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Bharat Heavy Electricals
BSE: 500103|NSE: BHEL|ISIN: INE257A01026|SECTOR: Infrastructure - General
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« Mar 13
Notes to Accounts Year End : Mar '14
S.  Description                            2013-2014      2012-2013
 No.
 
 1 Contingent liabilities:
 
 Claims against the company not acknowledged as debt :
 
 i) a) Income Tax Pending Appeals 
        Rs. in Crore                           0.90          34.05
 
 b) Against which paid under protest 
    included under the head Deposits       
    Rs. in Crore                               0.00           0.00
 
 ii) a) Sales Tax Demand Rs.in Crore        1343.70         876.47
 
 b) Against which paid under protest 
 included under the head Deposits 
 Rs. in Crore                                190.51         121.85
 
 iii) a) Excise Duty demands Rs.in Crore     489.55         333.56
 
 b) Against which paid under protest 
 included under the head Deposits 
 Rs.in Crore                                  17.75           8.52
 
 iv) a) Custom Duty demands Rs.in Crore        3.14           0.21
 
 b) Against which paid under protest 
 included under the head Deposits 
 Rs.in Crore                                   2.89           0.06
 
 v) Court & Arbitration cases Rs.in Crore   1033.88         726.38
 
 vi) a) Liquidated Damages Rs.in Crore      4347.41        3376.67
 
 b) Amount deducted by customers towards 
 LD included in
 vi)a Rs. in Crore                          2672.49        2004.98
 
 vii) Counter Claim by contractors 
      Rs.in Crore                              0.77           0.61
 
 viii) a) Service Tax Demand Rs.in Crore     291.71         165.41
 
 b) Against which paid under protest Rs.in 
   Crore                                       0.61           0.01
 
 ix) Others Rs.in Crore                       65.31          56.54
 
 x) Corporate Guarantee given on behalf of 
 subsidiary company Rs.in Crore                0.00           6.56
 
 (In view of the various court cases and litigations and claims disputed
 by the company financial impact as to outflow of resources is not
 ascertainable at this stage).
 
 2 a) Cash credit limit from banks aggregating to Rs. 5000 Crore (previous
 year Rs. 5000 Crore) and Companys counter guarantee / indemnity
 obligations in regard to bank guarantee / letters of credit limit
 aggregating to Rs. 50000 Crore (previous year Rs. 50000 Crore) sanctioned
 by the consortium banks are secured by first charge by way of
 hypothecation of raw materials, components, work in progress, finished
 goods, stores, trade receivables and other current assets both present
 and future.  The outstanding bank guarantees as at 31.03.2014 is Rs.
 45007 Crore (previous year Rs. 41786 Crore).
 
 b) Corporate Guarantees outstanding as on 31.03.2014 isRs.3312.07 Crore
 (Previous yearRs.4717.71 Crore).
 
 3 Other payable/ liabilities include a sum of Rs. 100.51 Crore (previous
 year Rs. 100.51 Crore) towards guarantee fee demanded by the Government
 of India in respect of foreign currency loans taken by the Company at
 the instance of the Government upto 1990-91. The matter for its waiver
 has been taken up with the Government since there was no stipulation
 for payment of such guarantee fee at the time the loans (guaranteed by
 Government) were taken. Vide BHEL letter dated 05.09.2013, Department
 of Heavy Industries (DHI) has been again requested for waiver of the
 guarantee fee.
 
 4 Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon was taken on
 April 1, 1999 from Ministry of Non- conventional Energy Sources on
 lease for a period of 30 years. The formal lease agreement with the
 Ministry of Non-Conventional Energy Sources is yet to be finalised.
 
 5 Balances shown under Long term Trade receivable, Trade Receivables,
 Trade payables, contractors advances, deposits and stock/materials
 lying with sub-contractors/fabricators are subject to confirmation,
 reconciliation & consequential adjustment, if any. The reconciliation
 is carried out on ongoing basis as the Company is in the business of
 long term construction contracts & provisions, wherever considered
 necessary, have been made in line with the guidelines.
 
 6 The operations of the Tishreen Syrian project site, Libyan project
 site, Afganistan, Vietnam, Belarus have been consolidated based on the
 unaudited accounts maintained at the regional headquarter at Noida.
 
 7 The details of Research & Development Expenditure incurred during
 the year which is deductible (other than land & building) under section
 35 (2AB) of the Income Tax Act, 1961.
 
 8 The disclosure relating to derivative instruments:
 
 a) The derivative instruments that are hedged and outstanding as on
 31.03.2014 is Nil (previous year Nil).
 
 9 The disclosure relating to AS-15 (R) – Employee Benefits
 
 a) Gratuity Plan
 
 The gratuity liability arises on account of future payments, which are
 required to be made in the event of retirement, death in service or
 withdrawal. The liability has been assessed using projected unit credit
 actuarial method.
 
 c) Long Term Leave Liability (EL/NEL/HPL)
 
 The company provides for earned leave benefit and half pay leave to the
 employees of the company which accrue half yearly at 15 days (maximum)
 and 10 days respectively. 73.33% of the earned leave is encashable
 while in service and upto a maximum of 300 days on retirement. Half pay
 leave is encashable within 3 months prior to superannuation or on
 separation beyond the age of 50 years subject to the overall ceiling of
 480 days. The leave liability has been treated as other long term
 benefits and has been assessed using projected unit credit actuarial
 method.
 
 10 Related Party Transactions:
 
 i) Related Parties where control exists (Joint Ventures): Powerplant
 Performance Improvement Ltd.
 
 BHEL-GE Gas Turbine Services Pvt. Ltd.
 
 NTPC-BHEL Power Projects Pvt. Ltd.
 
 Raichur Power Corporation Ltd.
 
 Dada Dhuniwale Khandwa Power Ltd.
 
 Latur Power Company Ltd.
 
 ii) Other related parties (Key Management Personnel- Functional
 Directors: existing & retired):
 
 S/Shri B.P Rao, Atul Saraya (upto 30.11.2013), O.P Bhutani (upto
 31.05.2013), M.K. Dube (upto 31.07.2013), PK. Bajpai, R. Krishnan,
 W.V.K. Krishnashankar (w.e.f. 01.08.2013) and Atul Sobti (w.e.f.
 01.12.2013)
 
 11 Joint Ventures
 
 Pursuant to compliance of Accounting Standard-27 issued by the
 Institute of Chartered Accountants of India, relevant disclosures
 relating to Joint ventures are as follows:
 
 b) The provision for diminution in value of investment in Powerplant
 Performance Improvement Ltd. has been made since the company is under
 liquidation and the amount paid as equity is not recoverable.
 
 b) Liquidated damages are provided in line with the Accounting Policy
 of the Company and the same is dealt suitably in the accounts on
 settlement or otherwise. Contingent liability relating to liquidated
 damages is shown in item No. 5 of Note no. 31
 
 c) The provision for contractual obligation is made at the rate of 2.5%
 of the contract revenue in line with significant Accounting Policy
 No.15 to meet the warranty obligations as per the terms and conditions
 of the contract. The same is retained till the completion of the
 warranty obligations of the contract.  The actual expenses on warranty
 obligation may vary from contract to contract and on year to year
 depending upon the terms and conditions of the respective contract.
 
 12 Assets and Liabilities are classified between Current and
 Non-current considering 12 months period as operating Cycle.
 
 13 Item of expense and income less than Rs. One Lakh are not considered
 for booking under Prior Period Items.
 
 14 Amalgamation of erstwhile Bharat Heavy Plate & Vessels Limited ,
 Visakhapatnam with the Company
 
 a) The Board for Industrial and Financial Reconstruction (BIFR) vide
 its order dated August 29, 2013 sanctioned the Modified Draft
 Rehabilitation Scheme (MDRS) for envisaging merger of Bharat Heavy
 Plate & Vessels Limited (BHPV) (100 % subsidiary of BHEL) with the
 Company under Section 18(5) of Sick Industrial Companies (Special
 Provisions) Act, 1985 (SICA) with effect from appointed date i.e.
 October 01, 2011.
 
 b) The Company has made necessary filings with the Registrar of
 Companies on August 30, 2013 (effective date). The scheme of merger has
 accordingly been given effect in these accounts.
 
 c) Pursuant to the merger the assets and liabilities of the erstwhile
 Bharat Heavy Plate & Vessels Limited (whose principle business was
 design, fabrication, supply and erection of heat exchanges, columns,
 storage spheres, reactors and related products)were transferred to and
 vested on going concern basis in the Company with effect from the
 appointed date i.e. October 01, 2011.
 
 d) In terms of the Accounting Standard (AS) 14 - Accounting for
 Amalgamations, the scheme of amalgamation has been accounted for under
 the Pooling of Interests method wherein all the assets, liabilities
 and reserves & surplus/losses of the erstwhile BHPV Limited have been
 taken over at their book values as appearing in the books of accounts
 as on October 01, 2011.
 
 e) On the amalgamation of the BHPV with the Company, the share capital
 of BHPV stand cancelled without any further act or deed or instrument,
 from the Appointed Date. Since the Company holds 100% (along with its
 nominees) of the issued, subscribed and paid-up capital of BHPV,
 neither allotment of any new shares nor any payment was made to any
 person whatsoever in consideration or in lieu of the transfer and
 vesting of the Undertaking/ Business of BHPV in the Company.
 
 f) The paid up Equity Share Capital of Rs. 33.80 Crore appearing in the
 books of account of BHPV and the corresponding Investments of Rs. 1 in
 respect thereof appearing in the books of account of the Company stand
 cancelled and the difference arising there from amounting to Rs. 33.80
 Crore has been adjusted with capital reserves of the Company.
 
 g) Debit balance of Profit and Loss Account of the BHPV amounting to Rs.
 278.05 Crore as on 01.10.2011 have been adjusted against surplus
 balance in Statement of Profit and Loss of the Company.
 
 15 a) Revenue from operations and Profit before tax includes Rs. 105.04
 Crore and Rs. (-)186.55 Crore respectively of HPVP Unit (erstwhile BHPV)
 for the current year 2013-14.
 
 b) On account of amalgamation of Bharat Heavy Plate & Vessels Limited,
 the Companys wholly-owned subsidiary, with the company with effect from
 01 October, 2011, the results pertaining to the year ended 31st March,
 2014 are not comparable with that of the corresponding previous year.
 
 c) Previous years figures have been regrouped/rearranged wherever
 considered necessary.
 
 
 
 
Source : Dion Global Solutions Limited
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