31/03/2011 31/03/2010
Contingent liabilities
Claims against Company not acknowledged
as debts (primarily relating to performance
related claims filed by customers) 35.831 20.639
Disputed demands in appeal towards income tax,
Service tax and 39.090 8.704
sales tax
Guarantee issued in respect of obligations
of a subsidiary Unfulfi lled Export Obligations
under EPCG scheme to be fulfilled 292.064 313.170
over 8 years
2. Segment reporting
The Companys activities involve predominantly one business segment
i.e. Process and Project Engineering, which are considered to be within
a single business segment since these are subject to similar risks and
returns. Accordingly, Process and Project Engineering comprise the
primary basis of segmental information as set out in these financial
statements, which therefore reflect the information required by AS 17
- Segment Reporting, with respect to primary segments.
The Company has identified India and Rest of the World as geographical
segments for secondary segmental reporting. Geographical sales are
segregated based on the location of the customer who is invoiced or in
relation to which the sale is otherwise recognised. Assets other than
receivables used in the Companys business or liabilities contracted
have not been identified to any of the reportable segments, as these
are used interchangeably between segments. All assets other than
receivables are located in India. Similarly, capital expenditure is
incurred towards fixed assets located in India.
3. Leases
The Company has entered into operating lease arrangements for office
space, equipments and residential premises for its employees. Certain
lease arrangements provide for cancellation by either party and also
contain a clause for renewal of the lease agreement. Lease payments on
cancellable and non cancellable operating lease arrangements debited to
the profit and loss account and the future minimum lease payments in
respect of non-cancellable operating leases are summarised below:
Notes:
1 Deposits with banks having maturity of more than three months
aggregating to Rs. 860.115 (2010: 1093.515) are not readily liquid and
have been excluded from cash and cash equivalents.
2 Cash and cash equivalents include bank balances in relation to
unclaimed dividends Rs. 5.257 (2010: 6.201).
4.0 Quantitative information of foreign exchange instruments
outstanding as at the Balance Sheet date
The foreign currency forward contracts outstanding as at the Balance
sheet date aggregate USD 20.850 millions and GBP Nil (2010: USD 1.750
millions, GBP Nil).
5. Employee benefits
a) Defined contribution plans
The Company has recognised Rs. 27.882 towards post employment defi ned
contribution plans comprising of provident and superannuation fund in
the profit and loss account.
b) Defined benefitplan
In accordance with the Payment of Gratuity Act, 1972, the Company is
required to provide post employment benefi t to its employees in the
form of gratuity. The Company has maintained a fund with the Life
Insurance Corporation of India to meet its gratuity obligations. In
accordance with the Standard, the disclosures relating to the Companys
gratuity plan are provided below:
Notes:
1. Expected rate of return on plan assets is based on actuarial
expectation of the average long-term rate of return expected on
investments of the fund during the estimated term of the obligations.
2. The estimates of future salary increases considered takes into
account the infl ation, seniority, promotion and other relevant factors
on long-term basis.
6.0 Employee stock options
The Compensation Committee of the Company established the Employee
Stock Option Plan on 23rd July, 2005. Employees covered by the Plan are
granted an option to purchase shares of the Company subject to the
requirements of vesting. Total of 8,100,265 (including impact of bonus)
stock options were approved in the Annual General Meeting of the
Company held on 23rd July, 2005, of which the employees have been
granted 2,759,139 stock options on 12th October, 2005 (Grant I),
2,311,500 stock options on 28th December, 2006 (Grant II) and
3,029,626 stock options on 9th July, 2009 (Grant III) with a vesting
period of 3 years. Stock options under Grant II lapsed on 28th
December, 2010. In the Meeting of the Compensation and Share Allotment
Committee held on 16th November, 2010 it was decided to utilise the
surrendered and lapsed options out of Grant II to grant them to new CEO
& MD in terms of his appointment letter and also to senior executives
of the Company at the relevant market price as Grant IV. The total
options granted under Grant IV are 1,950,000 options out of which
1,250,000 options(Plan A) were granted to CEO & MD with vesting period
of 5 years and 700,000 options (Plan B) were granted to Senior
Executives of the Company with vesting period of 2 years.
The stock options vest in a graded manner equally over the period of
vesting, each vesting taking effect as per the terms of the grant. The
stock options granted are exercisable at 100% of the fair market value
of the underlying equity shares of the Company as on the date of grant.
7.0 Insurance Claim
On 16th May, 2011 the Company has received in-principle proposal for
project related claim from Insurance Company. The Company has
recognised Rs. 59.413 as claim receivable from insurer as of 31st March,
2011.
7.1 Taxes
The Company has not recognised MAT credit entitlement to the extent of
Rs. 41.145 in respect of Income Tax paid in view of uncertainty of its
utilisation for payment of tax in foreseeable future.
7.2 Provision for diminution
Investment in Subsidiary viz. Praj Jaragua Bioenergia S.A., of Rs. 72.029
has been fully provided for during the year in view of continuing
losses and complete erosion in its net worth.
7.3 Major Events
- During the year, flash floods at the Head office of the Company
caused damage to certain assets in the building for which claim was
lodged with the insurer for losses incurred. The carrying value of
assets lost / damaged Rs. 0.517 is charged to profit and Loss Account
(net of insurance claim received Rs. 12.947).
- During the year the Company discontinued its activities of the Export
Oriented Unit at Alandi in Pune. The inventories lying at EOU were
debonded after payment of duty & the same was transferred to
manufacturing facility at Sanaswadi Pune.
7.4 Prior year comparatives
Previous years figures have been regrouped / reclassified to conform
to the current years presentation.
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