeals, the management is confident that additional tax so demanded will not be sustained on completion of the appellate proceedings and accordingly, pending the decision by the appellate authorities, no provision has been made in these financial statements.
2. There are various disputes pending with authorities of excise, customs, service tax, sales tax, VAT etc. The Company is contesting these demands raised by concerned authorities and are pending at various appellate authorities. Based on the grounds of appeal and advice of the independent legel experts, the management believes that there is reasonable strong likelihood of succeeding before the various authorities. Pending the final decisions on the above, no adjustment has been made in these financial statements. The above disputed indirect tax demands includes ? 181.90 crore which is reimbursable from clients.
3. In case of International Metro Civil Contractor, a Joint Operation of the Company, there is disputed demand pending with the sales tax authorities amounting to ? 3.07 crore (? 3.33 crore) on account of disallowance of labour expenses. The joint operation had filed appeals before the appropriate appellate authorities against the demand. The decision is pending before the appellate authorities and therefore, no provision has been made in the financial statements.
4. The Company is a party to several legal suits on construction contract terms related disputes, pending before various courts and arbitration proceedings in India and aboard. Some of the contractors have lodged claims on the company seeking enhancement of the contract price, revision of work schedule with price escalation, compensation for the extended period of work, idle charges etc. These claims are being contested by the company as being not admissible in terms of provisions of the respected contracts. Against a total claim of ? 613.53 crore (? 701.86 crore), provision of ? 60.99 crore (? 77.35 crore) has been made and balance ? 552.54 crore (? 624.50 crore) is shown as contingent liability. The Company has also made counter claims on the contractors admissible as per the terms of the contract of ? 222.44 crore (? 333.31 crore). Interest on claims is not considered, being unascertainable.
5. One of the contractor, M/s Sai Engineers has filed suit against International Metro Civil Contractor for an amount of ? 0.02 crore (? 0.02 crore) for dispute on contract terms. The decision is pending before the appellate authorities and therefore, no provision has been made in the financial statements.
6. There are some cases relating to employees/others are pending in the Courts against the Company in respect of which the liability is not ascertainable.
7. (i) The Company has given letter of comfort on behalf of its subsidiary company, Ircon Infrastructure and
Services Limited for an amount of ? 2.05 crore (? 11.39 crore) for performance guarantee submitted to client. (ii) The Company has given corporate guarantee to various Banks on behalf of and in respect of term loan facility for its subsidiary companies for an amount of ? 3,841.87 crore (? 4,565.99 crore). The term loan availed (net of repayment) by the subsidiary companies as on 31.03.2024 is ? 1,575.27 crore (?1,464.21 crore).
(iii) Contingent Assets
Disclosure of Contingent Assets as per Ind AS 37 ‘Provisions, Contingent Liabilities and Contingent Assets' is as under:
(a) Claims raised by company on some of its clients and awarded by arbitrators in favour of company against which clients have gone to court not accounted for as receivables are ? 461.40 crore (? 461.17 crore) including interest calculated up to 31.03.2024 as per arbitration award.
(b) Counter Claims raised by company on sub-contractors and awarded by arbitrators in favour of company against which sub-contractors have gone to court, not accounted for as receivables are ? 14.16 crore (? 22.48 crore).
(c) Insurance Claim of USD 0.95 Mn (USD 0.93 Mn) and Ethiopian Birr 1.34 Mn (Birr 1.28 Mn) equivalent to ? 8.03 crore (? 7.79 crore) including interest calculated upto 31.03.2024 awarded by Honourable Supreme Court of Ethiopia in favour of company has not been accounted for, pending execution order by High Court of Ethiopia.
* The Company's Board of Directors (BoD) has approved a resolution on 11th May, 2023 to increase the loan commitment
in three Joint Venture Companies. Accordingly, the changes in the commitment has been disclosed.
4. Company's Non Fund based limits earmarked for issuance of bank guarantee to subsidiary companies amounts to ? 747.95 crore (? 738.61 crore). Out of the said limit, bank guarantees to the extent of ? 461.07 crore (? 447.03 crore) has been utilised as on 31.03.2024.Therefore, the balance limit for issuance of bank guarantee is ? 286.88 crore (? 291.58 crore).
5. The Company has given corporate guarantee to various Banks on behalf of and in respect of term loan facility for its subsidiary companies for an amount of ? 3841.87 crore (? 4565.99 crore). The subsidiary companies have availed term loan of ? 1,795.54 crore (? 1758.82 crore) till 31.03.2024. During the year, the subsidiary companies have repaid an amount of ? 220.27 crore (? 294.61 crore) against these term loans and the term loan balance as on 31.03.2024 is ? 1,575.27 crore (? 1464.21 crore).
6. (i) The Company along with SECL (Sponsors) have executed Sponsor's Support Agreement on behalf
of its Joint Venture, Chhattisgarh East West Railway Ltd.(CEWRL), wherein it has been stated that in case of termination of the Concession Agreement due to an event of default by the Borrower prior to the achievement of the Commercial Operation Date the Sponsors shall meet any shortfall in the Debt Service obligations of the Borrower, to the satisfaction of the Lenders, without recourse to the Borrower and/or the Project. IRCON's share as per the given amount of Rupee Term Loan is ? 1033.76 crore (26% of total loan of ? 3976 crore) as on 31st March 2024 (31st March, 2023: ? 1033.76 crore).
(ii) The Company along with CCL (Sponsors) have executed Sponsor's Support Agreement on behalf of its Joint Venture, Jharkhand Central Railway Ltd. (JCRL), wherein it has been stated that in case of termination of the Concession Agreement due to an event of default by the Borrower prior to the achievement of the Commercial Operation Date the Sponsors shall meet any shortfall in the Debt Service obligations of the Borrower, to the satisfaction of the Lenders, without recourse to the Borrower and/or the Project. IRCON's share as per the given amount of Rupee Term Loan is ? 327.60 crore (26% of total loan of ? 1259.75 crore) as on 31st March 2024 (31st March, 2023: ? 327.60 crore)
(iii) The Company along with SECL and CSIDCL (Sponsors) have executed Sponsor's Support Agreement on behalf of its Joint Venture, Chhattisgarh East Railway Ltd.(CERL), wherein it has been stated that in case of termination of the Concession Agreement due to an event of default by the Borrower prior to the achievement of the Commercial Operation Date the Sponsors shall meet any shortfall in the Debt Service obligations of the Borrower, to the satisfaction of the Lenders, without recourse to the Borrower and/or the Project. IRCON's share as per the given amount of Rupee Term Loan is ? 350.74 crore (26% of total loan of ? 1,349.00 crore) as on 31st March 2024 (31st March, 2023: ? NIL).
7. The Company has committed to grant loan (Unsecured interest free/ Unsecured interest-bearing) upto an aggregate amount of ? 500 crore at any time to Special Purpose Vehicles (SPVs) formed as wholly owned subsidiary (WOS) companies in India for executing road/ highway project of NHAI, in addition to limits already approved BoD.
8. There is an outstanding Letter of Credit as on 31st March, 2024 amounting to ? 3.42 crore (31st March, 2024 ? 74.53 crore).
(i) The ratio is not material due to offsetting of loan from Indian Railway Finance Corporation with amount recoverable from Rail Land Development Authority and low value of lease liability. However, the variation in ratio is high only due to change in lease liability.
(ii) Average inventory has decreased in comparison to previous year.
(iii) Increase in operating expenditures due to corresponding increase in operating revenue.
(iv) Cost of goods sold includes project expenditures.
(v) Increase in project expenses due to corresponding increase in operating revenue.
(vi) Average trade payable has decreased in comparison to previous year.
b) The Company do not have any transactions with companies struck off in current year and previous year.
c) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period in current year and previous year.
d) The Company have not traded or invested in crypto currency or virtual currency during the current year and previous year.
e) The Company have not advanced or loaned or invested funds to any other person(s) or entity(is), including foreign entities (Intermediaries) with the understanding that the Intermediary shall in current year and previous year:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
f) The Company have not received any fund from any person(s) or entity(is), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall in current year and previous year:
(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
g) The Company does not have any transaction which is not recorded in the books of accounts that has been subsequently surrendered or disclosed as income during the year as part of the on going tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961) in current year and previous year.
h) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property in current year and previous year.
i) The Company has not been declared as willful defaulter by any bank or financial institution or government or any government authority in current year and previous year.
j) The Company has complied with the number of layers prescribed under the Companies Act, 2013 in current year and previous year.
46. Recent pronouncement
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated March 31, 2023 to amend the following Ind AS which are effective for annual periods beginning on or after April 1, 2023. The Company applied for the first-time these amendments:
(i) Definition of Accounting Estimates - Amendments to Ind AS 8
The amendments clarify the distinction between changes in accounting estimates, changes in accounting policies and the correction of errors. It has also been clarified how entities use measurement techniques and inputs to develop accounting estimates.
The amendments had no impact on the Company's financial statements
(ii) Disclosure of Accounting Policies - Amendments to Ind AS 1
The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant' accounting policies with a requirement to disclose their ‘material' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures..
The amendments have had an impact on the Company's disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Company's financial statements.
(iii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12
The amendments narrow the scope of the initial recognition exception under Ind AS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases.
As a result of these amendments, the Company has to recognize a separate deferred tax asset in relation to its lease liabilities and a deferred tax liability in relation to its right-of-use assets. Since, these balances qualify for offset as per the requirements of paragraph 74 of Ind AS 12, there is no impact in the balance sheet.
47. Other disclosures
a) (i) The company has been claiming deduction under section 80 IA from AY 2000-01 to AY 2019-20. The deduction under section 80 IA has been allowed by Income Tax appellate Tribunal (ITAT). However, Income Tax Department has filled appeal before High Court against order of ITAT for the AY 2000-01. Upto AY 2019-20 company was offering global income for tax in India after excluding the income in accordance with DTAA agreements where income earned from foreign countries are excluded from global income offered for taxation. The company was allowed exclusion method upto AY 2005-06, thereafter credit against taxes paid in foreign countries have been allowed from taxes computed on global income by department. After paying the due tax the issue has been contested by filing appeals. This issue has been allowed in favour of Ircon by ITAT.
(ii) The provision for income tax w.r.t earlier years has been written back / income tax expenses has been reversed amounting to. ? NIL (? 78.53 crores) account of favourable orders received from Income tax authorities.
b) There are certain other matters pending in litigations against the Company before various courts and appellate authorities on account of claims by some contractors in cost plus projects. In such cases, the Company envisages reimbursement from the Clients in full as per the terms of contract and expects no economic outflow of resources. In this respect, a total claim of ? 1702.41 crore (? 1,984.19 crore) is under litigation, for which provision of ? NIL (? 6.59 crore) has been made and reimbursed by the client. The Company has also made counter claims on the contractors of ? 120.64 crore (? 340.09 crore). Interest on claims is not considered, being unascertainable.
c) Hon'ble High Court has permitted to release an arbitration award, amounting to ? 97.96 Crore against NHAI for UP-05 ,Orai Highway Project against submission of bank guarantee of equivalent amount. The company has provided liability of equivalent amount till final decision of the Court.
d) The Company has a system of obtaining periodic confirmation of balances from banks and other parties. So far as trade/other payables and loans and advances are concerned, the balance confirmation letters were sent to the parties. Balances of some of the Trade Receivables, Other Assets, Trade and Other Payables are subject to confirmations/reconciliations and consequential adjustment, if any. Reconciliations are carried out on ongoing basis. However, management does not expect to have any material financial impact of such pending confirmations / reconciliations.
e) Certain reclassifications and recasting have been made to the comparative period's financial statements to enhance comparability with the current year's financial statements. These reclassifications have no effect on the reported results of operations.
f) Previous year figures are shown under bracket () to differentiate from current year figures.
g) In the opinion of the management, the value of assets, other than property, plant and equipment and non-current investments, on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.
As per our Report of even date attached For and on behalf of Board of Directors
For Ramesh C Agrawal and Company Sd/- Sd/-
Chartered Accountant Ragini Advani Ashish Bansal
FRN : 001770C Director (Finance) Chairman & Managing Director
DIN-09575213 and CEO
DIN-10328174
Sd/- Sd/- Sd/-
Sanjay Agrawal B. Mugunthan Pratibha Aggarwal
Partner Chief Financial Officer Company Secretary
M. No. 072867 FCS No. 8874
Place : New Delhi Date : 21st May, 2024
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