Nagarjuna Construction Co.

1.  Contingent liabilities not provided for:
 
 a) Letters of credit - Rs. 367.21 million (31-03-2008: Rs.1781.07
 million).
 
 b) Counter Guarantees given to the Bankers - Rs. 15269.51 million
 (31-03-2008: Rs. 13051.35 million).
 
 c) Performance guarantees, given on behalf of Subsidiaries and
 Associates Rs. 95.76 million (31-03-2008: Rs. 330.89 million).
 
 d) Corporate Guarantees given to Banks and Financial institutions for
 financial assistance extended to Subsidiaries, Associates and Joint
 Ventures Rs. 16731.69 million (31-03-2008: Rs. 4580.66 million).
 
 e) Disputed income tax liability for which the Company preferred appeal
 Rs. 69.77 million (31-03-2008: Nil).
 
 f) Disputed sales tax liability for which the Company preferred appeal
 Rs, 49,11 million (31-03-2008: Rs, 63,75 million),
 
 g) Disputed central excise duty relating to cement plant, which was
 sold in earlier year, for which the Company has filed an appeal to
 CESTAT, Bangalore Rs. 28.23 million (31-03-2008: Rs. 28.23 million)
 
 h) Disputed service tax liability for which the Company preferred
 appeal Rs. 186.12 million (31-03-2008: Rs. 23.88 million)
 
 i) Disputed sole arbitrator award of Rs. 30.00 million in case of
 counter claim by Bhartiya Reserve Bank Note Mudran Private Limited,
 against which the Company has filed appeal before City Civil Court,
 Bangalore. (31-03-2008: Rs. 30.00 million)
 
 j) Claims against the Company not acknowledged as debts Rs. 519.51
 million (31-03-2008: Rs. 390.51 million).
 
 k) Joint and several liability in respect of joint venture projects and
 liquidated damages in respect of delays in completion of projects -
 amount not ascertainable,
 
 I) Levy of labour cess @ 1 % (w.e.f. July 2007) on the construction
 contracts executed by the Company in the State of Andhra Pradesh
 contested before the Honble High Court of Andhra Pradesh - amount not
 ascertainable.
 
 m) Future Export commitments on account of import of machinery and
 equipments at concessional rate of duty under EPCG scheme is Rs. 483.04
 million (31-3-2008: Rs. Nil).
 
 2.  Estimated amount of contracts remaining to be executed on Capital
 Accounts and not provided for [net of advances Rs. 60.62 million
 (31-3-2008: Rs. 46.05 million)] - Rs. 88.06 million (31-3-2008: Rs.
 99.83 million). Commitment towards investment in companies [net of
 advances Rs. 10907.38 million (31-3-2008: Rs. 7012.13 million)] Rs.
 5699.62 million (31-3-2008: Rs. 5260.45 million).
 
 3.  Share Capital
 
 a) During the year, vested Options were exercised and the Company has
 allotted 2,000 equity shares in Grant 1 of Rs. 21- each at a premium of
 Rs. 9/- per share and 10,190 equity shares in Grant 3 of Rs. 21- each
 at a premium of Rs. 20/- per share aggregating to Rs. 0.25 million
 (includes share premium Rs. 0.22 million). Consequent to the said
 allotment, Rs. 1.98 million representing the intrinsic value of Rs.
 30.905 per option for Grant 1 and Rs. 188.00 per option for Grant 3
 exercised has been transferred to securities premium account from
 Employees Stock Options Outstanding Account
 
 b) Share Warrants
 
 The Company had allotted 25,00,000 Share warrants on preferential basis
 to M/s,AVSR Holdings Private Limited , the promoter of the Company, at
 a price of Rs, 21II- per warrant with a right to apply and be allotted
 Equity Shares of the Company of Rs, 21- each at a premium of Rs, 215/-
 per share within a period not exceeding 18 months from the date of
 allotment and the Company was in the receipt of Rs, 54,25 million as
 10% advance against the said share warrants allotted, The promoter
 Company has not exercised their right to subscribe within the
 stipulated time period, Consequently, the advance received has been
 forfeited and transferred to Capital Reserve account,
 
 4.  NCC Employees Stock Options Plan, 2004
 
 a) The Company follows the intrinsic value method in which the
 intrinsic value represents the excess of Market price over the exercise
 price of the option, The accounting value is computed by aggregating
 the intrinsic value of all the employee options granted during the
 accounting period, This accounting value is recognized as the Deferred
 employee compensation expense with a corresponding obligation to the
 stock option holders, The deferred employee compensation expense is
 amortized over the period of vesting on a straight-line basis, Upon
 exercise of option, the proceeds received are credited to Share Capital
 and Securities Premium Account, Deferred employee cost, obligation and
 amortised amount are derecognised upon lapse of options as per the
 terms of the scheme,
 
 5.  Loan Funds Secured Loans
 
 a) 11.95% Redeemable Non Convertible Debenture:
 
 i) 11.95% Redeemable Non Convertible Debentures numbering to1000 having
 a face value of Rs. 10 lakhs each aggregating to Rs. 100 crores
 privately placed with Life Insurance Corporation of India are secured
 by first charge in favour of IDBI Trusteeship services Limited,
 trustees to the debenture holders:
 
 (a) by way of hypothecation of the Companys movable property specified
 in Schedule 2 of Memorandum of Hypothecation dated 25th April, 2009;
 
 (b) first charge by way of hypothecation of the Companys immovable
 property situated at Gujarat as specified in first Schedule to the
 Debenture Trust Deed dated 23rd April, 2009;
 
 (c) Equitable mortgage by deposit of title deeds of Companys immovable
 properties situated at Hyderabad, Bangalore, Mumbai and New Delhi as
 specified in Schedule-A of Declaration and undertaking dated 25th April
 2009.
 
 ii) These debentures numbering to 1000 having a face value of Rs 10
 lakhs each aggregating to Rs 100 crores are to be redeemed in three
 installments in the ratio of 25:25:50 commencing at the end of 3rd year
 from the date of allotment i.e., 4th February 2012 onwards.
 
 Hi) The Company has created Rs 250 million as Debenture Redemption
 Reserve in accordance with the provisions of Companys Act, 1956,
 
 b) Term Loans
 
 Term Loans availed from banks and others are secured by hypothecation
 of specific assets, comprising plant and machinery and construction
 equipment, acquired out of the said loans and personal guarantee of a
 Director.
 
 c) Working Capital Facilities: Cash Credit facilities and Working
 Capital Demand Loans from consortium of banks are secured by:
 
 i) Hypothecation against first charge on stocks, book debts and other
 current assets of the Project and Light Engineering Division of the
 Company, both present and future, ranking parri passu with consortium
 banks
 
 ii) Hypothecation against first charge on all unencumbered fixed assets
 of the Project Division of the Company both present and future ranking
 parri passu with consortium banks.
 
 iii) Equitable mortgage of six properties (Land & Buildings),
 
 iv) Personal guarantee of certain Directors,
 
 v) Working Capital Demand Loan in foreign currency is secured
 either/and or as:
 
 Exclusive First hypothecation charge of project assets pertaining to
 the Al Amerat Quriyat road project.
 
 6.  Fixed Assets
 
 Fixed assets include Rs. 418.32 million (31.03.2008: Rs. 557.53
 million) (written down value) representing assets of a Joint Venture on
 which a second charge has been created in favour of M/s.3i Infotech
 Trustyship Services Limited, (a subsidiary of ICICI Bank Limited) for
 short term loan of USD 20 million and Working Capital Demand Loan USD
 15 million sanctioned by ICICI Bank Limited, Bahrain to Nagarjuna
 Contracting Company LLC, Dubai, a wholly owned subsidiary of the
 Company,
 
 7.  Inventories
 
 Property Development Cost: Property Development Cost includes Rs. 16.55
 million (31-3-2008: Rs. 16.55 million) representing the cost of
 acquisition of land from a land owner, for which the Company holds
 General Power of Attorney to deal with such land including registration
 of the sale in the name of the Company.
 
 8.  Loans and Advances
 
 Advances to Suppliers, Sub-contractors and others, include Rs. 459.67
 million (31-3-2008: Rs. 312.30 million) representing amounts withheld
 by contractees.
 
 9.  There are no dues payable to Micro, Small and Medium Enterprises
 exceeding the time limit specified in the Micro, Small and Medium
 Enterprises Development Act, 2006The information regarding Micro, Small
 and Medium Enterprises has been compiled by the Company based on the
 information received from such parties.
 
 10.  Employee Benefits
 
 a) Liability for retiring gratuity as on March 31, 2009 is Rs. 37.82
 million (31-3-2008: Rs. 33.30 million) of which Rs, 10,98 million
 (31-3-2008: Rs, 5,91 million) is funded with the Life Insurance
 Corporation of India, The balance of Rs, 26,84 million (31 -3-2008: Rs,
 27,39 million) is included in Provision for Gratuity, The Liability for
 Gratuity and Cost of Compensated absences has been actuarially
 determined and provided for in the books,
 
 11. Segment Reporting
 
 The Companys operations predominantly consist of construction /
 project activities, Hence there are no reportable segments under
 Accounting Standard -17. During the year under report, substantial part
 of the Companys business has been carried out in India. The conditions
 prevailing in India being uniform, no separate geographical disclosures
 are considered necessary. The Companys operations outside India do not
 qualify as reportable segments as the operations are not material.
 
 12. Figures of previous year have been regrouped / rearranged /
 reclassified wherever necessary to conform to the current year
 presentation.