I. Nature of Operations
ITD Cementation India Limited (''ITD Cem'' or ''the Company'') was
incorporated in 1978 and is engaged in construction of a wide variety
of structures like maritime structures, mass rapid transport systems
(MRTS), dams & tunnels, airports, highways, bridges & flyovers and
other foundations and specialist engineering work. The activities of
the Company comprise only one business segment viz Construction.
a) Terms/rights attached to equity shares
The Company has only one class of equity shares having at par value of
Rs.10 per share. Each holder of equity shares is entitled to one vote
per share. The Company declares and pays dividends in Indian Rupees.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting,
except interim dividend.
During the year, the amount of per share dividend recognised as
distributions to equity share holders was Rs.2.00 (31 December 2011 :
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, if any. The
distribution will be in proportion to the number of equity shares held
by the shareholders.
b) Aggregate number of bonus shares issued, shares issued for
consideration other than cash and shares bought back during the period
of five years immediately preceeding 31 December 2012
The Company has not issued any bonus shares nor has there been any buy
back of shares during five years immediately preceeding 31 December
c) Out of the total issued capital, 2,526 (31 December 2011 : 2,526)
equity shares of Rs.10 each have been kept in abeyance pending final
settlement of rights issues.
Plant loan from financial institution (Secured)
Loan obtained from Tata Capital Limited for purchase of vehicles and
construction equipment which carries interest rate ranging between
12.75 to 13.75 percent per annum and are repayble in 36 to 60 monthly
installments. These loans are secured by first and exclusive charge on
vehicles and specific equipment financed by the Institution. Vehicle
loan from bank (Secured)
Loan obtained from HDFC Bank for purchase of vehicles which carries
interest rate 12 percent approx per annum and are repayble in 60
monthly installments. These loans are secured by hypothecation of the
vehicle purchased out of this loan.
Term loan - from bank (Unsecured)
Term loan obtained from Vijaya Bank carries interest rate of base rate
plus 2.50 percent per annum. These loans are repayable in six equal
monthly installments commencing from January 2013.
Term loan - from financial institution (Unsecured)
Term loan obtained from SREI Equipment Finance Private Limited carries
interest rate of 11.56 percent per annum. These loans are repayable in
29 monthly installments commencing from September 15, 2012.
The information on the allocation of the gratuity fund into major asset
classes and the expected return on each major class is not readily
available. However, the gratuity fund is invested in a Group Gratuity
policy invested with the Life Insurance Corporation and Birla Sunlife
Insurance. The fair value of plan assets with Life Insurance
Corporation and Birla Sunlife Insurance at 31 December 2012 areRs.0.13
lakhs (31 December 2011 :Rs.0.06 lakhs) and Rs.1,216.71 lakhs (31
December 2011 :Rs.1,081.08 lakhs) respectively. The management
understands that the assets in these portfolios are well diversified
and as such the long term return thereon is expected to be higher than
the rate of return on Government Bonds.
The overall expected rate of return on assets is determined based on
the market prices prevailing on that date, applicable to the period
over which the obligation is to be settled.
The estimates of future salary increases, considered in actuarial
valuation take account of inflation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
In respect of provident funds, the Guidance issued by the Accounting
Standards Board (''ASB'') of ICAI on implementing AS 15 states that
provident funds trust is set up by employers, which requires interest
shortfall to be met by the employer, needs to be treated as a defined
benefit plan. The Company''s provident fund does not have any existing
deficit or interest shortfall. In regard to any future obligation
arising due to interest shortfall (i.e. government interest to be paid
on provident fund scheme exceeds rate of interest earned on
investment), pending the issuance of the Guidance Note from the
Actuarial Society of India, the Company''s actuary has expressed his
inability to reliably measure the same.
The Company''s expense for the superannuation, a defined contribution
plan aggregates Rs.287.24 lakhs during the year ended 31 December 2012
(31 December 2011 :Rs.233.43 lakhs)
The Company''s expense for the provident fund aggregates Rs.687.17 lakhs
during the year ended 31 December 2012 (31 December 2011 :Rs.593.95
1 Segment reporting
The activities of the Company comprises of only one business segment
viz Construction. The Company operates in only one geographical segment
viz India. Hence the Company''s financial statements also represents the
2 Related Party Disclosures :
a) Names of related parties and description of relationship A
Enterprise where control exists
i) Holding Company
Italian-Thai Development Public Company Limited
ii) Subsidiary Company
ITD Cementation Projects India Limited
B Other related parties
AVR Infra Private Limited
ii) Joint Ventures (unincorporated)
ITD Cemindia JV
ITD - ITD Cem JV
ITD - ITDCem JV (Consortium of ITD - ITD Cementation)
iii) Key management personnel (KMP)
Mr. Adun Saraban - Managing Director
Mr. S. Ramnath - Chief Financial Officer
Mr. P. B. Patwardhan - Chief Financial Officer (resigned on 30 April
3 Trade receivables at 31 December 2012 include variation claims
recognised by the Company aggregating Rs.3,278 lakhs (31 December 2011
: Rs.3,455 lakhs) which are disputed by the customer. Out of this
claims amounting to Rs.2,346 lakhs (31 December 2011 : Rs.2,346 lakhs)
are a subject matter of arbitration. The Company has received
arbitration award in its favour in respect of the balance amount
ofRs.932 lakhs (31 December 2011 : Rs.1,109 lakhs) which have since
been challenged by the customer. Considering the legal opinion from
Company''s counsel in the matter, the management is reasonably confident
of recovery of these amounts.
4 Trade receivables as at 31 December 2012 include Rs. 3,384 lakhs (31
December 2011 : Rs.3,384 lakhs) representing interim work bills for
work carried out by the Company which have not been certified by
customers beyond normal periods of certification. The management is
reasonably confident of the certification and recovery of the same
progressively on these contracts based on past experience of the
Company, assessment of work done and the fact that these amounts are
not disputed by the customer and based on the legal opinion received on
5 Trade receivables at 31 December 2012 include Rs.1,140 lakhs (31
December 2011 : Rs.1,140 lakhs) relating to price escalation claims
which are disputed by the customer. The Company has received favourable
verdict from Dispute Redressal Board and also thereafter in Arbitration
in respect of these claims. The Customer has appealed against the
Arbitration Award. Management is reasonably confident of recovery of
this amount based on the above and independent legal opinion from
eminent legal counsel in the matter.
6 Trade receivables at 31 December 2012 include variation claims of
Rs.309 lakhs (31 December 2011 : Rs.309 lakhs) for which the Company
had received an arbitration award in its favour which has subsequently
been upheld by the District Court. The customer has challenged this
Court Order. However, based on the above arbitration award, Court Order
and legal opinion, management is reasonably confident of recovery of
7 Trade receivables and Unbilled work-in-progress at 31 December 2012
include Rs.616 lakhs (31 December 2011 : Nil ) and Rs.2,757 lakhs (31
December 2011 : Rs.2,757 lakhs), in respect of a contract which has
been rescinded by the Company and Rs.5,929 lakhs (31 December 2011 :
Rs.5,929 lakhs) in respect of another contract where the Company has
received a notice from the customer withdrawing from the Company the
balance works to be executed under the contract; besides the Company
has also issued guarantees aggregating Rs.2,227 lakhs (31 December 2011
: Rs.2,227 lakhs). The Company has made claims against the customer to
recover these amounts and has initiated legal action. Based upon legal
opinion received, management is reasonably confident of recovery of
these amounts of work in progress and consequently no changes have been
made to the values and classification of these amounts in the financial
8 Trade receivables and Unbilled work in progress as at 31 December
2012 includes Rs.1,004 lakhs and Rs.17,222 lakhs, respectively in
respect of certain road contracts which are currently being executed by
the Company. The customer has already granted two extensions of time
and the Company''s request for further extension is under consideration.
These projects are yet to be taken over by the customer. The Company
has made claims on the customer for recovery of these amounts.
Considering the contractual tenability and legal opinion obtained, the
management is reasonably confident of recovery of these amounts.
9 Micro, Small and Medium Enterprises
There are no Micro, Small and Medium Enterprises, to whom the Company
owes dues, which are outstanding for more than 45 days as at December
31, 2012. This information as required to be disclosed under the Micro,
Small and Medium Enterprises Development Act, 2006, has been determined
to the extent such parties have been identified on the basis of
information available with the Company. This has been relied upon by
the statutory auditors.
10 Operating lease
a) The Company has taken various residential/commercial premises and
construction equipment on cancellable operating lease. These lease
agreements are normally renewed on expiry. Rental expenses in the
statement of profit and loss for the year includes lease payments
towards premises Rs.1,765.63 lakhs (31 December 2011 -Rs.1,596.14
lakhs). Plant hire expense relates to the lease payment for
b) The Company, in addition to above, has taken construction equipments
on leases (non-cancellable operating leases). The future minimum lease
payments in respect of which as at 31 December 2012 are as follows:
These leases have no escalation clauses.
Rental expenses in the statement of profit and loss for the year
includes Rs.129.09 lakhs (31 December 2011 : Rs.499.09 lakhs) towards
such non-cancellable leases.
c) General descriptions of non-cancellable lease terms :
Lease rentals are charged on the basis of agreed terms.
Assets are taken on lease over a period of 3-5 years.
The Company did not sublease any of its assets and hence did not
receive any sub lease payments during the current or previous year.
11 The Company has changed the basis of measurement of percentage of
completion from ''physical proportion of the contract work'' to
''proportion of contract costs incurred for the work performed to date
to the estimated total contract costs''. Consequent to the change in
method, turnover is lower by Rs.713 lakhs and profit before tax is
higher by Rs.80 lakhs for the year ended 31 December 2012.
12 Further in respect of existing contracts, the Company has adopted a
policy of recording trade receivables only to the extent these are
certified by the customer. Consequent to this change, uncertified
receivables as of December 31, 2011 amounting toRs.25,391 lakhs have
been reclassified from trade receivables to unbilled work in progress
with respect to running contracts.
13 During the year cheque was stolen and fraudulently encashed from
Company''s bank account for a sum of Rs.54.24 lakhs and the same was
subsequently recovered by the Company. Investigation to apprehend the
culprits involved in the incident is in process.
14 Prior year comparatives
The financial statements for the year ended 31 December 2011 has been
prepared as per the then applicable, pre-revised Schedule VI to the
Companies Act, 1956. Consequent to the notification of Revised Schedule
VI under the Companies Act, 1956, the financial statements for the year
ended 31 December 2012 are prepared as per Revised Schedule VI.
Accordingly, the previous year figures have also been reclassified to
conform to this year''s classification.