xiv) Provisions, Contingent Liabilities and Contingent Assets
Provisions
The Company recognizes a provision when: it has a present legal or constructive obligation as a result of past events; it
is likely that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
Provisions are not recognized for future operating losses. Provisions are reviewed at each balance sheet and adjusted
to reflect the current best estimates.
Contingent liabilities and Contingent Assets
A contingent liability recognised in a business combination is initially measured at its fair value. Subsequently, it is
measured at the higher of the amount that would be recognised in accordance with the requirements for provisions above
or the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the
requirements for revenue recognition.
A contingent assets is not recognised unless it becomes virtually certain that an inflow of economic benefits will arise.
When an inflow of economic benefits is probable, contingent assets are disclosed in the financial statements. Contingent
liabilities and contingent assets are reviewed at each balance sheet date.
Onerous contracts
A provision for onerous contracts is measured at the present value of the lower expected costs of terminating the contract
and the expected cost of continuing with the contract. Before a provision is established, the Company recognizes
impairment on the assets with the contract.
xv) Earnings Per Share
Basic earnings per share is calculated by dividing the profit from continuing operations and total profit, both attributable
to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period.
xvi) Current and non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
An asset is current when it is:
• Expected to be realized or intended to sold or consumed in normal operating cycle,
• Held primarily for the purpose of trading,
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle,
• It is held primarily for the purpose of trading,
• It is due to be settled within twelve months after the reporting period, or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period. Deferred tax assets/liabilities are classified as non-current.
All other liabilities are classified as non-current.
xvii) Fair value measurement
The Company measures financial instruments such as derivatives and certain investments, at fair value at each balance
sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the
asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable
inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the
fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement
as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly
or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognized in the balance sheet on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input
that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
xviii) Financial instruments
Financial assets
I. Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value
through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Financial assets are classified, at initial recognition, as financial assets measured at fair value or as financial assets
measured at amortized cost.
II. Subsequent measurement
For purposes of subsequent measurement financial assets are classified in two broad categories:
• Financial assets at fair value
• Financial assets at amortized cost
Where assets are measured at fair value, gains and losses are either recognized entirely in the statement of profit
and loss (i.e. fair value through profit or loss), or recognized in other comprehensive income (i.e. fair value through
other comprehensive income).
A financial asset that meets the following two conditions is measured at amortized cost (net of any write down for
impairment) unless the asset is designated at fair value through profit or loss under the fair value option.
• Business model test: The objective of the Company's business model is to hold the financial asset to collect the
contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realize its fair value
changes).
• Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount outstanding.
A financial asset that meets the following two conditions is measured at Fair Value through Other Comprehensive
Income unless the asset is designated at fair value through profit or loss under the fair value option.
• Business model test: The financial asset is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets.
• Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount outstanding.
Even if an instrument meets the two requirements to be measured at amortized cost or fair value through other
comprehensive income, a financial asset is measured at fair value through profit or loss if doing so eliminates
or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an 'accounting
mismatch') that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on
them on different bases.
All other financial asset is measured at fair value through profit or loss.
All equity investments other than investment on subsidiary, joint venture and associates are measured at fair value
in the balance sheet, with value changes recognized in the statement of profit and loss.
III. Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognized (i.e. removed from the Company's balance sheet) when:
• The rights to receive cash flows from the asset have expired, or
• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement and
either:
(a) the Company has transferred substantially all the risks and rewards of the asset, or
(b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but
has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset,
the Company continues to recognize the transferred asset to the extent of the Company's continuing involvement.
In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability
are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration that the Company could be required
to repay.
IV. Investment in associates, joint venture and subsidiaries
The Company has accounted for its investment in subsidiaries and associates, joint venture at cost.
V. Impairment of financial assets
The Company assesses impairment based on expected credit losses (ECL) model to the Financial Assets measured
at amortized cost.
Expected credit losses are measured through a loss allowance at an amount equal to:
• the12-months expected credit losses (expected credit losses that result from those default events on the
financial instrument that are possible within 12 months after the reporting date); or
• full lifetime expected credit losses (expected credit losses that result from all possible default events over the
life of the financial instrument).
The Company follows 'simplified approach' for recognition of impairment loss allowance on:
• Trade receivables or contract revenue receivables; and
• All lease receivables
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognizes impairment
loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivable
and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates are analysed.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that
whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased
significantly, 12-months ECL is used to provide for impairment loss. However, if credit risk has increased significantly,
lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer
a significant increase in credit risk since initial recognition, then the Company reverts to recognizing impairment loss
allowance based on 12-months ECL.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis
of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant
increases in credit risk to be identified on a timely basis.
Financial liabilities
I. Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs.
The Company's financial liabilities include trade and other payables, loans and borrowings including bank
overdrafts, and derivative financial instruments.
II. Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the
near term. This category also includes derivative financial instruments entered into by the Company that are
not designated as hedging instruments in hedge relationships as defined by Ind AS 109.Separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the statement of profit and loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the
initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost
using the effective interest rate (EIR) method.
Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the
EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit
and loss.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made
to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in
accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a
liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.
Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per
impairment requirements of Ind AS 109 and the amount recognized less cumulative amortization.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as
the de-recognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognized in the statement of profit and loss.
III. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is
a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net
basis, to realize the assets and settle the liabilities simultaneously
IV. Derivative financial instruments
The Company enters into derivative contracts to hedge foreign currency price risk on unexecuted firm
commitments and highly probable forecast transactions. Such derivative financial instruments are initially
recognized at fair value on the date on which a derivative contract is entered into and are subsequently re¬
measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit
and loss.
xix) Exceptional Items
When items of income and expense within profit or loss from ordinary activities are of such size, nature or incidence that
their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such
material items are disclosed separately as exceptional items.
xx) Trade Payables
A payable is classified as a 'trade payable' if it is in respect of the amount due on account of goods purchased or services
received in the normal course of business. These amounts represent liabilities for goods and services provided to the
Company prior to the end of the financial year which are unpaid. These amounts are unsecured and are usually settled
as per the payment terms stated in the contract. Trade and other payables are presented as current liabilities unless
payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and
subsequently measured at amortised cost using the EIR method.
(a) In respect of the projects undertaken by the Company:
(i) In furtherance to the recommendation of the Dispute Resolution Board (DRB) and Arbitration Awards in the
Company's favour, the Company had recognized income in the previous year the carrying value of which as at the
March 31,2025 is Rs. 225.64 (excluding CMRL award of Rs. 208.00 Crores refer note 4(a)(ii) below), which is part of
Non Current Trade Receivable. The Company contends that such awards have reached finality for the determination
of the amounts of such claims and are reasonably confident of recovery of such claims although the client has
moved the court to set aside the awards. Considering the fact that the Company has received favourable awards
from the DRB and the Arbitration Tribunal, the management is reasonably certain that the awards will get favourable
verdict from the courts.
(ii) The Company had accounted the CMRL award at an amount of Rs 532.00 Crores which included an amount of Rs
124.00 Crores which was subject matter of appeal. This was shown under contract assets in the previous year. The
Company based on its internal assessment along with the opinion of the techno legal expert has concluded that the
claim is not expected to realize hence this amount is reversed / written off provided in the previous year resulting in
the net carrying amount against CMRL award at Rs. 408.00 crores. Further, on a prudent basis the company has
retained its share of 51% since its a Joint Venture award and has provided for the JV partner's share as expected
credit loss while retaining its right to litigate for the entire award amount. The Company contends that its tenable
counter claim on the JV partner arising from their abandoning the project is far in excess of their share of claim
awarded.
The company has given an unfunded exposure of Rs. 50.39 Crores in form of Bank Guarantee.
a) Unbilled Revenue
The Company had evaluated its claims in respect of on-going, completed and/or terminated contracts in the earlier
periods which amounts to Rs. 30.00 crore as at March 31, 2025 with the help of an independent expert in the field
of claims and arbitration who had assessed the likely amount of claims being settled in favour of the Company. The
management contends that there is no change in position during the year and the same are due to them and they have
a very good chance of realisation.
b) Prepaid Taxes Net of Provision
During the Previous year Company has made additional provision for tax for earlier years towards the non crystallisation
of refunds of past several years which refunds have got adjusted against tax demands for matters in appeal which are
pending disposal. The total amount provided on this account is Rs. 384.27 Crores, as short excess provision for tax
which is reflected in Statement of Profit & Loss. The Contingent Liabilities is disclosed in Note no. 32 is as reflected on
the Income tax website.
Note :
1 Gratuity is payable as per company's scheme as detailed in the report.
2 Actuarial gains/losses are recognized in the period of occurrence under Other Comprehensive Income (OCI). All
above reported figures of OCI are gross of taxation.
3 The Company's Gratuity Fund is managed by Life Insurance Corporation of India. The plan assets under the fund are
deposited under approved securities. The Company's Gratuity Liability is entirely funded except LMR employees.
4 Salary escalation & attrition rate are considered as advised by the company; they appear to be in line with the
industry practice considering promotion and demand & supply of the employees.
5 Maturity Analysis of Projected Benefit Obligation is done considering future salary, attrition & death in respective year
for members as mentioned above.
6 In the absence of data of experience adjustments, the same is not disclosed.
7 The Company's Leave Encashment Liability is entirely unfunded.
8 Provision as at March 31 is bifurcated into current and non current based on estimated recoupment of fund balances
by the company in the near future
9 Risk Factors / Assumptions
a) Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of
the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of
the assets depending on the duration of asset.
b) Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries
of members. As such, an increase in the salary of the members more than assumed level will increase the plan's
liability.
c) Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which
is determined by reference to market yields at the end of the reporting period on government bonds. If the return
on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively
balanced mix of investments in government securities, and other debt instruments.
d) Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is
invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.
e) Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only,
plan does not have any longevity risk.
f) Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company
and a default will wipe out all the assets. Although probability of this is very less as insurance companies have
to follow regulatory guidelines.
* The facilities from the lenders to SPV Companies were backed by the Company's Corporate Guarantees. Since the
SPV companies could not make payment of the overdue amounts, the lenders have demanded the immediate payment
of all overdue amount of loan and interest from the Company in the earlier years. The same is classified as current and
disclosed as Current Liabilities and correspondingly recoverable from the SPV companies.
a) On account of the above, a number of lenders have not shared their confirmations as at the year ended March 31,
2025 (also in the previous years) and to that extent the balances are unconfirmed.
b) As at March 30, 2024, Union Bank of India has entered into assignment deed with Omkara Assets Reconstruction
Company Private Limited (OARPL) and assigned its outstanding loan facilities to OARPL. The outstanding loan
amount is part of credit facilities recalled by the lenders in current financial liabilities.
(A) (a) Corporate Restructuring and Other - Borrowings Notes
The Company's Corporate Debt Restructuring (CDR) package was approved by the CDR Empowered Group (EG) in its
meeting held on 24th June, 2013 and communicated to the Company vide its letter of approval dated 29th June, 2013.
The Company executed the Master Restructuring Agreement (MRA) with the CDR lenders on 24th September, 2013.
Substantial securities have been created in favour of the CDR lenders.
Key features of the CDR agreement are as follows :
• Reschedulement of Short Term Loans & Rupee Term Loans (RTL) and NCD payable over a period of ten years.
• Repayment of Rupee Term Loans (RTL) after moratorium of 27 months from cut off date being 1st January, 2013 in
structured quarterly instalments commencing from April 2015.
• Conversion of various irregular / outstanding / devolved financial facilities into Working Capital Term Loan (WCTL).
• Repayment of WCTL after moratorium of 27 Months from cut off date in structured quarterly instalments commencing
from April 2015, subject to mandatory prepayment obligation on realization of proceeds from certain asset sale and
capital infusion.
• Restructuring of existing and fresh fund based and non fund based financial facilities, subject to renewal and
reassessment every year.
• Interest accrued but not paid on certain financial facilities till March 2014 is converted into Funded Interest Term
Loan (FITL).
• Waiver of existing events of defaults, penal interest and charges etc. in accordance with MRA.
• Right of Recompense to CDR Lenders for the relief and sacrifice extended, subject to provisions of CDR Guidelines
and MRA.
• Contribution of Rs.100 Crore in the Company by promoters, in lieu of bank sacrifice, in the form of Promoters
Contribution which can be converted to equity.
(b) Securities for Term Loans and NCD :
Rupee Term Loan (RTL) - 1 and FITL thereon -
1) 1st pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company,
including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non
Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade
Receivables and other assets of the Company.
Rupee Term Loan (RTL) - 2 and FITL thereon -
1) 1st pari-passu charge on Gammon House.
2) 2nd pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the
Company, including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for
Non Convertible Debenture and the Gammon House.
3) 2nd pari-passu charge on entire Current Assets, Loans and Advances, Long Term Trade Receivables and other
assets of the Company.
Rupee Term Loan (RTL) - 3 and FITL thereon -
1) 3rd pari-passu charge over the entire Fixed Assets (movable and immovable) and Current Assets of the Company
excluding the Gammon House.
2) 3rd pari-passu charge on the Gammon House.
Working Capital Term Loan (WCTL) -
1) 1st pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company,
including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non
Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade
Receivables and other assets of the Company.
Priority Loan -
1) 1st pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company,
including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non
Convertible Debenture and the Gammon House.
2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade
Receivables and other assets of the Company.
Non Convertible Debentures (NCD) and FITL thereon -
1) 1st pari-passu charge by mortgage of Gujarat Property and hypothecation over the pari-passu security with the Non
Convertible Debentures.
2) 3rd pari-passu charge over the entire Fixed Assets (movable and immovable) and Current Assets of the Company
excluding the Gammon House.
3) 3rd pari-passu charge on the Gammon House.
4) In case of 9.95% NCD of Rs.50 Crore, being not part of CDR scheme, interest is not converted in to FITL. This
redeemable NCD is secured by hypothecation of specific Plant and Machinery with pari-passu charge by mortgage
of immovable property in Gujarat.
c) IDBI - STL
Primary Security
pari-passu charge on the entire current assets, loans & advances investments, long term trade receivables and
other assets of Gammon India Limited by way of deed of hypothecation
2nd pari passu charge on the entire fixed assets ( immovable and movable) of Gammon India Limited excluding the
fixed asset charged exclusively to Non Convertible Debenture holders
2nd pari passu charge on Gammon House
STL-I & II are allowed by way of interchangeability from the existing NFB limits for which the security has already
been created
Collateral Security
Pledge of 16,27,94,100 unencumbered shares of Gammon Infrastructure Project Limited (GIPL) with duly executed
Power of Attorney for sale of shares.
d) ICICI -STL
The performance BG facility and therefore the proposed OD facility is already secured by way of various securities
as part of the CDR Package.
The OD facility shall be additionally collateralised by way of :
Exclusive pledge of 193,999,800 equity shares of Gammon Infrastructure Projects Limited (GIPL) held by Gammon
Power Limited representing 20.60 % of the total paid up equity shares of GIPL. The same shall be Subject section
19 (2) & (3) of the Banking Regulation Act.
NDU- PoA over the remaining 193,999,800 equity shares of Gammon Infrastructure Projects Limited (GIPL) held by
Gammon Power Limited representing 20.60 % of the total paid up equity shares of GIPL which shall be released in
favour of IDBI Bank / Other Bank who shall be sanctioning the remaining OD facility
(D) ** Rs. 0.58 Crores (PY Rs. 0.58 Crores) lying in unpaid dividend bank account are pending to be transferred to Investors
Education and Protection Fund. The amount of unpaid dividend is pertaining to 725,800 equity shares which are held in
abeyance. The Company as a matter of abundant precaution also declared dividend on these shares whose allotment was
held in abeyance. The accumulated dividend on these shares is being kept in a separate bank account. The said dividend is
unclaimed and unpaid as it pertains to shares whose allotment itself is held in “abeyance”.
(E) Interest accrued includes ' 3105.83 Crore (PY March 2024: ' 2516.31 Crore) on account of NPA Interest accrued in the
books
(F) Other Payable:
An Amount of Rs. 81.31 Crore (PYRs 110.68 Crore) is payable to GECPL as at March 31, 2025. This amount has been
earmarked against the assignment of specific claims and awards in favour of GECPL, for which the Company has written to
the clients. No interest is accrued on the aforesaid amount.
(H) The company has not taken any fresh loan from banks and financial institutions during the year.
(I) The Company has borrowings from banks or financial institutions on the basis of security of current assets, however during
the current year and in the previous year no quarterly returns or statements of current assets are filed by the company with
banks or financial institutions as the entire facilities from the lenders have become Non Performing Assets in the month
June'17 and the Lenders have recalled all the loans and during the year no new working capital limit was sanctioned.
(J) Registration of Charge - As at March 31,2025, the Company has registered all charges duly with the Registrar of Companies
in favour of the lenders.
Satisfaction of Charge - There are old charges disclosed as outstanding of Rs. 29,149.57 crores as at March 31, 2025 in
respect of borrowings which have been restructured by the lenders long back for which fresh charge is created. The Company
is unable to clear the satisfaction of old charges for lack of requisite documentation from the lenders. The matter is being
followed up by the Company.
(K) Pledge of Shares
The equity shares held by the Company and / or GIL in a Subsidiary and /or Joint Venture Company of the Group are pledged
with respective lenders or consortium of lenders for the individual secured loan availed by the said Subsidiary and / or Joint
Venture Company from their respective lenders or consortium of lenders.
(L) During the year 2024-25, some of the lenders have levied penal interest and charges of Rs 124.97 Crores. Cumulative amount
of such penal interest and charges amounts to Rs. 803.64 Crores up to March 31, 2025. The management is disputing the
same and has not accepted the debit of excess penal interest and charges in its books. They have also requested the lenders
to reverse the same. In the resolution plan which is approved by two lenders, this amount is likely to be reversed and the
resolution plan does not consider the Company liability to pay this.
(b) Contract balances
The contract assets primarily relate to the Company's rights to consideration for work completed but not billed at the
reporting date. The contract assets are transferred to receivables when the rights become unconditional. This usually
occurs when the Company issues an invoice to the customer. The contract liabilities primarily relate to the advance
consideration received from customers for construction for which revenue is recognised over time.
Amounts due from contract customers represents the gross unbilled amount expected to be collected from customers
for contract work performed till date. It is measured at cost plus profit recognised till date less progress billings and
recognised losses when incurred.
Amounts due to contract customers represents the excess of progress billings over the revenue recognised (cost plus
attributable profits) for the contract work performed till date.
Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads
incurred in the Company's contract activity based on normal operating capacity.
(c) Performance obligation
The Company undertakes Engineering, Procurement and Construction business. The ongoing contracts with customers
are for construction of highways, water pipeline projects, construction of residential & commercial buildings, and others.
The type of work in these contracts involve construction, engineering, designing, supply of materials, development of
system, installation, project management, operations & maintenance etc.
The Company evaluates whether each contract consists of a single performance obligation or multiple performance
obligations. Contracts where the Company provides a significant integration service to the customer by combining all
the goods and services are concluded to have a single performance obligations. Contracts with no significant integration
service, and where the customer can benefit from each unit on its own, are concluded to have multiple performance
obligations. In such cases consideration is allocated to each performance obligation, based on standalone selling prices.
Where the Company enters into multiple contracts with the same customer, the Company evaluates whether the contract
is to be combined or not by evaluating factors such as commercial objective of the contract, consideration negotiated with
the customer and whether the individual contracts have single performance obligations or not.
The Company recognises contract revenue over time as the performance creates or enhances an asset controlled by the
customer. For such arrangements revenue is recognised using cost based input methods. Revenue is recognised with
respect to the stage of completion, which is assessed with reference to the proportion of contract costs incurred for the
work performed at the balance sheet date relative to the estimated total contract costs.
Any costs incurred that do not contribute to satisfying performance obligations are excluded from the Company's input
methods of revenue recognition as the amounts are not reflective of our transferring control of the system to the customer.
Significant judgment is required to evaluate assumptions related to the amount of net contract revenues, including the
impact of any performance incentives, liquidated damages, and other forms of variable consideration.
If estimated incremental costs on any contract, are greater than the net contract revenues, the Company recognises the
entire estimated loss in the period the loss becomes known. Variations in contract work, claims, incentive payments are
included in contract revenue to the extent that may have been agreed with the customer and are capable of being reliably
measured.
The aggregate value of transaction price allocated to unsatisfied (or partially satisfied) Performance obligations to be
performed in next year is amounting to Rs. 9.54 crores (PY amounting to Rs. 19.61 Crores )
Notes related to Exceptional Items:
i) During the quarter ended June 30, 2023, the Company has entered into Shareholders Agreement (SHA) between
subsidiaries of the Company i.e., Gammon International BV (GIBV), Gammon Holdings (Mauritius) Ltd (GHML) and the
new investor, where the investor has committed to subscribe and pay the share capital of Sofinter for a total amount of
Euro 12 Million.
With this infusion, the new investor will acquire 90% stake in Sofinter at an aggregate value of Euro 12 million. Post
infusion of money, the subsidiary companies, GIBV and GHML will hold a balance 10% stake in Sofinter. Gammon India
Ltd (GIL) is the corporate guarantor for due performance of the subsidiaries i.e., of Gammon Holdings (Mauritius) Limited
and Gammon International BV. The execution of the SHA is underway along with fulfilment of Condition Precedent. The
SHA also provides for a waterfall mechanism agreed between the Parties, with a maximum exit for the Gammon Group
equal to Euro 34 million at an exit at Euro 135 million.
Thus, the stake of Gammon Group in Investment in Sofinter will reduce to 10% as against total 67.5% through Gammon
International BV @ 32.5% and Gammon Holdings (Mauritius) Limited@ 35%. Considering the value at which the new
investor has acquired the 90% stake in Sofinter, the carrying value of the stake of Gammon group which is carried at fair
value through Other Comprehensive Income (FVTOCI), has been fair valued at the proportionate fair value for their 10%
stake in Sofinter. Therefore, the Company on a prudence basis without considering the effect of waterfall mechanism,
has given effect of to the excess exposure in the standalone financials statements towards loans given to SPVs for an
amount of Rs 114.01 crores during year ended March 31, 2024 in addition to amount already provided as at March 31,
2023 amounting to Rs. 400 Crores.
ii) During the year the Company has provided for one of its subsidiary namely Ansaldocaldaie Boilers India Private Limited
receivables on account of loan of Rs. 17.57 Crores and Interest of Rs. 5.54 Crores and for investment Rs. 5.85 Crores
iii) During the previous year Gactel Turnkeys Projects Limited has received order from Hon'ble NCLT Mumbai branch vide
Order CB(1B) -1797/MB/2018 dated 27th March 2024 and initiated Corporate Insolvency Resolution Process(CIRP) in
respect of the subsidiary company. Since then the management of the company has been transferred from the Board
of Directors to an Interim Resolution professional to manage the company. Recently NCLT vide order pronounced on
April, 24, 2025 has issued the schedule of amount payable to their creditors in which Rs. 95,979 is allotted to Gammon
India Limited as operational creditors. In view of the said order the entire exposure of Gactel has been written off
amounting to Rs. 257.22 Crores (Loan Rs. 228.33 Crores, Interest Rs. 1.40 Crores, Investment Rs. 19.59 Crores and
Trade Receivable Rs. 7.89 Crores) and the provision created in earlier years is reversed amounting to Rs. 257.23 Crores
(Loan Rs. 228.33 Crores, Interest Rs. 1.40 Crores, Investment Rs. 19.59 Crores and Trade Receivable Rs. 7.90 Crores)
as an exceptional Item.
iv) During the year the lender of Gammon India limited IDBI bank has invoked 9,30,00,000 no of shares of AJR Infra &
Tolling Limited held in Gammon Power Limited. On account of this there is a reversal of provision in the books amounting
to Rs 6.51 Crores.
v) During the Current year company has Reversed the provision of Gammon International FZE and write off the receivable
on account of Loan of Rs. 96.87 Crores and Interest of Rs.20.83 Crores and for Investment of Rs. 0.17 crores
35 Foreign & Domestic Venture
(a) The Company through its Special Purpose Investment Vehicle holds the following stakes :
- Sofinter S.p.A, Italy
- Franco Tosi Mecannica S.p.A, Italy (FTM)
- Sadelmi S.p.A, Italy
- SAE Power Line S.r.l, Italy
(b) During the quarter ended June 30, 2023, the Group has entered into Shareholders Agreement (SHA) between subsidiaries
of the Company i.e., Gammon International BV (GIBV), Gammon Holdings (Mauritius) Ltd (GHML) and the new investor,
where the investor has committed to subscribe and pay the share capital of Sofinter for a total amount of Euro 12 Million.
With the proposed infusion, the new investor will acquire 90% stake in Sofinter at an aggregate value of Euro 12 million.
Post infusion of money, the subsidiary companies, GIBV and GHML will hold a balance 10% stake in Sofinter. Gammon
India Ltd (GIL) is the corporate guarantor for due performance of the subsidiaries i.e., of Gammon Holdings (Mauritius)
Limited and Gammon International BV. The execution of the SHA is underway along with fulfilment of Condition Precedent.
The SHA also provides for a waterfall mechanism agreed between the Parties, with a maximum exit for the Gammon
Group equal to Euro 34 million at an exit at Euro 135 million
Thus, the stake of Gammon Group in Investment in Sofinter will reduce to 10% as against total 67.5% through Gammon
International BV @ 32.5% and Gammon Holdings (Mauritius) Limited@ 35%.
Considering the value at which the new investor proposes to acquire the 90% stake in Sofinter, the carrying value of the
stake of Gammon group which is carried at fair value through Other Comprehensive Income (FVTOCI), has been fair
valued at the proportionate fair value for their 10% stake in Sofinter.
Therefore, the Company on a prudence basis without considering the effect of waterfall mechanism, has given effect
of to the excess exposure in the carrying value of investment in Sofinter (which as carried at FVTOCI) for an amount of
Rs 114.01 crores during the quarter ended June 30, 2023 which is debited to Other Comprehensive Income. The group
had already provided for an amount of Rs 698.00 crores in the quarter and the year ended March 31, 2023 under Other
Comprehensive Income.
(c) The accounts of a subsidiary M/s Campo Puma Oriente S.A. have not been audited since December 2012, due to certain
disputes with the partner in the project. Furthermore, IDBI Bank Dubai, invoked the Stand by letter of credit provided
by IDBI Mumbai in the month of October 2016. The exposure of the Company in the said subsidiary is ' 430.19 crores.
The company had received a valuation report for $ 60 Million approximately from an independent merchant banker for
its share more than 3 years ago, which the management believes is still valid. Considering the elapse of time and the
resolution with partner not concluding and the increasing losses being incurred in the oil field, the company has made the
entire provision against its exposure.
(d) The Company through its step down subsidiary P. Van Eerd Beheersmaatschappij B.V., Netherlands (PVAN) held a 50%
shareholding in Sadelmi S.p.A for Euro 7.50 Million, Italy (Sadelmi) with the remaining 50% held by Busi Impianti S.p.A,
Italy since April 2008. Due to the economic conditions prevailing in different parts of the world where Sadelmi was present
some of the projects under execution encountered serious contractual problems. Sadelmi therefore sought creditors'
protection through a Court in Italy and simultaneously, as part of scheme, applied for transferring the remaining projects
and leased all references standing in its name since inception to a new Company Busi Power S.r.l wholly held by Busi
Group. The above procedure however has not yet been completed as the decision in the Court is still awaited. The delay
is on account of objections raised by some creditors among other reasons. In view of the uncertainties prevailing in
Europe and the delay in the outcome of the Court process in respect of the creditors' protection sought by M/s Sadelmi
in its application in connection therewith, the Company has, on prudent basis, made full provision towards its funded
exposures in connection with the Investment in Sadelmi of Rs.25.72 Crore. The Company has exposure in respect of
Corporate Guarantee for acquisition loan by its SPV. The Company has made provision as risks and contingencies
aggregating to '.1.66 Crore towards the guarantees issued to the banker of its wholly owned SPV PVAN, in respect
of loans taken by the said subsidiary for making investment into Sadelmi, in accordance with Ind AS 37 Provisions,
Contingent Liabilities and Contingent Assets considering the net worth and operations of the said Sadelmi.
(e) The Court of Monza in respect of one of the step down Subsidiary SAE Powerlines S.r.L. (Held through ATSL Holdings
BV) has declared the bankruptcy. The company has made full provision against it's exposure in SAE .
36 Material Uncertainty Relating to Going Concern
The Company's operations have been affected in the last few years by various factors including liquidity crunch, unavailability
of resources on timely basis, delays in execution of projects, delays in land acquisition, operational issues etc. The
Company's overseas operations are characterized due to weak order booking, paucity of working capital and uncertain
business environment. Also the Company's current liabilities exceed the current assets by Rs 11,446.84 Crore as at March
31,2025. The facilities of the Company with the Secured lenders are presently marked as NPA since June 2017. The liquidity
crunch has resulted in several winding up petitions being filed against the Company by various stakeholders for recovery of
the debts which the Company has been settling as per the mutually agreed repayment terms. The liquidity crunch is affecting
the Company's operation with increasing severity. The Secured lenders have recalled the various facilities, initiated recovery
suits in the Debt Recovery Tribunals as well as filing a winding up petition with the National Company Law Tribunal, Mumbai
bench under the Insolvency and Bankruptcy code.
The Company has been making every effort in settling the outstanding Lenders dues.
The Companies Proposal for restructuring has undergone multiple iterations with the many of the lenders approving while
others not according to their approval.
The Company presently has submitted a revised proposal to the lead bankers on the strength of a prospective investor,
whose restructuring proposal is under consideration by the lenders.
The Management is hopeful for a resolution in the matter for which a joint lender meeting is planned in the near future.
Therefore, the management continues to believe that going concern assumption is intact albeit with uncertainty in the area of
acceptance by the lenders.
The company has received various notices from Union Bank of India (assigned to Omkara Assets Reconstruction Private
Limited in the current year) and Punjab National Bank under the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act 2002, taking over the possession of the Gammon House property including the land
appurtenant to it. The company has been restrained from parting with the rights over the said property. The total demand
raised by this notice is Rs. 1,136.71 Cr.
The management is hopeful of obtaining approval of all the lenders to the above plan and execute documents accordingly
and maintain its going concern status and to that effect is continuously engaged with the lenders for a solution.
Therefore, in the view of the management the going concern assumption of GIL is intact and these financials are prepared
on a going concern basis. The above action plan of the Company for repaying the debts and servicing the same including the
necessary value of the balance stake being available and realisation of the claim amounts filed by the Company, monetisation
of the stake sale of investments and also the acceptance of the resolution proposal by the lenders is exposed to material
uncertainties which may affect the going concern assumption.
37 Disclosure of transactions with Related Parties, as required by Indian Accounting Standard (Ind AS) - 24 “Related Party
Disclosures” has been set out in a separate Statement A.
38 Analytical Ratios as per requirements of Schedule III are given in Statement B
Note: The management assessed that fair value of cash and bank balances, trade receivables, trade payables, book
overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the short¬
term maturities of these instruments
(ii) Fair Value Hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments that
are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed
in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the
group has classified its financial instruments into the three levels prescribed under the accounting standard.
An explanation of each level follows underneath the table.
The following methods and assumptions were used to estimate the fair values:
Fair value of cash and short-term deposits, trade and other short-term receivables, trade payables, other current liabilities,
short term loans from banks and other financial institutions approximate their carrying amounts largely due to the short¬
term maturities of these instruments.
Financial instruments with fixed and floating interest rates are evaluated by the Company based on parameters such
as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to
account for the expected losses of these receivables.
The Company uses the following hierarchy for determining and disclosing the fair value of the financial instruments by
valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have significant effect on recorded fair value are observable, either
directly or indirectly.
Level 3: techniques which use inputs that have a significant effect on recorded fair value that are not based on observable
market data
(iii) Financial Risk Management Objectives And Policies
The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's
focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial
performance. The Company's financial risk management is an integral part of how to plan and execute its business
strategies. The Company's financial risk management policy is set by the Managing Board.
(a) Market Risk :
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the
price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest
rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive
instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and
deposits, foreign currency receivables, payables and loans and borrowings.
Derivative financial instruments
The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of
changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank
or a financial institution. These derivative financial instruments are valued based on quoted prices for similar assets
and liabilities in inactive markets or inputs that are directly or indirectly observable in the market place.
(b) Credit risk
Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. The
maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to ' 445.21
Crore and ' 507.77 crore as of March 31, 2025 and March 31, 2024 respectively, unbilled revenue amounting to
' 31.74 crore and ' 30.95 crore as of March 31, 2025 and March 31, 2024, respectively. To manage this, the
Company monitors whether the collections are made within the contractually established deadlines. In addition
to this, the Company periodically assesses the financial reliability of customers, taking into account the financial
condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual
risk limits are set accordingly.
The Company considers the probability of default upon initial recognition of asset and whether there has been a
significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there
is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the
reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive
forwarding-looking information such as :
(i) Actual or expected significant adverse changes in business,
(ii) Actual or expected significant changes in the operating results of the counterparty,
(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty's ability to
meet its obligations,
(iv) Significant increases in credit risk on other financial instruments of the same counterparty,
(v) Significant changes in the value of the collateral supporting the obligation or in the quality of third-party
guarantees or credit enhancements.
Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing
to engage in a repayment plan with the Company. The Company categorises a loan or receivable for write off
when a debtor fails to make contractual payments greater than 2 years past due. Where loans or receivables
have been written off, the Company continues to engage in enforcement activity to attempt to recover the
receivable due. Where recoveries are made, these are recognised in profit or loss.
(c) Interest rate risk
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of
loans and borrowings affected. With all other variables held constant, the Companies profit before tax is affected
through the impact on floating rate borrowings, as follows:
(d) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at
a reasonable price. The Company's treasury department is responsible for liquidity, funding as well as settlement
management. In addition, processes and policies related to such risks are overseen by senior management.
Management monitors the Company's net liquidity position through rolling forecasts on the basis of expected cash
flows.
(e) Competition Risk:
The Company is operating in a highly competitive environment with various Companies wanting a pie in the project.
This invariably results in bidding for projects at low margins to maintain a steady flow of the projects to enable the
group to retain the projects team and to maintain sustainable operations for the Company and the SPVs. The ability
of the Company to build the infrastructure at a competitive price and the ability to start the tolling operations is very
important factor in mitigating the competition risk for the group.
(f) Input cost risk
Raw materials, such as bitumen, stone aggregates cement and steel, need to be supplied continuously to complete
projects undertaken by the group. As mentioned in the earlier paragraph of the business risk and the competition
risk the input cost is a major risk to attend to ensure that the Company is able to contain the project cost within the
estimate projected to the lenders and the regulators. To mitigate this the group sub-contracts the construction of the
facility at a fixed price contract to various subcontractor within and without the group.
40 Capital Management
For the purpose of the Group's capital management, capital includes issued equity capital, convertible preference shares,
share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the
Group's capital management is to maximise the shareholder value.
The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the
requirements of the financial covenants. To maintain or adjust the capital structure, the Group may adjust the dividend
payment to shareholders, return capital to shareholders or issue new shares. The Group monitors capital using a gearing
ratio, which is net debt divided by total capital plus net debt. The gearing ratio in the infrastructure business is generally high.
The Group includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash
equivalents, excluding discontinued operations.
Since the Networth of the company is negative gearing ratio is shown as nil
41 The information about transaction with struck off Companies (defined under section 248 of the Companies Act, 2013 or
section 560 of Companies Act, 1956) has been determined to the extent such parties have been identified on the basis of the
information available with the Company.
42 In the opinion of the Board of Directors, all assets other than fixed assets and non-current investments have a value on
realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.
43 Audit Trail Disclosure
The Ministry of Corporate Affairs (MCA) by the Companies (Accounts) Amendment Rules 2021 and vide notification dated
24 March 2021 has issued the “Companies (Audit and Auditors) Amendment Rules, 2021 has prescribed a new requirement
for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted requiring companies, which
uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature
of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along
with the date when such changes were made and ensuring that the audit trail cannot be disabled.
As required under above rules, the company uses Tally software for the purposes of its financial accounting requirements
which has a feature of recording audit trail (edit log) facility. The said feature is being enabled at application level from April 22,
2024 and the same has been operated throughout the year for all transactions recorded. In case of tally data is an encrypted
form and therefore direct access of the data does not provide meaningful methodology to edit the data.
Further, the audit trail has been retained by the Company as per the statutory requirements for record retention except that
the audit trail at application level changes is retained only from April 22, 2024
44 Figures for the previous year have been regrouped / reinstated, wherever considered necessary.
45 The Balance sheet, Statement of Profit and loss, Cash flow statement, Statement of Changes in Equity, Statement of Material
Accounting Policy Information and the other explanatory notes forms an integral part of the financial statements of the
Company for the year ended March 31, 2025.
As per our report of even date For and on behalf of the Board of Directors
For N V C & Associates LLP Gammon India Limited
(Formally Known as Natvarlal Vepari & Co.)
Chartered Accountants
Firm Registration No. 106971W/W101085
Anurag Choudhry Sandeep Sheth
Chief Financial Officer Executive Director
DIN No. 00955456 DIN No. 08781589
Nuzhat Khan Mahendra Ujamshi Shah Ajit B. Desai
Partner Audit Committee chairman Chief Executive Officer
M.No. 124960 DIN No. 05359127 Mumbai, Dated : August 2, 2025
Mumbai, Dated : August 2, 2025 Mumbai, Dated : August 2, 2025
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