Accounts Notes: NOTES FORMING PART OF THE ACCOUNTS INCLUDING DISCLOSURES

Wednesday 30 March 2011

NOTES FORMING PART OF THE ACCOUNTS INCLUDING DISCLOSURES

1) Contingent liabilities consist of amounts not provided for:

a) Claims against the Company not acknowledged as debt Rs. 4368.57 million (Rs. 3921.42 million) excluding the amount of provision for contingent liabilities legal cases for Rs.171.71 million (Rs. 169.29 million) ( Schedule-L ) . Against this the Company has counter claims of Rs.822.27 million (Rs.1092.42 million). In case claims against the Company do materialise, claims for Rs.2823.70 million (Rs.2303.16 million) will be reimbursable from the clients. Interest on claims is not considered, being unascertainable.

b) Few cases relating to employees/others are pending in the Courts against the Company in respect of which the liability is not ascertainable.

c) Direct and Indirect disputed tax demands under appeal Rs.883.59 million (Rs.875.76 million) of which Rs.338.93 million (Rs.199.21 million) are reimbursable from the clients and Rs.Nil (Rs.Nil) from the sub- contractors.

d) Pending disposal of application for extension of time by clients, company is contingently liable to pay liquidated damages to the extent of Rs.37.54 million (Rs.13.05 million)

e) Outstanding Bank Guarantee of Rs. 3.54 million (Rs. 1.45 million ) to CIDCO and MSRDC towards flats.

f) Ircon International Limited (the Company) and Soma Enterprises Limited (JV Partner) incorporated a joint venture company called Ircon-Soma Tollway Private Limited (ISTPL) on 19.4.2005 for execution of a highway project awarded by NHAI to ISTPL (after its incorporation) in terms of the concession agreement between NHAI and ISTPL dated 28th September 2005 for Improvement, Operation and Maintenance, Rehabilitation and Strengthening of Existing 2-lane Road and its widening to a 4- lane divided Highway on NH-3 (Pimpalgaon- Dhule Section ) in the State of Maharashtra on Build, Operate and Transfer (BOT) basis , at an approximate cost of Rs.6044.20 million.

The proposed equity investment in the JV Company from both JV partners is Rs. 1280 million (Rs.640 million each) out of which each JV partner has paid Rs.511 million (Rs.380 million). To finance the debt portion of the project, the JV Company has arranged a term loan of Rs. 4500 million from a consortium of eight banks, State Bank of India being the lead bank lender. To secure this term loan the company along with its joint venture partner has by way of promoters’ support executed a “Sponsor Support Undertaking” and a “ Consent and agreement” on 7th August 2006 , in favour of State Bank of India (Security trustee and Lenders’ agent), wherein both the partners have jointly and severally undertaken to extend additional equity/provide subordinated loans for meeting any cost overrun , shortfall in the agreed debt-service ratio, temporary shortfall on account of delay in receipt of grant and termination payment from NHAI.

2) Estimated amount of contracts remaining to be accounted for on capital account net of advances is
Rs. 34.46 million (Rs 368.09 million)

3) Basic earnings per share are computed by dividing net profit after tax Rs. 1137.98 million (Rs. 756.93 million) by (9,898,000) fully paid equity shares of Rs.10 each. Diluted Earnings per share is not applicable, as there is no dilution involved.

(4) (a) Some of the balances shown under debtors, advances, creditors and material lying with third parties are subject to confirmation / reconciliation. The Company has been sending letters for confirmation to parties included in the above.

(b) In the opinion of the management, the value of current assets, loans and advances on realization in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.