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Bharat Heavy Electricals

BSE: 500103|NSE: BHEL|ISIN: INE257A01026|SECTOR: Infrastructure - General
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« Mar 14
Notes to Accounts Year End : Mar '15
1 Contingent liabilities:
 Claims against the company not acknowledged as debt :
 i) a) Income Tax Pending Appeals    Rs. in Crore     16.50      0.90
 b) Against which paid under 
 protest included under the head
 Deposits                          Rs. in Crore      0.70      0.00
 ii) a) Sales Tax Demand             Rs. in Crore   1519.28   1343.70
 b) Against which paid under 
 protest included under the head
 Deposits                          Rs. in Crore    267.66    190.51
 iii) a) Excise Duty demands         Rs. in Crore    530.85    489.55
 b) Against which paid under 
 protest included under the head
 Deposits                          Rs. in Crore     23.40     17.75
 iv) a) Custom Duty demands          Rs. in Crore      2.93      3.14
 b) Against which paid under 
 protest included under the head
 Deposits                          Rs. in Crore      2.83      2.89
 v) Court & Arbitration cases        Rs. in Crore    862.72   1033.93
 vi) a) Liquidated Damages           Rs. in Crore   4107.19   4347.41
 b) Amount deducted by customers
 towards LD included in vi)a         Rs. in Crore   2405.13   2672.49
 vii) Counter Claim by contractors   Rs. in Crore      0.61      0.77
 viii) a) Service Tax Demand         Rs. in Crore    458.95    291.71
 b) Against which paid under protest Rs. in Crore      4.36      0.61
 ix) Others                          Rs. in Crore    102.23     65.26
 (In view of the various court cases, litigations and claims disputed by
 the company, the outflow of resources is not ascertainable at this
 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. 55000 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 31.03.2015 is
 Rs. 44915 Crore (previous year Rs. 45007 Crore).
 b) Corporate Guarantees outstanding as on 31.03.2015 is Rs. 2752.27
 Crore (Previous year Rs. 3312.07 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 up to 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 by the company. The Company vide
 letter dated 09.02.15 has again requested Department of Heavy
 Industries (DHI) for waiver of the guarantee fee.
 4 Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon was taken on
 April 1, 1999 from Ministry of New and Renewable Energy (MNRE) on lease
 for a period of 30 years. The formal lease agreement with the Ministry
 of New and Renewable Energy (MNRE) is yet to be finalised.
 5 Balances shown under Trade Receivables, Long term Trade receivable,
 Trade payables, contractors advances, deposits and stock/ materials
 lying with sub-contractors/ fabricators are subject to confirmation,
 reconciliation & consequential adjustment, if any. As the Company is in
 the business of long term construction contracts, bills are raised on
 the customers as per contract by the units located at various places as
 per the approved billing schedule by the customer and the
 reconciliation is carried out on ongoing basis & provisions made,
 wherever considered necessary. Final reconciliation with customer is
 done on completion of project (Trial Operation and PG Test completed).
 The total receivables (including long term) are Rs. 42717 Crore,
 (including deferred debts Rs. 17267 Crore not due for payment). The
 amount reconciled with customer is around Rs. 1900 Crore against the
 outstanding amount of Rs. 5412 Crore in completed projects.
 6 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.
 7 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 & Company Secretary):
 CMD : Shri B. Prasada Rao,
 Functional Directors : S/Shri P. K. Bajpai, R Krishnan, W. V. K.
 Krishnashankar, Atul Sobti,
 T.N. Veeraraghavan (from 07.01.2015) & Company Secretary : Shri I.P.
 8 Assets and Liabilities are classified between Current and
 Non-current considering 12 months period as operating Cycle.
 9 Item of expense and income less than Rs. one Lakh are not considered
 for booking under Prior Period Items.
 10 a) The Company has revised the accounting policy for depreciation in
 line with Schedule II of the Companies Act, 2013. Assets, for which the
 estimated useful life based on the technical evaluation is different
 from the life given in the Schedule II, have been disclosed in
 significant accounting policy no.  7. Wherever applicable, depreciation
 is charged at the increased rate for double and triple shift as
 prescribed in Note no. 6 of Schedule II of the Companies Act 2013.
 b) Due to the revision in depreciation policy, the depreciation for the
 year is higher by Rs. 77.58 Crore and profit before tax for the year is
 lower to this extent. Further, an amount of Rs. 40.50 Crore (net of
 deferred tax Rs. 21.44 Crore) for assets, whose remaining useful life
 is NIL as at 1st April 2014, has been adjusted with the opening balance
 of retained earnings.
 11 There is an outstanding of Rs. 3376 Crore pertaining to 20 projects
 on hold due to various reasons like environment clearance, fuel
 linkage, land acquisition, fund constraints, force majeure etc. mainly
 hold imposed by BHEL due to strategic reasons. This includes Rs. 1845
 Crore outstanding for more than 3 years in respect of 11 projects.
 Total advance available against these 20 hold projects is Rs. 1109
 12 Previous year''s figures have been regrouped/ rearranged wherever
 considered necessary.
Source : Dion Global Solutions Limited
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