Get Updates

Get notified about market trends, financial advice, and investment tips!

A Oneindia Venture

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Notes to Accounts of Va Tech Wabag Ltd.

Mar 31, 2025

^#Pursuant to an exclusive contractual arrangement providing for a majority share in the economic interests and control of voting power in the Project-I of VA Tech Wabag and Roots Contracting L.L.C, Qatar, the investment was classified as a subsidiary at inception. During the year ended 31 March 2016 and 31 March 2020 for Project-II and Project-III respectively, a similar arrangement providing for majority rights in the new projects to the other investor was agreed and hence the investment in the legal entity has been accordingly reclassified as an associate based on economic interests in the projects respectively as against the ownership in the entity.

### Pursuant to an exclusive contractual arrangement providing for a share of 100% of the economic interests in the entity, Wabag Belhasa JV WLL,(Bahrain) has been assessed and determined that the Company has power over the entity exposure, or rights, to variable returns and the ability to use its power to affect the amount of returns of the Wabag Belhasa JV WLL,(Bahrain). Accordingly the investment has been classified as a subsidiary

The Company had entered into a joint venture with Pratibha Industries Limited in Nepal to execute a project. Considering the fact that the Company has control over the governing body and thereby has power over the entity, has rights to variable returns from its involvement with the entity and has the ability to use its power over the entity to affect the amount of its returns, the same has been treated as a subsidiary in the consolidated financial statements.

The term loans availed in the Special Purpose Vehicles (âSPVsâ), namely Ganga STP Project Private Limited, DK Sewage Project Private Limited, and Ghaziabad Water Solutions Private Limited, for projects being implemented under the Design, Build, Finance, Operate, and Transfer (âDBFOTâ) model are secured by way of a charge over the assets, securities of the respective SPVs (investments in securities held by the Company in these SPVs), in accordance with the provisions set out in the relevant financing agreements.

Trade receivables include dues from related parties amounting to H 1,333 Millions (31 March 2024: H 1,144 Millions)The carrying amount of the current trade receivable and customer retention is considered a reasonable approximation of fair value as is expected to be collected within twelve months, such that the effect of any difference between the effective interest rate applied and the estimated current market rate is not significant.

There are no receivables due from directors or other officers of the Company

All of the Companyâs trade receivables and customer retention have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and an allowance for credit losses of H (457 Millions) (2023-24: H 98 Millions) has been (utilised)/created respectively within other expenses. The Company has provided for expected credit loss on its trade receivables using a provisioning matrix and specific provisioning, where appropriate, representing expected credit losses based on a range of outcomes.

Non-current bank balances represents interest bearing deposits with bank with more than 12 months maturity and held as margin money or security against the borrowings, guarantees and other commitments.

There are no other financial assets due from directors or other officers of the Company. The carrying amount of the other financial assets are considered as a reasonable approximation of fair value.

Refer note 39 for description of the Company''s financial instrument risks, including risk management objectives and policies.

In assessing the recoverability of deferred tax assets, the management of the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

All deferred tax assets have been recognized in the balance sheet.

d) Terms/right attached to equity shares

The Company has issued only one class of equity shares having a face value of H 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. In the Board meeting held on 21 May 2025, the dividend proposed by the Board of Directors at H 4 per equity share is subject to the approval of the shareholders in the ensuing Annual General Meeting. This amount has not been recorded as a liability for the year ended 31 March 2025. In the event of liquidation, 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.

f) Buy back of shares

There were no buy back of shares and no shares issued pursuant to contract without payment being received in cash during the last 5 years immediately preceding 31 March 2025.

g) Capital management

The Companyâs capital management objectives are:

- to safeguard the Companyâs ability to continue as a going concern, and continue to provide optimum returns to the shareholders and all other stakeholders by building a strong capital base.

- to maintain an optimum capital structure to reduce the cost of capital

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders plus its borrowings, if any less cash and bank balances.

A provision is recognized for expected warranty claims on construction contracts completed, based on past experience of level of repairs and returns. It is expected that these costs would be predominantly incurred within one year from the balance sheet date, which generally coincides with the completion of warranty period of the contracts. The assumption used to calculate the provision for warranties are based on the Companyâs current status of contracts under execution and information available about expenditure estimated to be incurred based on the Companyâs warranty period for contracts completed.

The Company provides for liquidated damages when it reasonably expects that a delay in the completion of the project or a shortfall in the performance parameters might give rise to a claim from the customer. In the event of failure to complete a project as scheduled, or in case of a performance shortfall, the Company may generally be held liable for penalties in the form of agreed liquidated damages. Liquidated damages are generally measured and recognized in accordance with the terms of the contracts with customers.

The Company provides for foreseeable losses on contracts when it is probable that total contract cost, including expected cost to complete, will exceed the economic benefits expected to be received under it.

d) Provision for employee benefits

i) Gratuity

In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (âthe Gratuity Planâ) covering eligible employees. The Gratuity plan provides for a lump sum payment to vested employees on retirement (subject to completion of five years of continuous employment), death, incapacitation or termination of employment that are based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity plan are determined by actuarial valuation on the reporting date and the Company makes annual contribution to the gratuity fund maintained with an insurance company

The following tables summarise the components of net benefit expenses recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity.

The significant actuarial assumptions for the determination of the defined benefit obligation are the attrition rate, discount rate and the long-term rate of compensation increase. The calculation of the net defined benefit liability is sensitive to these assumptions. The following table summarises the effects of changes in these actuarial assumptions on the defined benefit liability:

(ii) Compensated absences

The Company permits encashment of compensated absences accumulated by its employees on retirement, separation and during the course of service. The liability in respect of the Company, for outstanding balance of privilege leave at the balance sheet date is determined and provided on the basis of actuarial valuation performed by an independent actuary. The Company does not maintain any plan assets to fund its obligation towards compensated absences. The total Compensated absences recognized in the statement of profit and loss for the year is H 36 Millions (2023-24 : H 37 Millions).

The carrying amount of borrowings is considered to be a reasonable approximation of fair value.

a) Terms, repayment and guarantee details of borrowings

i) The Company has availed packing credit facilities in US dollars (USD) and Euro (EUR) at an interest rate of 3.21% p.a to 6.99% p.a (31 March 2024: 6.66% p.a to 8.00% p.a) . These packing credits are repayable within 180 days, as applicable, from the date of availment and are secured against foreign currency receivables. The Company has availed EUR-denominated packing credit facilities for the first time during the current financial year.

ii) The Company has availed cash credit facilities from banks at an interest rate of 9.65% p.a to 10.05% p.a (31 March 2024: 8.25% p.a to 9.65% p.a) and are secured against receivables of the Company.

iii) The Company has availed working capital demand loan at an interest rate of 8.55% p.a to 8.85% p.a (31 March 2024 : 8.25% p.a to 9.55% p.a) and is repayable within 180 days from the date of availment and are secured against receivables of the Company.

iv) During the Previous year the Company issued debentures to an international organisation established under a Charter, which is secured by first pari-passu charge on the entire current assets of the Company except MRPL Project and BUIDCO Bhagalpur Project at an interest of 8.54% p.a and repayable by 18 quarterly instalments from August 2024 and during the current year the interest rate has been repriced to 7.695% p.a due to modification of interest terms .

Investments excludes equity and other instruments in subsidiaries and associates amounting to H 1,410 Millions (previous year H 1,300 Millions ) which are measured at cost.

The carrying value of financial assets and financial liabilities approximates the fair value of financial assets and financial liabilities as at 31 March 2025 and 31 March 2024.

Also refer note 38 fair value measurement

c) Based on Timing of revenue recognition

Revenues from construction contracts and operation & maintenance contracts are recognised on ''Over a point in time'' basis and ''At a point in time'' basis respectively.

d) Based on Geography

Revenue from operations can be disaggregated based on geography into ''India'' and ''Rest of the World''.

B Transaction price allocated to the remaining sales contracts (Order backlog)

Revenues expected to be recognised in the future related to performance obligations that are unsatisfied or partially unsatisfied as at 31 March 2025 amounting to H 110,366 Millions (31 March 2024 : H 84,111 Millions)

Construction contracts are progressively executed over a period of upto 3.5 years and based on specific project schedules. Operation and maintenance contracts are expected to be executed over a period of 1 to 20 years, primarily invoiced on a monthly basis.

38. Fair value measurement

Fair value measurement hierarchy

The Company records certain financial assets and financial liabilities at fair value on a recurring basis. The Company determines fair values based on the price it would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.

The Company holds certain fixed income investments and other financial assets such as employee advances, deposits etc. which must be measured using the fair value hierarchy and related valuation methodologies. The guidance specifies a hierarchy of valuation techniques based on whether the inputs to each measurement are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Companyâs assumptions about current market conditions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Financial assets and financial liabilities measured at fair value in the balance sheet are grouped into three Levels of fair value hierarchy. These levels are based on the observability of significant inputs to the measurement, as follows:

> Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

> Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e prices) or indirectly (i.e derived from prices)

> Level 3: Inputs for assets or liabilities that are not based on observable market data (unobservable inputs)

The following table shows the Levels within the hierarchy of financial and non-financial assets and liabilities measured at fair value on a recurring basis at 31 March 2025, 31 March 2024:

iii) Liabilities measured at amortised cost:

a) Interest-bearing loans and borrowings:

The Company ensures a balanced portfolio of fixed and floating rate loans and borrowings. The Company''s borrowings as at 31 March 2025 of H 1,519 Millions (31 March 2024 H 663 Millions )and of H 816 Millions (31 March 2024 H 979 Millions) are on fixed rate and floating rate basis of interest respectively .

The fair values of the Companyâs interest-bearing borrowings and loans are determined under amortised cost method using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. These rates are considered to reflect the market rate of interest and hence the carrying value are considered to be at fair value.

39. Nature and extent of risks arising from financial instruments and respective financial risk management objectives and policies

The Companyâs principal financial liabilities comprise of borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Companyâs operations and to provide guarantees to support its and group companies operations. The Companyâs principal financial assets include investments, trade and other receivables, cash and short-term deposits that are created directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs management oversees the management of these risks. The Companyâs management is supported by the Group Treasury Team that advises on financial risks and the appropriate financial risk governance framework in accordance with the Companyâs policies and risk objectives. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors review and agree on policies for managing each of these risks, which are summarised below.

a) Market risk

The Company is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which result from both its operating and investing activities.

i. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates.

Interest rate sensitivity

The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of /- 1% for the year ended 31 March 2025 (31 March 2024: /- 1%). These changes are considered to be reasonably possible based on observation of current market conditions. Sensitivity calculations are based on a annualized interest cost on the borrowings at floating rate as of the reporting dates 31 March 2025 and 31 March 2024 . All other variables are held constant.

ii. Foreign currency risk

Most of the Companyâs transactions are carried out in Indian rupees. Exposures to currency exchange rates arise from the Companyâs overseas sales and purchases, which are primarily denominated in US dollars (USD) and Euro (EUR).

For the purpose of this disclosure, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency.

The following table illustrates the sensitivity of profit and equity in regards to the Companyâs financial assets and financial liabilities and the USD/H exchange rate and EUR/H exchange rate ''all other things being equalâ. It assumes a /- 1% change of the H/USD and H/EUR exchange rate for the year ended 31 March 2025 (31 March 2024: 1%).

If the H had strengthened against the USD by 1% during the year ended 31 March 2025 (31 March 2024: 1%), and EUR by 1% during the year ended 31 March 2025 (31 March 2024: 1%) respectively then this would have had the following impact on profit before tax and equity before tax:

If the H had weakened against the USD by 1% during the year ended 31 March 2025 (31 March 2024: 1% ) and EUR by 1% during the year ended 31 March 2025 (31 March 2024: 1% ) respectively, there would be an equal but opposite effect on the above currencies to the amount shown above, on the basis that all other variables remain constant.

b) Credit risk

Credit risk is the risk that a counterparty fails to discharge an obligation to the Company. The Company is exposed to this risk for various financial instruments, for example trade receivables, deposits etc. The Companyâs maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at 31 March, as summarised below:

The Company continuously monitors defaults of customers and other counterparties, identified either individually or by the Company, and incorporates this information into its credit risk controls. The Companyâs policy is to transact only with counterparties who are highly creditworthy which are assessed based on internal due diligence parameters.

In respect of trade receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties . Customer credit risk is managed based on the Companyâs established policy, procedures and control relating to customer credit risk management, pursuant to which outstanding customer receivables are regularly monitored by the management, to ensure the risk of credit loss is minimal. Credit quality of a customer is assessed based on historical information in relation to pattern of collections, defaults and credit worthiness of the customer As at 31 March 2025, the Company had 22 (Previous year 2023-24 : 19) customers that owed the Company more than H 300 Millions each and accounted for approximately 91% (Previous year 2023-24: 90%) of all the receivables outstanding. As at 31 March 2025, the Company has certain trade receivables that have not been settled by the contractual due date but are not considered to be impaired .(Also refer note 6)

The credit risk for cash and cash equivalents, balance with banks are considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Other financial assets mainly comprises of tender deposits and security deposits which are given to customers or other governmental agencies in relation to contracts executed and are assessed by the Company for credit risk on a continuous basis. The credit risk on these balances are estimated to be low as at 31 March 2025.

c) Liquidity risk

Liquidity risk is that the Company might be unable to meet its obligations. The Company manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business. The data used for analysing these cash flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on a monthly, quarterly, and yearly basis depending on the business needs. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period.

The Company''s objective is to maintain cash and marketable securities to meet its liquidity requirements for 30-day periods at a minimum. This objective was met for the reporting periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities.

The Company considers expected cash flows from financial assets in assessing and managing liquidity risk, in particular its cash resources and trade receivables. The Companyâs existing cash resources and trade receivables significantly exceed the current cash outflow requirements. Cash flows from trade receivables are all contractually due within six months except for retention and long term trade receivables which are governed by the relevant contract conditions.

The Companyâs objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, and shortterm borrowings. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders.

The table below analyses non-derivative financial liabilities of the Company into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed in the table are contractual undiscounted cash flows including interest as at 31 March 2025 and 31 March 2024.

All investments are non current in nature and invested in group companies , hence return on investment ratio is not computed.

44. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.(Previous Year : Nil)

45. Additional disclosures under Schedule III Division II of the Companies Act

a. No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder, as at the end of the year.

b The Company has not been declared as a wilful defaulter by any bank or financial institution or government or any government authority

c. As per the information available with the Company, the Company has not entred into any transactions with the companies struck off

under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 (Previous Year Nil)

d. There has been no charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period as at the end of the year.

e. The Company has not traded or invested in Crypto currency or Virtual currency during the financial year ended 31 March 2025. (Previous Year Nil)

f. The Company is using IFS ERP (accounting software) for maintaining books of accounts. Audit trail was operational throughout the year and audit trial backup has been preserved as required under Act .

46. Figures for the previous year have been regrouped / re-classified to conform to the figures of the current year. Values less than H 0.5 Million disclosed as zero .

Mar 31, 2024

Pursuant to an exclusive contractual arrangement providing for a majority share in the economic interests and control of voting power in the Project-I of VA Tech Wabag and Roots Contracting L.L.C, Qatar, the investment was classified as a subsidiary at inception. During the year ended 31 March 2016 and 31 March 2020 for Project-II and Project-III respectively a similar arrangement providing for majority rights in the new projects to the other investor was agreed and hence the investment in the legal entity has been accordingly reclassified as an associate based on economic interests in the projects respectively as against the ownership in the entity

## The investments in Wabag Limited (Thailand) has been fully impaired during the previous year and has been liquidated on 03 November 2023.

### Pursuant to an exclusive contractual arrangement providing for a share of 100% of the economic interests in the entity Wabag Belhasa JV WLL,(Bahrain) has assessed and determined that it has power over the entity exposure, or rights, to variable returns and the ability to use its power to affect the amount of returns of the Wabag Belhasa JV WLL,(Bahrain). Accordingly the investment has been classified as a subsidiary

$DK Sewage Project Private Limited was incorporated on 26 September 2019 as a project specific entity. The Company has entered into a Share Holder''s Agreement with Madhya Pradesh Waste Management Private Limited (""MPWMPL"") on 29 March 2024 for subscription of the Company''s Securities. Debenture application money of H153.5 million was received. Pursuant to this agreement, the control has been transferred to MPWMPL as on 29 March 2024 hence the entity been treated as associates, instead of subsidiary as on reporting date.

$$Kopri Bio Engineering Private Limited has been incorporated on 27 November 2020 as a project specific entity. As the Company doesnât have the control neither on the activity nor with management, hence deconsolidation been done with effective from 04 July 2023

Trade receivables include dues from related parties amounting to H1,144 Millions (31 March 2023: H1,891 Millions).The carrying amount of the current trade receivable and customer retention is considered a reasonable approximation of fair value as is expected to be collected within twelve months, such that the effect of any difference between the effective interest rate applied and the estimated current market rate is not significant.

There are no receivables due from directors or other officers of the Company.

All of the Companyâs trade receivables and customer retention have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and an allowance for credit losses of H98 Millions (2022-23: H229 Millions) has been created/(utilised) respectively within other expenses. The Company has provided for expected credit loss on its trade receivables using a provisioning matrix and specific provisioning, where appropriate, representing expected credit losses based on a range of outcomes.

All deferred tax assets have been recognized in the balance sheet.

d) Terms/right attached to equity shares

The Company has issued only one class of equity shares having a face value of H2 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, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except interim dividend, which can be approved by the Board of Directors. In the event of liquidation, 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.

f) Buy back of shares

There were no buy back of shares and no shares issued pursuant to contract without payment being received in cash during the last 5 years immediately preceding 31 March 2024

g) Capital management

The Companyâs capital management objectives are:

- to safeguard the Companyâs ability to continue as a going concern, and continue to provide optimum returns to the shareholders and all other stakeholders by building a strong capital base.

- to maintain an optimum capital structure to reduce the cost of capital

d) Provision for employee benefits

i) Gratuity

In accordance with applicable Indian laws, the Company provides for gratuity a defined benefit retirement plan (âthe Gratuity Planâ) covering eligible employees. The Gratuity plan provides for a lump sum payment to vested employees on retirement (subject to completion of five years of continuous employment), death, incapacitation or termination of employment that are based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity plan are determined by actuarial valuation on the reporting date and the Company makes annual contribution to the gratuity fund maintained with an insurance company.

(ii) Compensated absences

The Company permits encashment of compensated absences accumulated by its employees on retirement, separation and during the course of service. The liability in respect of the Company, for outstanding balance of privilege leave at the balance sheet date is determined and provided on the basis of actuarial valuation performed by an independent actuary The Company does not maintain any plan assets to fund its obligation towards compensated absences. The total Compensated absences recognized in the statement of profit and loss for the year is H37 Millions (2022-23 : H26 Millions).

a) Terms, repayment and guarantee details of borrowings

i) The Company has availed packing credit facilities in US dollars at an interest rate of 6.66% p.a to 8.00% p.a (31 March 2023: 2.19% p.a to 7.08% p.a) and in the previous year the Company has availed packing facilities in Indian rupees at an interest rate of 7.75% p.a to 9.08% p.a. These packing credits are repayable within 180 days, as applicable, from the date of availment and are secured against foreign currency receivables.

ii) The Company has availed cash credit facilities from banks at an interest rate of 8.25% p.a to 9.65% p.a (31 March 2023: 7.9% p.a to 9.70% p.a) and are secured against receivables of the Company.

iii) The Company has availed working capital demand loan at an interest rate of 8.25% p.a to 9.55% p.a (31 March 2023 : 6.25% p.a to 9.70% p.a) and is repayable within 180 days from the date of availment and are secured against receivables of the Company.

iv) During the current year the Company issued debentures to to an international organisation established under a Charter, which is secured by first pari-passu charge on the entire current assets of the Company except MRPL Project and BUIDCO Bhagalpur Project at an interest of 8.54% p.a and repayable by 18 quarterly instalments from the end of moratorium period .

v) The Company has availed working capital term loan from various banks at an interest rate of 8.00% p.a to 9.65% p.a (31 March 2023 : 7.85% p.a to 9.50% p.a) which is secured by second pari-passu charge on the entire current assets of the Company and has been repaid in current year.

c) Based on Timing of revenue recognition

Revenues from construction contracts and operation & maintenance contracts are recognised on ''Over a point in time'' basis and ''At a point in time'' basis respectively

d) Based on Geography

Revenue from operations can be disaggregated based on geography into ''India'' and ''Rest of the World''.

B Transaction price allocated to the remaining sales contracts (Order backlog)

Revenues expected to be recognised in the future related to performance obligations that are unsatisfied or partially unsatisfied as at 31 March 2024 amounting to H84,111 Millions (31 March 2023 : H94,760 Millions)

38. Fair value measurement

Fair value measurement hierarchy

Financial assets and financial liabilities measured at fair value in the balance sheet are grouped into three Levels of fair value hierarchy These levels are based on the observability of significant inputs to the measurement, as follows:

> Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

> Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (i.e prices) or indirectly (i.e derived from prices)

> Level 3: Inputs for assets or liabilities that are not based on observable market data (unobservable inputs)

The following table shows the Levels within the hierarchy of financial and non-financial assets and liabilities measured at fair value on a recurring basis at 31 March 2024, 31 March 2023:

iii) Liabilities measured at amortised cost: a) Interest-bearing loans and borrowings:

The Company ensures a balanced portfolio of fixed and floating rate loans and borrowings. The Company''s borowings as at 31 March 2024 of H663 Millions (31 March 2023 H1,432 Millions )and of H979 Millions (31 March 2023 H598 Millions) are on fixed rate and floating rate basis of interest respectively .

a) Market risk

i. Interest rate risk

Interest rate sensitivity

The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of /- 1% for the year ended 31 March 2024 (31 March 2023: /- 1%). These changes are considered to be reasonably possible based on observation of current market conditions. Sensitivity calculations are based on a annualized interest cost on the borrowings at floating rate as of the reporting dates 31 March 2024 and 31 March 2023 . All other variables are held constant.

ii. Foreign currency risk

Foreign currency denominated financial assets and financial liabilities which predominantly expose the Company to currency risk are disclosed below. The amounts shown are translated at the closing rate:-

For the purpose of this disclosure, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency

If the H had strengthened against the USD by 1% during the year ended 31 March 2024 (31 March 2023: 1%), and EUR by 1% during the year ended 31 March 2024 (31 March 2023: 1%) respectively then this would have had the following impact on profit before tax and equity before tax:

If the H had weakened against the USD by 1% during the year ended 31 March 2024 (31 March 2023: 1% ) and EUR by 1% during the year ended 31 March 2024 (31 March 2023: 1% ) respectively, there would be an equal but opposite effect on the above currencies to the amount shown above, on the basis that all other variables remain constant.

b) Credit risk

Credit risk is the risk that a counterparty fails to discharge an obligation to the Company The Company is exposed to this risk for various financial instruments, for example trade receivables, placing deposits etc. The Companyâs maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at 31 March, as summarised below:

In respect of trade receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties . Customer credit risk is managed based on the Companyâs established policy, procedures and control relating to customer credit risk management, pursuant to which outstanding customer receivables are regularly monitored by the management, to ensure the risk of credit loss is minimal. Credit quality of a customer is assessed based on historical information in relation to pattern of collections, defaults and credit worthiness of the customer As at 31 March 2024, the Company had 19 (Previous year 2022-23 : 19) customers that owed the Company more than H300 Millions each and accounted for approximately 90% (Previous year 2022-23: 83%) of all the receivables outstanding. As at 31 March 2024, the Company has certain trade receivables that have not been settled by the contractual due date but are not considered to be impaired .(Also refer note 6)

The credit risk for cash and cash equivalents, balance with banks are considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Other financial assets mainly comprises of tender deposits and security deposits which are given to customers or other governmental agencies in relation to contracts executed and are assessed by the Company for credit risk on a continuous basis.The credit risk on these balances are estimated to be low as at 31 March 2024.

c) Liquidity risk

Liquidity risk is that the Company might be unable to meet its obligations. The Company manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-today business. The data used for analysing these cash flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on a monthly quarterly, and yearly basis depending on the business needs. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period.

The Companyâs objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, and short-term borrowings. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders.

40. Events after the reporting period

No adjusting or significant non-adjusting events have occurred between the reporting date (31 March 2024) and the date of authorisation (21 May 2024) other than those disclosed under respective notes.

41. Contingent liabilities, commitments and guarantees a) Claims against the Company not acknowledged as debt

Particulars	As at 31 March 2024	As at 31 March 2023
Income tax demand including interest contested in appeal for various assessment years	134	54
Indirect tax matters under dispute including interest contested in appeal for various years	1,242	648
b) Capital commitments The estimated amounts of contracts to be executed on capital account and not provided for (net of advances) Nil (Previous year - Nil).
c) Guarantees excluding financial guarantees
Particulars	As at 31 March 2024	As at 31 March 2023
Guarantees issued by the Company for:
- subsidiaries	-	261

42. Segment reporting

The Company publishes the standalone financial statements along with the consolidated financial statements in the annual report. In accordance with Ind AS 108, Operating segments, the Company has disclosed the segment information in the consolidated financial statements.

All investments are non current in nature and invested in group companies as equity instruments, hence return on investment ratio is not computed.

44 . No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.(Previous Year : Nil)

45. Additional disclosures under Schedule III Division II of the Companies Act

b. The Company has not been declared as a wilful defaulter by any bank or financial institution or government or any government authority

c. As per the information available with the Company, the Company has no transactions with the companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 (Previous Year :Nil)

d. There has been no charges or satisfaction yet to be registered with ROC beyond the statutory period as at the end of the year.

e. The Company has not traded or invested in Crypto currency or Virtual currency during the financial year ended 31 March 2024. (Previous Year :Nil)

f. The Company is using IFS ERP (accounting software) for maintaining books of accounts. Audit trail was operational throughout the year, except for a period from 20 June 2023 to 30 September 2023, during which period the ERP was upgraded.

46. Figures for the previous year have been regrouped / re-classified to conform to the figures of the Current year. Values less than H0.5

Milllion disclosed as zero .

Mar 31, 2023

^#Pursuant to an exclusive contractual arrangement providing for a majority share in the economic interests and control of voting power in the Project-I of VA Tech Wabag and Roots Contracting L.L.C, Qatar, the investment was classified as a subsidiary at inception. During the year ended March 31, 2016 and March 31, 2020 for Project-II and Project-III respectively, a similar arrangement providing for majority rights in the new projects to the other investor was agreed and hence the investment in the legal entity has been accordingly reclassified as an associate based on economic interests in the projects respectively as against the ownership in the entity.

## Pursuant to the statutory document providing for a majority share of 90.6% of the economic interests in the entity, Wabag Limited (Thailand) has assessed and determined that it has power over the entity, exposure, or rights, to variable returns and the ability to use its power to affect the amount of returns of the Wabag Limited (Thailand). Accordingly, the investment has been classified as a subsidiary. The investments has been fully impaired during the current year, as the liquidation process of the entity has been initiated.

### Pursuant to an exclusive contractual arrangement providing for a share of 100% of the economic interests in the entity, Wabag Belhasa JV WLL,(Bahrain) has assessed and determined that it has power over the entity, exposure, or rights, to variable returns and the ability to use its power to affect the amount of returns of the Wabag Belhasa JV WLL,(Bahrain). Accordingly, the investment has been classified as a subsidiary.

####International Water Treatment L.L.C (âIWTâ), Oman, was established as a Special Purpose Vehicle for carrying out Engineering, Procurement and Construction Contract for Water Desalination Project in Muscat, Oman has been liquidated effective April 17, 2022, post completion of the project and all contractual and other formalities.

Trade receivables include dues from related parties amounting to INR 18,908 Lakhs (March 31,2022: INR 14,333 Lakhs). The carrying amount of the current trade receivable and customer retention is considered a reasonable approximation of fair value as is expected to be collected within twelve months, such that the effect of any difference between the effective interest rate applied and the estimated current market rate is not significant.

There are no receivables due from directors or other officers of the Company.

All of the Companyâs trade receivables and customer retention have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and an allowance for credit losses of INR 2,290 Lakhs (FY 2021-22: INR (1,680) Lakhs) has been created/(utilised) respectively within other expenses. The Company has provided for expected credit loss on its trade receivables using a provisioning matrix and specific provisioning, where appropriate, representing expected credit losses based on a range of outcomes.

There are no other financial assets due from directors or other officers of the Company. The carrying amount of the other financial assets are considered as a reasonable approximation of fair value.

Refer note 39 for description of the Companyâs financial instrument risks, including risk management objectives and policies.

In assessing the recoverability of deferred tax assets, the management of the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will be realised. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. The amount of the deferred tax assets considered realisable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

d) Terms/right attached to equity shares

The Company has issued only one class of equity shares having a face value of INR 2 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, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except interim dividend, which can be approved by the Board of Directors. In the event of liquidation, 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.

e) Shares reserved for issue under options

There is no options reserved for issuance of equity shares to the employees as on March 31,2023.

f) Buy back of shares

There were no buy back of shares and no shares issued pursuant to contract without payment being received in cash during the last 5 years immediately preceding March 31,2023

g) Capital management

The Companyâs capital management objectives are:

- to safeguard the Companyâs ability to continue as a going concern, and continue to provide optimum returns to the shareholders and all other stakeholders by building a strong capital base.

- to maintain an optimum capital structure to reduce the cost of capital

The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. The amounts managed as capital by the Company for the reporting periods under review are summarised as follows:

A provision is recognised for expected warranty claims on construction contracts completed, based on past experience of level of repairs and returns. It is expected that these costs would be predominantly incurred within one year from the balance sheet date, which generally coincides with the completion of warranty period of the contracts. The assumption used to calculate the provision for warranties are based on the Companyâs current status of contracts under execution and information available about expenditure estimated to be incurred based on the Companyâs warranty period for contracts completed.

The Company provides for liquidated damages when it reasonably expects that a delay in the completion of the project or a shortfall in the performance parameters might give rise to a claim from the customer. In the event of failure to complete a project as scheduled, or in case of a performance shortfall, the Company may generally be held liable for penalties in the form of agreed liquidated damages. Liquidated damages are generally measured and recognised in accordance with the terms of the contracts with customers.

d) Provision for employee benefits

i) Gratuity

The Company assesses these assumptions with the projected long-term plans of growth and prevalent industry standards.

Based on historical data, the Company expects contributions of INR 95 Lakhs to be paid for financial year 2022-23. The weighted average duration of the defined benefit obligation as at March 31, 2023 is 3.96 years (March 31,2022: 3.83 years)

ii) Compensated absences

The Company permits encashment of compensated absences accumulated by its employees on retirement, separation and during the course of service. The liability in respect of the Company, for outstanding balance of privilege leave at the balance sheet date is determined and provided on the basis of actuarial valuation performed by an independent actuary. The Company does not maintain any plan assets to fund its obligation towards compensated absences. The total Compensated absences recognised in the statement of profit and loss for the year is INR 260 Lakhs (FY 2021-22 : INR 350 Lakhs).

The carrying amount of borrowings is considered to be a reasonable approximation of fair value. a) Terms, repayment and guarantee details of borrowings

i) The Company has availed packing credit facilities in Indian rupees and US dollars at an interest rate of 7.75% p.a to 9.08% p.a (March 31,2022: 7.5% p.a to 11.00% p.a) and 2.19% p.a to 7.08% p.a (March 31,2022: 2.15% p.a to 2.65% p.a) respectively. These packing credits are repayable within 180 days, as applicable, from the date of availment and are secured against foreign currency receivables.

ii) The Company has availed cash credit facilities from banks at an interest rate of 7.9% p.a to 9.70% p.a (March 31, 2022: 7.9% p.a to 9.85% p.a) and are secured against receivables of the Company.

iii) The Company has availed working capital demand loan at an interest rate of 6.25% p.a to 9.70% p.a (March 31, 2022 : 6.25% p.a to 9.75% p.a) and is repayable within 180 days from the date of availment and are secured against receivables of the Company.

iv) The Company has availed working capital term loan from various banks at an interest rate of 7.85% p.a to 9.50% p.a (March 31,2022 : 7.75% p.a to 8.80% p.a) which is secured by second pari-pasu charge on the entire current assets of the Company, repayable by 48 monthly instalments from the end of moratorium period .

Investments excludes equity and other instruments in subsidiaries and associates amounting to INR 9,491 Lakhs (Previous year INR 5,573 Lakhs) which are measured at cost.

The carrying value of financial assets and financial liabilities approximates the fair value of financial assets and financial liabilities as at March 31,2023 and March 31,2022.

Also refer note 38 fair value measurement

c) Based on Timing of revenue recognition

Revenues from construction contracts and operation & maintenance contracts are recognised on âOver a point in timeâ basis and âAt a point in timeâ basis respectively.

d) Based on Geography

Revenue from operations can be disaggregated based on geography into âIndiaâ and âRest of the Worldâ.

B Transaction price allocated to the remaining sales contracts (Order backlog)

Revenues expected to be recognised in the future related to performance obligations that are unsatisfied or partially unsatisfied as at March 31,2023 amounting to INR 947,602 Lakhs (March 31,2022 : INR 673,608 Lakhs)

38 Fair value measurement

Fair value measurement hierarchy

The Company holds certain fixed income investments and other financial assets such as employee advances, deposits etc. which must be measured using the fair value hierarchy and related valuation methodologies. The guidance specifies a hierarchy of valuation techniques based on whether the inputs to each measurement are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Companyâs assumptions about current market conditions. The fair value hierarchy also requires an entity to maximise the use of observable inputs and minimise the use of unobservable inputs when measuring fair value.

Financial assets and financial liabilities measured at fair value in the balance sheet are grouped into three levels of fair value hierarchy. These levels are based on the observability of significant inputs to the measurement, as follows:

0 Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

0 Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e prices) or indirectly (i.e derived from prices)

0 Level 3: Inputs for assets or liabilities that are not based on observable market data (unobservable inputs)

The following table shows the Levels within the hierarchy of financial and non-financial assets and liabilities measured at fair value on a recurring basis at March 31,2023, March 31,2022:

iii) Liabilities measured at amortised cost: a) Interest-bearing loans and borrowings:

The Company ensures a balanced portfolio of fixed and floating rate loans and borrowings. The Companyâs borowings as at March 31,2023 of INR 14,324 (March 31,2022 INR 27,564) and of INR 5,979 (March 31,2022 INR 12,319) are on fixed rate and floating rate basis of interest respectively.

39 Nature and extent of risks arising from financial instruments and respective financial risk management objectives and policies

a) Market risk

i. Interest rate risk

Interest rate sensitivity

The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of /- 1% for the year ended March 31, 2023 (March 31, 2022: /- 1%). These changes are considered to be reasonably possible based on observation of current market conditions. Sensitivity calculations are based on a annualised interest cost on the borrowings at floating rate as of the reporting dates March 31,2023 and March 31,2022 . All other variables are held constant.

ii. Foreign currency risk

For the purpose of this disclosure, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency.

The following table illustrates the sensitivity of profit and equity in regards to the Companyâs financial assets and financial liabilities and the USD/INR exchange rate and EUR/INR exchange rate âall other things being equalâ. It assumes a /- 1% change of the INR/USD and INR/EUR exchange rate for the year ended March 31,2023 (March 31,2022: 1%).

If the INR had strengthened against the USD by 1% during the year ended March 31,2023 (March 31,2022: 1%), and EUR by 1% during the year ended March 31, 2023 (March 31, 2022: 1%) respectively then this would have had the following impact on profit before tax and equity before tax:

If the INR had weakened against the USD by 1% during the year ended March 31,2023 (March 31,2022: 1% ) and EUR by 1% during the year ended March 31,2023 (March 31,2022: 1% ) respectively, there would be an equal but opposite effect on the above currencies to the amount shown above, on the basis that all other variables remain constant.

b) Credit risk

Credit risk is the risk that a counterparty fails to discharge an obligation to the Company. The Company is exposed to this risk for various financial instruments, for example trade receivables, placing deposits etc. The Companyâs maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at March 31, as summarised below:

Particulars	As at March 31, 2023	As at March 31, 2022
Classes of financial assets
Trade receivables	1,92,634	1,81,661
Cash and cash equivalents balances	8,614	14,482
Bank balances other than those mentioned in cash and cash equivalents	8,006	7,024
Other financial assets	9,401	9,657

In respect of trade receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics other than matters disclosed in note 46. Customer credit risk is managed based on the Companyâs established policy, procedures and control relating to customer credit risk management, pursuant to which outstanding customer receivables are regularly monitored by the management, to ensure the risk of credit loss is minimal. Credit quality of a customer is assessed based on historical information in relation to pattern of collections, defaults and credit worthiness of the customer. As at March 31, 2023, the Company had 19 (Previous year 2021-22 : 18) customers that owed the Company more than INR 3,000 Lakhs each and accounted for approximately 83% (Previous year 2021-22: 85%) of all the receivables outstanding. As at March 31, 2023, the Company has certain trade receivables that have not been settled by the contractual due date but are not considered to be impaired .(Also refer note 6)

The credit risk for cash and cash equivalents, balance with banks are considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Other financial assets mainly comprises of tender deposits and security deposits which are given to customers or other governmental agencies in relation to contracts executed and are assessed by the Company for credit risk on a continuous basis.The credit risk on these balances are estimated to be low as at March 31,2023.

c) Liquidity risk

The Companyâs objective is to maintain cash and marketable securities to meet its liquidity requirements for 30-day periods at a minimum. This objective was met for the reporting periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities.

40 Events after the reporting period

No adjusting or significant non-adjusting events have occurred between the reporting date (March 31, 2023) and the date of authorisation (May 19, 2023) other than those disclosed under respective notes.

41 Contingent liabilities, commitments and guarantees a) Claims against the Company not acknowledged as debt
Particulars	As at March 31, 2023	As at March 31, 2022
Income tax demand including interest contested in appeal for various assessment years	537	413
Indirect tax matters under dispute including interest contested in appeal for various years	6,479	6,837
b) Capital commitments The estimated amounts of contracts to be executed on capital account and not provided for (net of advances) Nil (Previous year - Nil). c) Guarantees excluding financial guarantees
Particulars	As at March 31, 2023	As at March 31, 2022
Guarantees issued by the Company for:
- subsidiaries	2,606	6,005

42 Segment reporting

All investments are non current in nature and invested in group companies as equity instruments, hence return on investment ratio is not computed.

44 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.(Previous Year : Nil)

45 Additional disclosures under Schedule III Division II of the Companies Act

b. The Company has not been declared as a wilful defaulter by any bank or financial institution or government or any government authority

d. There has been no charges or satisfaction yet to be registered with ROC beyond the statutory period as at the end of the year.

e. The Company has not traded or invested in Crypto currency or Virtual currency during the financial year ended March 31, 2023. (Previous Year :Nil)

46 a) Pursuant to the inordinate delays in recovery of the receivables from Tecpro due to the prolonged legal proceedings

at the National Company Law Tribunal (âNCLTâ) and from Andhrapradesh Power Generation Corporation Limited (APGENCO) due to project completion delays not attributable to the Company, the receivables and other current assets pertaining to these projects to the tune of INR 28,923 Lakhs have been written off and reported under Exceptional Items in the Statement of Profit and Loss in the current financial year. The Company will continue its efforts to pursue the recovery of these balances.

b) The Company has completed the project for Telangana State Generation Corporation Limited (TSGENCO) and is in the process of recovering the receivables and retentions of INR 11,078 Lakhs. The Supreme Court has appointed a sole arbitrator to decide on all claims between the parties and the Company expects to recover the receivables and retention on completion of the arbitration process.

Mar 31, 2018

1. Nature of Operations

VA Tech Wabag Limited (âthe Companyâ), its subsidiaries, associates and joint venture (collectively referred to as âthe Groupâ) is one of the worldâs leading companies in the water treatment field. The Companyâs principal activities include design, supply, installation, construction and operational management of drinking water, waste water treatment, industrial water treatment and desalination plants. The shares of the Company are listed in the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The Company is domiciled in India and its registered office and its principal place of business is âWABAG HOUSE, No.17, 200 Feet Thoraipakkam - Pallavaram Main Road, Sunnambu Kolathur, Chennai - 600 117.

2. Basis of preparation of financial statements

2.1 General information and statement of compliance with Indian Accounting Standards (Ind AS)

The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standard) Amendment Rules, 2016 as notified under section 133 of Companies Act, 2013 (the âActâ) and other relevant provisions of the Act.

The standalone financial statements as at and for the year ended 31 March 2018 are approved and authorized for issue by the Board of Directors on 25 May 2018.

The standalone financial statements of the Company are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain financial assets and financial liabilities that have been measured at fair value. These standalone financial statements are presented in lakhs of Indian rupees which is also the Companyâs functional currency, except per share data and as otherwise stated. Figures for the previous years have been regrouped/rearranged wherever considered necessary to conform to the figures presented in the current year,

2.2 Recent accounting pronouncements

Ministry of Corporate Affairs (âMCAâ) through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind ASs which the Company has not applied as they are effective for annual periods beginning on or after 01 April, 2018:

a) Ind AS 115- Revenue from Contract with Customers:

Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standards Ind AS 11 Construction Contracts and Ind AS 18 Revenue, when it becomes effective. The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The standard can be applied either retrospectively to each prior reporting period presented or can be applied retrospectively with recognition of cumulative effect of contracts that are not completed as at the date of initial application.

b) Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:

The amendment clarifies on the accounting of transactions that include receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. In the event of multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The Appendix further clarifies that the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the asset, expense or income is the date on which an entity has received or paid an advance consideration in a foreign currency towards the asset, expense or income.

Based on the initial assessment, the Company does not expect any material change to the financial statements with the implementation of the above pronouncements.

* Pursuant to an exclusive contractual arrangement providing for a majority share in the economic interests and control of voting power in the Project-I of the Company, the investment was classified as a subsidiary at inception. During the year ended 31 March 2016, consequent to a similar arrangement for Project-II providing for majority rights in the new project to the other partner, the investment in the legal entity has been reclassified as an associate based on ownership as against the economic interests in the respective projects.

** Pursuant to the statutory document providing for a majority share of 90.6% of the economic interests in the entity, the Company has assessed and determined that it has power over the entity, exposure, or rights, to variable returns and the ability to use its power to affect the amount of the Companyâs returns. Accordingly, the investment has been classified as a subsidiary.

*** Pursuant to an exclusive contractual arrangement providing for a share of 100% of the economic interests in the entity, the Company has assessed and determined that it has power over the entity, exposure, or rights, to variable returns and the ability to use its power to affect the amount of the Companyâs returns. Accordingly, the investment has been classified as a subsidiary.

Trade receivables include due from related parties amounting to Rs.5,173 lakhs (31 March 2017: Rs.11,569 lakhs). The carrying amount of the current trade receivable is considered a reasonable approximation of fair value as is expected to be collected within twelve months, such that the effect of any difference between the effective interest rate applied and the estimated current market rate is not significant. There are no receivables due from directors or other officers of the company.

All of the Companyâs trade receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and an allowance for credit losses of Rs.4,654 lakhs (2016-17: Rs.375 lakhs) has been recorded accordingly within other expenses. The Company has impaired its trade receivables using a provisioning matrix representing expected credit losses based on a range of outcomes.

There are no other financial assets due from directors or other officers of the Company. The carrying amount of the other financial assets are considered as a reasonable approximation of fair value.

A description of the Companyâs financial instrument risks, including risk management objectives and policies are given in Note 43.

In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

All deferred tax assets have been recognized in the balance sheet.

All of the Companyâs other current assets have been reviewed for indicators of impairment. There are no allowances for credit losses for the year ended 31 March 2018 and 31 March 2017. There are no advances due from directors or other officers of the Company.

c) Terms/right attached to equity shares

The Company has issued only one class of equity shares having a face value of Rs.2 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, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except interim dividend, which can be approved by the Board of Directors. In the event of liquidation, 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.

d) Bonus issue

The Company had allotted 27,142,555 equity shares of face value Rs.2 per share as fully paid bonus shares during the year ended 31 March 2015, pursuant to the bonus issue approved by the shareholders through postal ballot by capitalization of securities premium. Bonus share of one equity share for every equity share held had been allotted.

e) Shares reserved for issue under options

The Company has reserved issuance of 122,714 equity shares of Rs.2 each (31 March 2017 : 294,440 shares of Rs.2 each) for offering to eligible employees of the Company and its subsidiaries under Employees Stock Option Plan (ESOP).

f) Buy back of shares

There were no buy back of shares and shares issued pursuant to contract without payment being received in cash during the last 5 years immediately preceding 31 March 2018.

g) Capital management

The Companyâs capital management objectives are:

- to safeguard the Companyâs ability to continue as a going concern, and continue to provide optimum returns to the shareholders and all other stakeholders by building a strong capital base.

- to maintain an optimum capital structure to reduce the cost of capital

A provision is recognized for expected warranty claims on construction contracts completed, based on past experience of level of repairs and returns. It is expected that these costs would be predominantly incurred within one year from the balance sheet date, which generally coincides with the completion of warranty period of the contract. The assumption used to calculate the provision for warranties are based on the Companyâs current status of contracts under execution and information available about expenditure more probable to be incurred based on the Companyâs warranty period for contracts completed.

The Company provides performance guarantees to its customers which require it to complete projects within a specified timeframe. In the event of failure to complete a project as scheduled, or in case of a performance shortfall, the Company may generally be held liable for penalties in the form of agreed liquidated damages. The Company provides for liquidated damages when it reasonably expects that a delay in the completion of the project or a shortfall in the performance parameters might give rise to a claim from the customer. Liquidated damages are generally measured and recognized in accordance with the terms of the contracts with customers.

d) Provision for employee benefits i) Gratuity

i n accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (âthe Gratuity Planâ) covering eligible employees. The Gratuity plan provides for a lump sum payment to vested employees on retirement (subject to completion of five years of continuous employment), death, incapacitation or termination of employment that are based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity plan are determined by actuarial valuation on the reporting date and the Company makes annual contribution to the gratuity fund maintained by ICICI Prudential Life Insurance.

The following table summarise the components of net benefit expenses recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the Gratuity.

The Company assesses these assumptions with the projected long-term plans of growth and prevalent industry standards.

Based on historical data, the Company expects contributions of Rs.102 lakhs to be paid for financial year 2018-19. The weighted average duration of the defined benefit obligation as at 31 March 2018 is 4.8 years (31 March 2017: 5.6 years)

(ii) Compensated absences

The Company permits encashment of compensated absences accumulated by their employees on retirement, separation and during the course of service. The liability in respect of the Company, for outstanding balance of privilege leave at the balance sheet date is determined and provided on the basis of actuarial valuation performed by an independent actuary. The Company does not maintain any plan assets to fund its obligation towards compensated absences. The total Compensated absences recognized in the statement of profit and loss for the year is Rs.264 lakhs (2016-17 Rs.85 lakhs).

Terms, repayment and guarantee details of short-term borrowings

The Company has availed packing credit facilities in Indian rupees and US dollars at an interest rate of 4.65% to 5.50% (31 March 2017: 5.5% to 6.30%) and 1.78% to 4.46% (31 March 2017: 1.41% to 2.15%) respectively. These packing credits are repayable within 180 days, as applicable, from the date of availment and are secured against foreign currency receivables.

3 Financial instruments

The carrying value and fair value of financial instruments by categories are as follows:

4 Exceptional item

Consequent to International Water Treatment LLC, a Joint venture entity in Oman (IWT/Joint venture), being unsuccessful in its arbitration claim for Liquidated Damages (LD) against project related time overruns, the Company, as part of its contractual obligation under the EPC contract, had to pay its share of LD for the claim levied on the Joint venture. Pursuant to the arbitration award rejecting such a claim, the Company has made payments amounting to Rs.7,860 lakhs towards its share of LD and costs, as investments in IWT. Consequent to IWT carrying out a capital reduction, the Company has impaired its entire investments in the Joint venture. An impairment loss of Rs.6,432 lakhs (net of provisions already made in the earlier years) has been accounted during the previous year and the same has been disclosed as an Exceptional item in the Statement of profit and loss.

5 Income taxes

The major components of income tax expense for the year ended 31 March 2018 and 31 March 2017 are:

Disclosures in respect of non-cancellable operating leases

The lease rentals charged for the years ended 31 March 2018 and 31 March 2017 and maximum obligations on long-term, non-cancellable operating leases payable as per the rentals stated in the respective agreements are as below:

6 Employee stock based option Employee share based plan- ESOP 2010 Scheme

In August 2010, the Board of Directors approved and the Company adopted the âESOP 2010â (the âPlanâ) under which not more than 467,831 shares of the Companyâs equity shares was reserved for issuance to employees. The Board of Directors determined that the options granted under the Plan would vest not less than one year and not more than five years from the date of grant. The exercise price of options shall be Rs.900 (Face value of Rs.5 each) on the grant date.

During the year ended 31 March 2018 and 31 March 2017, the weighted average share price of options exercised under the Plan on the date of exercise was Rs.594 and Rs.548. The weighted average remaining contractual life of the Plan outstanding as of 31 March 2018 and 31 March 2017 is 0.5 year and 1.5 years respectively.

7 Fair value measurement

Fair value measurement hierarchy

The Company holds certain fixed income investments and other financial assets such as employee loans, deposits etc. which must be measured using the fair value hierarchy and related valuation methodologies. The guidance specifies a hierarchy of valuation techniques based on whether the inputs to each measurement are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Companyâs assumptions about current market conditions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e prices) or indirectly (i.e derived from prices)

- Level 3: Inputs for assets or liabilities that are not based on observable market data (unobservable inputs)

The following table shows the Levels within the hierarchy of financial and non-financial assets and liabilities measured at fair value on a recurring basis as at 31 March 2018, 31 March 2017:

8 Nature and extent of risks arising from financial instruments and respective financial risk management objectives and policies

The Companyâs principal financial liabilities comprise of loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Companyâs operations and to provide guarantees to support its group companies operations. The Companyâs principal financial assets include investments, loans, trade and other receivables, cash and short-term deposits that derive directly from its operations. The Company also enters into derivative transactions and holds short term investments.

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management is supported by the Group Treasury Team that advises on financial risks and the appropriate financial risk governance framework in accordance with the Companyâs policies and risk objectives. All derivative activities for risk management purposes are carried out by Group Treasury Team that have the appropriate skills, experience and supervision. It is the Groupâs policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors review and agree on policies for managing each of these risks, which are summarised below.

a) Market risk

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates are managed by borrowing at fixed interest rates. During the year Company did not have any floating rate borrowings.

Foreign currency risk

To mitigate the Companyâs exposure to foreign currency risk, cash flows are monitored and forward exchange contracts are entered into in accordance with the Companyâs risk management policies. Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Forward exchange contracts are mainly entered into for net foreign currency exposures that are not expected to be offset by other same currency transactions.

Foreign currency denominated financial assets and financial liabilities which expose the Company to currency risk are disclosed below. The amounts shown are those reported to key management translated at the closing rate:-

Currency risk (or foreign exchange risk) arises on financial instruments that are denominated in a foreign currency, i.e. in a currency other than the functional currency in which they are measured. For the purpose of this disclosure, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency.

The following table illustrates the sensitivity of profit and equity in regards to the Companyâs financial assets and financial liabilities and the USD/â exchange rate and EUR/â exchange rate âall other things being equalâ. It assumes a /- 1% change of the Rs. /USD and Rs. /EUR exchange rate for the year ended 31 March 2018 (31 March 2017: 1%).

If the â had strengthened against the USD by 1% during the year ended 31 March 2018 (31 March 2017: 1%), and EUR by 1% during the year ended 31 March 2018 (31 March 2017: 1%) respectively then this would have had the following impact on profit before tax and equity before tax:

If the â had weakened against the USD by 1% during the year ended 31 March 2018 (31 March 2017: 1% ) and EUR by 1% during the year ended 31 March 2018 (31 March 2017: 1% ) respectively, there would be an equal but opposite effect on the above currencies to the amount shown above, on the basis that all other variables remain constant.

The movement in the pre-tax effect is a result of a change in the fair value of derivative financial instruments not designated in a hedge relationship and monetary assets and liabilities denominated in USD and EUR. Although the derivatives have not been designated in a hedge relationship, they act as an economic hedge and will offset the underlying transactions when they occur.

b) Credit risk

Credit risk is the risk that a counterparty fails to discharge an obligation to the Company. The Company is exposed to this risk for various financial instruments, for example trade receivables, placing deposits, investment in mutual funds etc. the Companyâs maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at 31 March, as summarised below:

In respect of trade receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Customer credit risk is managed based on the Companyâs established policy, procedures and control relating to customer credit risk management, pursuant to which outstanding customer receivables are regularly monitored by the management. Outstanding customer receivables are regularly monitored by the management to ensure the risk of credit loss is minimal. Credit quality of a customer is assessed based on historical information in relation to pattern of collections, defaults and credit worthiness of the customer. As at 31 March 2018, the Company had 12 (Previous year 2016-17 : 10) customers that owed the Company more than Rs.3,000 lakhs each and accounted for approximately 80% (Previous year 2016-17: 78%) of all the receivables outstanding. As at 31 March 2018, the Company has certain trade receivables that have not been settled by the contractual due date but are not considered to be impaired.

The credit risk for cash and cash equivalents, fixed deposits and mutual funds are considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

c) Liquidity risk

9 Events after the reporting period

No adjusting or significant non-adjusting events have occurred between the reporting date (31 March 2018) and the date of authorization except for proposed dividend as disclosed in note 17.

10 Contingent liabilities, commitments and guarantees

a) Claims against the Company not acknowledged as debt

b) Capital commitments

The estimated amounts of contracts to be executed on capital account and not provided for (net of advances) Nil (Previous year - Nil). Other commitments are cancellable at the option of the company and hence not disclosed.

c) Guarantees excluding financial guarantees

11 Segment reporting

The Company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with Ind AS 108, Operating segments, the Company has disclosed the segment information in the consolidated financial statements.

12 During the financial year, pursuant to a corporate insolvency resolution process (âCIRPâ) ordered by National Company Law Tribunal (âNCLTâ) against M/s. Tecpro Limited (âTecproâ), erstwhile lead consortium member of the projects in Kakatiya and Rayalaseema areas of the states of Telangana and Andhra Pradesh respectively. The Company filed a claim amounting to Rs.58,793 Lakhs representing the monies receivable from Tecpro, included under financial assets in books of accounts of the Company. The Company has been contractually appointed as the consortium leader and is currently in the process of recovering these dues directly from the ultimate customer of the projects. The Company has estimated certain expected credit losses in the books of accounts and is confident of recovering the balance dues from the ultimate customer in due course.

Notes 1 to 47 form an integral part of the standalone financial statements.

Mar 31, 2017

1. Terms/right attached to equity shares

The Company has issued only one class of equity shares having a face value of '' 2 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, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except interim dividend, which can be approved by the Board of Directors. In the event of liquidation, 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.

2. Bonus issue

The Company had allotted 2,71,42,555 equity shares of face value Rs. 2 per share as fully paid bonus shares during the year ended 31 March 2015, pursuant to the bonus issue approved by the shareholders through postal ballot by capitalization of share premium. Bonus share of one equity share for every equity share held had been allotted.

3. Shares reserved for issue under options

The Company has reserved issuance of 2,94,440 equity shares of Rs. 2 each (Previous year : 4,65,785 shares of Rs. 2 each) for offering to eligible employees of the Company and its subsidiaries under Employees Stock Option Plan (ESOP).

4. Buy back of shares

There were no buy back of shares and shares issued pursuant to contract without payment being received in cash during the last 5 years immediately preceding 31 March 2017.

5. Capital management

The Company''s capital management objectives are:

-to safeguard the Company''s ability to continue as a going concern, and continue to provide optimum returns to the shareholders and all other stakeholders by building a strong capital base.

-to maintain an optimum capital structure to reduce the cost of capital.

For the purpose of the Company''s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders plus its borrowings, if any, less cash and cash equivalents as presented on the face of the balance sheet.

6. Provision for employee benefits

7. Gratuity

In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("the Gratuity Planâ) covering eligible employees. The Gratuity Plan provides for a lump sum payment to vested employees on retirement (subject to completion of five years of continuous employment), death, incapacitation or termination of employment that are based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation on the reporting date and the Company makes annual contribution to the gratuity fund maintained by ICICI Prudential Life Insurance.

8. Compensated absences

The Company permits encashment of compensated absences accumulated by their employees on retirement, separation and during the course of service. The liability in respect of the Company, for outstanding balance of privilege leave at the balance sheet date is determined and provided on the basis of actuarial valuation performed by an independent actuary. The Company does not maintain any plan assets to fund its obligation towards compensated absences. The total Compensated absences recognized in the schedule of profit and loss for the year is Rs. 85 lakhs (2015-16 Rs. 89 lakhs).

9. Fair value measurement

Fair value measurement hierarchy

The Company holds certain fixed income investments and other financial assets such as employee loans, deposits etc. which must be measured using the fair value hierarchy and related valuation methodologies. The guidance specifies a hierarchy of valuation techniques based on whether the inputs to each measurement are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company''s assumptions about current market conditions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

â¢ Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: Unobservable inputs for the asset or liability.

10. Nature and extent of risks arising from financial instruments and respective financial risk management objectives and policies

The Company''s principal financial liabilities comprise of loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its and group companies operations. The Company''s principal financial assets include loans, trade and other receivables, cash and short-term deposits that derive directly from its operations. The Company also enters into derivative transactions and holds short term investments.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by the Group Treasury Team that advises on financial risks and the appropriate financial risk governance framework in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by Group Treasury Team that have the appropriate skills, experience and supervision. It is the Group''s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors review and agree on policies for managing each of these risks, which are summarized below.

11. Market risk

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates are managed by borrowing at fixed interest rates. During the year Company did not have any floating rate borrowings.

Foreign currency risk

Most of the Company''s transactions are carried out in Indian rupees. Exposures to currency exchange rates arise from the Company''s overseas sales and purchases, which are primarily denominated in US dollars (USD) and Euro (EUR).

To mitigate the Company''s exposure to foreign currency risk, cash flows are monitored and forward exchange contracts are entered into in accordance with the Company''s risk management policies. Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Forward exchange contracts are mainly entered into for net foreign currency exposures that are not expected to be offset by other same currency transactions.

The following table illustrates the sensitivity of profit and equity in regards to the Company''s financial assets and financial liabilities and the USD/INR exchange rate and EUR/INR exchange rate ''all other things being equal''. It assumes a /- 1% change of the INR/USD exchange rate for the year ended at 31 March 2017 (31 March 2016: 1%, 1 April 2015: 1%). A /- 1% change is considered for the INR/EUR exchange rate for the year ended (31 March 2016: 1%, 1 April 2015: 1%).

If the INR had strengthened against the USD by 1% during the year ended 31 March 2017 (31 March 2016: 1%, 01 April 2015: 1%) and EUR by 1% during the year ended 31 March 2017 (31 March 2016: 1%, 01 April 2015: 1%) respectively then this would have had the following impact on profit before tax and equity before tax:

The Company continuously monitors defaults of customers and other counterparties, identified either individually or by the Company, and incorporates this information into its credit risk controls. The Company''s policy is to transact only with counterparties who are highly creditworthy which are assessed based on internal due diligence parameters.

In respect of trade receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various geographical areas. Based on historical information about customer default rates management consider the credit quality of trade receivables that are not past due or impaired to be good.

The credit risk for cash and cash equivalents, fixed deposits and mutual funds are considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

12. Liquidity risk

Liquidity risk is that the Company might be unable to meet its obligations. The Company manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business. The data used for analyzing these cash flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on a monthly, quarterly, and yearly basis depending on the business needs. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period.

The Company considers expected cash flows from financial assets in assessing and managing liquidity risk, in particular its cash resources and trade receivables. The Company''s existing cash resources and trade receivables significantly exceed the current cash outflow requirements. Cash flows from trade receivables are all contractually due within six months except for retention and long term trade receivables which are governed by the relevant contract conditions.

The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, and short-term borrowings. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders.

13. First-time adoption of Ind AS

These are the Company''s first financial statements prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with Companies (Accounting Standard) Rules, 2006, notified under section 133 of the Act and other relevant provisions of the Act (Previous GAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on or after 31 March 2017, together with the comparative period data as at and for the year ended 31 March 2016. This note explains the principal adjustments made by the Company in restating its statement of financial position as at 1 April 2015 and its previously published financial statements as at and for the year ended 31 March 2016 under previous GAAP.

14. First time adoption exemptions applied

Upon transition, Ind AS 101 permits certain exemptions from full retrospective application of Ind AS. The Company has applied the mandatory exceptions and certain optional exemptions, as set out below:

Mandatory exceptions adopted by the Company

15. De-recognition of financial assets and liabilities

The de-recognition criteria of Ind AS 109 Financial Instruments has been applied prospectively for transactions occurring on or after the date of transition to Ind AS. Non-derivative financial assets and non-derivative financial liabilities derecognized before date of transition under previous GAAP are not recognized on the opening Ind AS Balance Sheet.

16. Estimates

Hindsight is not used to create or revise estimates. The estimates made by the Company under previous GAAP were not revised for the application of Ind AS except where necessary to reflect any differences in accounting policies or errors.

Optional exemptions availed by the Company

17. property, plant and equipment

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. The Company has elected to use carrying value under previous GAAP as the deemed cost on the date of transition to Ind AS for all property, plant and equipment (including intangible assets). Land and buildings (properties) were carried in the Balance Sheet prepared in accordance with Previous GAAP on the basis of historical cost. The Company has elected to regard those values of property as deemed cost at the date of the transition since they were broadly comparable to fair value. Accordingly, the Company has not revalued the property at 01 April 2015.

18. Investment in subsidiaries, joint ventures and associates

Investment in subsidiaries, joint ventures and associates are measured at the carrying value under previous GAAP on the date of transition to Ind AS. These carrying value under previous GAAP are considered to be the deemed cost as at the date of transition.

19. Classification and measurement of financial assets

Ind AS 101 requires an entity to assess the classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS. The Company has elected to apply this exemption to its financial assets.

20. Leases

Appendix C to Ind AS 17, Leases, requires an entity to assess whether a contract or arrangement contains a lease. As per Ind AS 17, this assessment should be carried out at inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.

Footnotes to the reconciliations

21. Fair valuation of Investments

Under the previous GAAP, investments in mutual funds were classified as long-term investments or current investments based on intended holding period or reliability and were accounted at cost less provision for diminution in value of investments. Under Ind AS, these investments are required to be measured at fair value. The Company has designated the investments as classified at fair value through profit or loss. The resulting fair value changes of these investments have been recognized in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31 March 2016.

22. Expected credit losses

Under previous GAAP, the Company had created provision for doubtful receivables based on overdue receivables that reflected incurred losses. Under Ind AS 109 ''Financial Instruments'', the Company has to determine expected credit loss that reflects, amongst other factors, unbiased probability weighted amounts determined by evaluating a range of outcomes based on supportable and available information. The Company has used practical expedients for measuring these expected credit losses using a provisioning matrix. Based on this assessment, the Company impaired its financial assets by Rs. 2,886 lakhs on 01 April 2015 which has been recognized in opening retained earnings. The impact of Rs. 635 lakhs for year ended on 31 March 2016 has been recognized in the statement of profit and loss.

Under previous GAAP, the provision for impairment of financial guarantees are recognized only when there is a "more likely than notâ possibility of a probable outflow of economic resources. However, under Ind AS 109, an entity shall recognize a loss allowance for expected credit losses on a financial guarantee contract at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. The impairment allowance has been determined based on Expected Credit Loss model (ECL). Under ECL model, the Company impaired its financial guarantees by Rs. 1,398 lakhs on 01 April 2015 which has been recognized in opening retained earnings.

23 provisions

Under previous GAAP, the proposed dividends (along with related dividend distribution tax) are recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividends are considered as a non-adjusting post balance sheet event and recognized as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid. Accordingly the provision for proposed dividend, including dividend distribution tax, recognized under previous GAAP has been reversed.

24. Defined benefit obligation

Both under previous GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under previous GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind-AS, re-measurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income.

25. Other Comprehensive Income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes re-measurements of defined benefit plans, foreign exchange differences arising on translation of foreign operations, effective portion of gains and losses on cash flow hedging instruments and fair value gains or (losses) on FVOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP.

26. Deferred tax

The various transitional adjustments lead to temporary differences that result in deferred tax liability/asset (as the case may be). Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or Other Comprehensive Income. On the date of transition, the net impact on deferred tax assets is of Rs. 1,485 lakhs (31 March 2016: Rs. 1,705 lakhs).

27. Loans

Employee loans were carried at cost under previous GAAP. However, under Ind AS, these loans are classified as financial asset and is carried at its fair value.

28. Events after the reporting period

No adjusting or significant non-adjusting events have occurred between the reporting date (31 March 2017) and the date of authorization except for proposed dividend as disclosed in note 17.

29. The Company had been claiming deduction under section 80-IA of the Income Tax Act, 1961 from the financial year ended 31 March 2002 as a developer of infrastructure projects in India. The Finance Act 2009 amended the provisions of Section 80-IA retrospectively with effect from 01 April 2000 to make it inapplicable for persons having a mere works contract with the government or statutory authority. The Company believed that this amendment was in line with the objective of the government of incentivizing only a developer of infrastructure facility and not a mere works contractor. The Company strongly opined that, being a developer of infrastructure turnkey development contracts starting from the conceptualization to execution assuming significant financial commitment and risks, the Company would be treated as a developer and the amendment would not apply to it. Based on a legal opinion from a Senior Counsel, the Company had filed a writ petition in the High Court of Madras challenging the Constitutional validity of the retrospective amendment. The Company had subsequently received favourable Appellate Orders from CIT (Appeals) from financial years 2001-02 to 2006-07 allowing the benefit under section 80-IA of the Income Tax Act, while, the Income Tax department had raised a demand for Rs. 939 lakhs denying benefit under section 80-IA for the financial year 2008-09. Further to this, the Income Tax department had gone on appeal against the CIT (Appeals) order and was pending at the Income Tax Appellate Tribunal till the previous year. Considering these facts and as a matter of prudence, the Company had disclosed the total tax benefit so far claimed u/s 80-IA as contingent liability in the standalone financial statements upto 31 March 2016. However during the current year favourable orders from Income Tax Appellate Tribunal have been received by the Company which has not been contested. Hence the demand has not been considered as a contingent liability.

30. The Company, also based on an opinion taken from a professional firm believes that the interest under section 234B on account of 80-IA disallowance discussed in paragraph ''a'' above amounting to Rs. 2,855 lakhs as at 31 March 2016 would not be payable as the Jurisdictional High Court rulings and various assessment orders commencing from financial year 2001-02 are in favour of the Company on this aspect and on this basis, the amount of interest had been disclosed as contingent liability. However as detailed in paragraph ''a'' above, the same has not been considered as a contingent liability during the current year.

31. Capital commitments

32. Segment reporting

Mar 31, 2016

1 General Information

VA Tech Wabag Limited (''the Company''), its subsidiaries, associates and joint ventures (collectively referred to as ''the Group'') is one of the world''s leading companies in the water treatment field. The group''s principal activities include design, supply, installation, construction and operational management of drinking water, waste water treatment, industrial water treatment and desalination plants. The shares of the Company are listed in the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

All amounts in the standalone financial statements are presented in Rupees in lakhs except per share data and as otherwise stated. Figures for the previous year have been regrouped / rearranged wherever considered necessary to conform to the figures presented in the current year.

The Company is in the business of execution of turnkey projects for water management and hence the requirements under paragraph 5(ii)(a), 5(ii)(b) and 5(ii) (d) of Part II of Schedule III to the Companies Act, 2013 are not applicable.

2.1 Capital Commitments

The estimated amount of contracts to be executed on capital account and not provided for, (net of advances) Rs. Nil (Previous year - Rs. 516 lakhs). Other commitments are cancellable at the option of the Company and hence not disclosed.

a) The Company had been claiming deduction under section 80-IA of the Income Tax Act, 1961 from the financial year ended 31 March 2002 as a developer of infrastructure projects in India. The Finance Act 2009 amended the provisions of Section 80-IA retrospectively with effect from 01 April 2000 to make it inapplicable for persons having a mere works contract with the government or statutory authority. The Company believes that this amendment is in line with the objective of the government of incentivising only a developer of infrastructure facility and not a mere works contractor.

The Company strongly opines that, being a developer of infrastructure turnkey development contracts starting from the conceptualisation to execution assuming significant financial commitment and risks, the Company would be treated as a developer and the amendment would not apply to it. Based on a legal opinion from a Senior Counsel, the Company has filed a writ petition in the High Court of Madras challenging the Constitutional validity of the retrospective amendment. The Company has subsequently received favourable Appellate Orders from CIT (Appeals) from financial years 2001- 02 to 2006-07 allowing the benefit under section 80-IA of the Income Tax Act, while, the Income Tax department has raised a demand for Rs.939 lakhs denying benefit under section 80-IA for the financial year 2008-09. Further to this, the Income Tax department had gone on appeal against the CIT (Appeals) order and is currently pending at the Income Tax Appellate Tribunal. Considering these facts and as a matter of prudence, the Company has disclosed the total tax benefit so far claimed u/s 80-IA as contingent liability in the standalone financial statements for 31 March 2016. However, on a conservative basis the liability on account of possible denial of deduction prospectively from 01 April 2009 has been fully provided as current tax in the respective years.

b) The Company, also based on an opinion taken from a professional firm believes that the interest under section 234B on account of 80-IA disallowance discussed in paragraph ''a'' above amounting to Rs. 2,855 lakhs as at 31 March 2016 would not be payable as the Jurisdictional High Court rulings and various assessment orders commencing from financial year 2001-02 are in favour of the Company on this aspect and on this basis, the amount of interest has been disclosed as contingent liability.

c) The additional liability assessed by Indirect tax authorities for various financial years from 2003-04 to 2012-13 amounts to Rs. 8,050 lakhs.

2.2 Transfer Pricing

As per the Transfer pricing norms introduced in India with effect from 1 April 2001, the Company is required to use certain specific methods in computing arm''s length price of international transactions between the associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of transactions/class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Transfer pricing study for the fiscal year ended 31 March 2016 is in progress and accordingly, the contracts may be amended subsequently and related adjustment, if any, will be quantified upon completion of this study. However, in the opinion of the Management, the outcome of the study will not have material impact on the Company''s results.

2.3 Corporate Social Responsibility

As mandated by Section 135 of the Companies Act, 2013, the company has constituted a CSR committee. The company has identified areas for its CSR activities as specified in schedule VII of the Companies Act, 2013 and incurred expenses as disclosed in Note 27 to these financial statements towards such activities.

3. Interest in joint venture

The group has 32.5% (31 March 2015 : 32.5%) interest in International Water Treatment LLC, a joint venture, classified as a Jointly controlled entity domiciled in Oman which is involved in construction of a desalination plant. The joint venture was incorporated during February 2013 and commenced operations from April 2013.

4. Segment reporting

The Company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with Accounting Standard 17, Segment Reporting, the Company has disclosed the segment information in the consolidated financial statements.

Mar 31, 2013

1.1 General Information

All amounts in the financial statements are presented in Rupees in Lakhs except per share data and as otherwise stated. Figures for the previous year have been regrouped / rearranged wherever considered necessary to conform to the figures presented in the current year.

The Company is in the business of execution of turnkey projects for water management and hence the requirements under paragraph 5(ii)(a), 5(ii)(b) and 5(ii)(d) of Part II of Schedule VI to the Companies Act, 1956 are not applicable.

1.2 Company Overview

VA TECH WABAG Limited (''the Company''), its subsidiaries, associates and joint ventures (collectively referred to as ''the Group'') is one of the world''s leading companies in the water treatment field. The group''s principal activities include design, supply, installation, and operational management of drinking water and waste water treatment plants.

VA TECH WABAG Limited was part of the Austrian group, VA Tech and formed the water technology and engineering division of the Company.

In July 2005, VA TECH WABAG worldwide was acquired by Siemens. Soon after in September 2005, the Company had a Management buyout with 20% of the shares with the management team and 60% of the shares with ICICI Ventures and the rest with Siemens.

In November 2007, the Company acquired 100% stake in its erstwhile parent VA TECH WABAG GmbH, Vienna through its wholly owned subsidiary VA TECH WABAG (Singapore) Pte Limited.

Pursuant to an Initial Public offering of its shares, the shares of the Company were listed on 13 October, 2010 in the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

2 Others

2.1 Capital Commitments

The estimated amount of contracts to be executed on capital account and not provided for (net of advances) Rs.2,138 lakhs (Previous year - Rs.1,612 lakhs). Other commitments are cancellable at the option of the Company and hence not disclosed.

2.2 Contingent liabilities Rs. in Lakhs

As at As at 31 March 2013 31 March 2012

Income tax impact on account of non- deductibility U/s 80-IA (Refer ''a'' below) 2,422 2,422

- Out of the above, Income tax demand contested in appeal 939 939

Interest U/s 234B on the tax liability referred above (Refer ''b'' below) 1,968 1,672

Sales tax matters under dispute (Refer ''c'' below) 395 325

a) The Company had been claiming deduction under section 80-IA of the Income Tax Act, 1961 from the financial year ended 31 March 2002 as a developer of infrastructure projects in India. The Finance Act 2009 amended the provisions of Section 80-IA retrospectively with effect from 01 April 2000 to make it inapplicable for persons having a mere works contract with the government or statutory authority. The Company believes that this amendment is in line with the objective of the government of incentivising only a developer of infrastructure facility and not a mere works contractor. The Company strongly opines that, being a developer of infrastructure turnkey development contracts starting from the conceptualisation to execution assuming significant financial commitment and risks, the Company would be treated as a developer and the amendment would not apply to it. Based on a legal opinion from a Senior Counsel, the Company has filed a writ petition in the High Court of Madras challenging the Constitutional validity of the retrospective amendment. Also, the Company has subsequently received favourable Appellate Orders from CIT (Appeals) from financial years 2001-02 to 2006-07 allowing the benefit under section 80-IA of the Income Tax Act, while, the Income Tax department has raised a demand for Rs.939 lakhs denying benefit under section 80-IA for the financial year 2008-09. Considering these facts and as a matter of prudence, the Company has presented the total tax benefit so far claimed u/s 80-IA as contingent liability in the financial statement for 31 March 2013.

However, on a conservative basis the liability on account of possible denial of deduction prospectively from 01 April 2009 has been fully provided as current tax in the respective years.

b) The Company, also based on an opinion taken from a professional firm believes that the interest under section 234B on account of 80-IA disallowance discussed in paragraph ''a'' above amounting to Rs. 1,968 lakhs as at 31 March 2013 would not be payable as the Jurisdictional High Court rulings and various assessment orders commencing from financial year 2001-02 are in favour of the Company on this aspect and on this basis, the amount of interest has been disclosed as contingent liability.

c) The additional liability assessed by sales tax authorities for various financial years from 2002-03 to 2008-09 amounts to Rs. 395 Lakhs.

2.3 Transfer Pricing

As per the Transfer pricing norms introduced in India with effect from 1 April 2001, the Company is required to use certain specific methods in computing arm''s length price of international transactions between the associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of transactions/class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Transfer pricing study for the fiscal year ended 31 March 2013 is in progress and accordingly, the contracts may be amended subsequently and related adjustment, if any, will be quantified upon completion of this study. However, in the opinion of the Management, the outcome of the study will not have material impact on the Company''s results.

Note 3

SEGMENT REPORTING

The Company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with Accounting Standard 17, Segment Reporting, the Company has disclosed the segment information in the consolidated financial statements.

Mar 31, 2012

1.1 General Information

All amounts in the financial statements are presented in Rupees in Lakhs except per share data and as otherwise stated. Figures for the previous year have been regrouped / rearranged wherever considered necessary to conform to the figures presented in the current year.

The Company is in the business of execution of turnkey projects for water management and hence the requirements under paragraph 5(ii)(a), 5(ii)(b) and 5(ii)(d) of Part II of Revised Schedule VI to the Companies Act, 1956 are not applicable.

1.2 Company Overview

VA TECH WABAG Limited ('the Company'), its subsidiaries, associates and joint ventures (collectively referred to as 'the Group') is one of the world's leading companies in the water treatment field. The group's principal activities include design, supply, installation, and operational management of drinking water and waste water treatment plants.

VA TECH WABAG Limited was part of the Austrian group, VA Tech and formed the water technology and engineering division of the Company.

In July 2005, VA TECH WABAG worldwide was acquired by Siemens. Soon after in September 2005, the Company had a Management buyout with 20% of the shares with the management team and 60% of the shares with ICICI Ventures and the rest with Siemens.

In November 2007, the Company acquired 100% stake in its erstwhile parent VA TECH WABAG GmbH, Vienna through its wholly owned subsidiary VA TECH WABAG (Singapore) Pte Limited.

Pursuant to an Initial Public offering of its shares, the shares of the company were listed on 13th October, 2010 in the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

2. Others

2.1 Capital Commitments

The estimated amount of contracts to be executed on capital account and not provided for (net of advances) Rs.1,612 lakhs (Previous year - Rs.771 lakhs). Other commitments are cancellable at the option of the Company and hence not disclosed.

2.2 Guarantees (Rs. in Lakhs)

As at As at 31 March 2012 31 March 2011

Bank Guarantees/ Letter of Credit issued by the banks on behalf of the Company

-Bank Guarantee 37,194 46,300

-Letter of Credit 14,928 9,787

Corporate Guarantees issued by the Company on behalf of its subsidiary

-For VA Tech Wabag GmbH, Vienna 14,949 11,506

3.1 Segment reporting

The Company operates in a single segment "Construction and maintenance of Water and Waste water treatment plant. Therefore, the Company's business does not fall under different business segments as defined by AS-17 "Segment Reporting' issued by Companies (Accounting Standards) Rules, 2006.

3.2 Transfer Pricing

As per the Transfer pricing norms introduced in India with effect from April 1, 2001, the Company is required to use certain specific methods in computing arm's length price of international transactions between the associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of transactions/class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Transfer pricing study for the fiscal year ending March 31, 2012 is in progress and accordingly, the contracts may be amended subsequently and related adjustment, if any, will be quantified upon completion of this study. However, in the opinion of the Management, the outcome of the study will not have material impact on the Company's results.

a) Terms/ rights attached to equity shares

The Company has issued only one class of equity shares having a face value of Rs. 2 per share (Previous year Rs. 5 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.

In the event of liquidation, 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.

During the year ended 31 March 2012, the amount of dividend per share, recognized as distributions to the equity shareholders of face value Rs. 2 each (Previous year Rs. 5 each) was Rs. 6 (Previous year : Rs. 10).

b) Shares reserved for issue under options

The Company had reserved issuance of 933,070 Equity shares of Rs. 2 each (Previous year : 455,410 shares of Rs. 5 each) for offering to eligible employees of the Company and its subsidiaries under Employees Stock Option Scheme (ESOS).

c) During the year, on 18 August 2011, the Company subdivided 10,576,434 fully paid equity shares of face value of Rs. 5 each into 26,441,085 equity shares of Rs. 2 each fully paid up pursuant to the approval of the shareholders at the Annual General Meeting on 15 July 2011

d) Employee share based plan

In August 2006, the Board of Directors approved and the Company adopted the "ESOP 2006" (the "Plan") under which not more than 204,080 shares of the Company's equity shares was reserved for issuance to employees. The Board of Directors determined that the options granted under the Plan would vest not less than one year and not more than five years from the date of grant. The exercise price of options shall be Rs 200 (face value of Rs. 10 each) on the grant date. The exercise period of the options is 4 years.

Employee share based plan- ESOP 2010 Scheme

In August 2010, the Board of Directors approved and the Company adopted the "ESOP 2010" (the "Plan") under which not more than 467,831 shares of the Company's equity shares was reserved for issuance to employees. The Board of Directors determined that the options granted under the Plan would vest not less than one year and not more than five years from the date of grant. The exercise price of options shall be Rs 900 (Face value of Rs. 5 each) on the grant date. The exercise period of the options is 4 years. The company has calculated the value of options using fair value, which is lower than the exercise price.

A provision is recognized for expected warranty claims on construction contracts completed, based on past experience of level of repairs and returns. It is expected that these costs would be incurred within two years from the balance sheet date, which generally coincides with the completion of warranty period of the contract. The assumption used to calculate the provision for warranties are based on the company's current status of contracts under execution and information available about expenditure more probable to be incurred based on the company's warranty period for contracts completed.

The Company provides performance guarantees to its customers which require it to complete projects within a specified timeframe. In the event of failure to complete a project as scheduled, or in case of a performance shortfall, the Company may generally be held liable for penalties in the form of agreed liquidated damages. The Company provides for liquidated damages when it reasonably expects that a delay in the completion of the project or a shortfall in the performance parameters might give rise to a claim from the customer. Liquidated damages are measured and recognized in accordance with the terms of the contracts with customers.

The Company provides for litigations, which is predominantly on account of disputes on statutory dues. The Company assesses each demand raised by the statutory authorities and based on responses and discussions with the attorneys and when there is a present obligation as a result of a past event, where the outflow of economic resources is probable and a reliable estimate of the amount of obligation, a provision for litigation is created. Instances when there is no present obligation or where the present obligation would probably not require outflow of resources or where the same cannot be reliably estimated, the same is disclosed as contingent liability in the financial statements. The Company reverses its provisions on receipt of a favorable order from the appropriate authority and when no further obligation is envisaged.

a) Employee benefits

i) Gratuity

In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("the Gratuity Plan") covering eligible employees. The Gratuity Plan provides for a lump sum payment to vested employees on retirement (subject to completion of five years of continuous employment), death, incapacitation or termination of employment that are based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation on the reporting date and the Company makes annual contribution to the gratuity fund maintained by LIC of India.

ii) Compensated absences

The Company permits encashment of compensated absences accumulated by their employees on retirement, separation and during the course of service. The liability in respect of the Company, for outstanding balance of privilege leave at the balance sheet date is determined and provided on the basis of actuarial valuation performed by an independent actuary. The Company doesn't maintain any plan assets to fund its obligation compensated absences.

1. During the year, the Company has availed two Secured overdraft facilities, one for an amount of Rs. 3,975 Lakhs from Punjab National Bank, Chennai at an interest rate of 10.40%-11.25%, which is secured against the Fixed Deposits of Rs. 4,300 Lakhs placed with the bank and another for amount of Rs. 2,843 Lakhs from Bank of India at an interest rate of 11.20%, which is secured against the Fixed Deposits of Rs. 3,000 Lakhs.

2. On 15 February 2012, the Company has availed a Working capital loan repayable on demand from Punjab National Bank for an amount of Rs. 3,500 Lakhs repayable within 60 days from the date of disbursement and is secured by the entire current assets both present and future.

b) Variable Pay and Productivity Reward

The Company has a performance related Variable pay program and the computation of the eligible pay for employees was hitherto made annually using various parameters depending on functional goals. During the year, the Company modified its Variable pay program such that it is related to quarterly target and performance. Pursuant to this updated scheme, the company has paid part of the variable pay related to performance of first half of the current year ended 31 March 2012 amounting to Rs. 102 Lakhs and has also accrued for the variable pay payable based on performance of second half of the year amounting to Rs.576 lakhs. The company has also expensed off an amount of Rs 664 lakhs, paid as variable pay to employees based on achievement of functional goals for year ended 2010-11.

Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article