The Railway Board has entrusted RVNL the work of construction of residential accommodation for Railway/PSU officers on a plot of Railway Land Near Safdarjung Railway Station in accordance with its Policy No. 15/LML/181/68 dated 19.05.1998 which inter-alia stipulates that total 54 flats are to be constructed and from which 27 flats will be handed over to Railway Board towards cost /usage of land. Out of balance 27 flats, 18 flats will be retained by RVNL on lease of 30 year and 9 flats will be handed over to other PSUs against payment. Accordingly, Right to use asset has been created in respect of 14 flats on completion.
1. Rights, Preferences and Restrictions attaching to shares
Equity Shares: The Company has only one class of Equity Shares having face value of H 10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their share holding. All equity shareholders are having right to get dividend in proportion to paid up value of each equity share as and when declared.
(b) General Reserve
General Reserve is a free reserve which is created from retained earnings. The Company may pay dividend and issue fully paid-up bonus shares to its members out of the general reserve account, and company can use this reserve for buy-back of shares.
(c) Items of Other Comprehensive Income
The Company has elected to recognize changes in fair value of investment in equity securities of Indian Port Rail and Ropeway Corporation Limited in other comprehensive income. The changes are accumulated within the FVTOCI equity investments reserves within equity. The company transfers amounts from this reserve to retained earnings when the relevant equity securities are de-recognized.
Terms of Repayment:
(i) There is a moratorium period of 3 years for each year's loan. During the said moratorium period, no amount on account of interest and principal shall be payable. The interest shall be charged on yearly basis and repayment of loan shall be once in a year (for a period of 12 years) after the completion of moratorium period. Ministry of Railways would make available to RVNL the required funds thereafter, to enable them to do the debt servicing. The debt servicing will pass through RVNL books.
(ii) The Company has not borrowed any funds during this F.Y 2023-24 (Previous year 2022-23: HNil) from Indian Railway Finance Corporation (IRFC). The outstanding borrowing is H 4964.36 crores as on 31.03.2024 (as at 31.03.2023 : H 5,341.65 crore), which includes current liability i.e. repayable in next twelve months H 472.00 crores (as at 31.03.2023 : H 377.29 crore).
(iii) The Interest Liability has been assessed on the amount disbursed in the F.Y. 2006-07 to 2023-24 by applying the Interest rate as advised by the IRFC for each Financial year (2023-24- No disbursement, 2022-23- No disbursement, 2021-22: 7.64%, 2020-21: 7.73%, 2019-20: 8.42%, 2018-19: 9.17% & 8.93%, 2017-18: 8.82%, 2016-17: 8.19%, 2015-16: 8.68%, 2014-15: 9.56%, 2013-14: 9.60%, 2012-13: 9.41%, 2011-12: 10.12%, 2010-11: 9.12%, 2009-10: 8.92%, 2008-09: 9.96%, 2007-08: 10.24%, 2006-07: 9.73%).
The interest accrued but not due on the IRFC loan amount has been shown in the Balance Sheet as recoverable from MoR under Current Assets & Non-Current assets (for the interest non recoverable in next 12 Months) and the interest payable but not due under the Current Liabilities and Non-Current Liabilities (for the interest not payable in next 12 Months) payable to IRFC.
16.1 Foreign Service Contribution :
Foreign Service Contribution in respect of officers on deputation with RVNL, is recognised on accrual basis in the statement of profit and loss account as per the terms of deputation with their parent organisations.
16.2 For RVNL Employees
The disclosure required under Indian Accounting Standard-19 "Employee Benefit” in respect of defined benefit plan is:
Sensitivity analysis:
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation recognised within the statement of financial position.
Risk Analysis :
Company is exposed to a number of risks in the defined benefit plan which are as follows:
A) Salary Increases- Actual salary increases will increase the Plan's liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
B) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
C) Discount Rate : Reduction in discount rate in subsequent valuations can increase the plan's liability.
D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan's liability.
26.1 CSR Expenses
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on Corporate Social Responsibility (CSR) activities.
A. Gross amount required to be spent by the Company during the Current Year H 28.04 crore (Previous year H 23.68 crore).
The applicable Indian statutory tax rate for financial year 2023-24 is 25.168% and for financial year 202223 was 34.944%.
Pursuant to the introduction of Section 115BAA of the Income Tax Act,1961 ("New Tax Regime"), the Company has an option to pay corporate income tax at a lower rate of 22% plus applicable surcharge and cess as against the earlier applicable rate of 30% plus surcharge and cess,subject to certain conditions. Considering all the provisions under said section 115BAA of the Income Tax Act, 1961, the company has decided to avail the lower rate from F.Y 2023-24, accordingly the company has recognised provision for income tax for the year ended March 31,2024 and remeasured its deferred tax assests on the basis of the rate prescribed in the said section.
NOTE: 29 DIVIDEND
The Board of Directors has recommended the final dividend of H 2.11 per equity share having face value of H 10 each for the financial year 2023-24, subject to the approval of the shareholders at the ensuing Annual General Meeting.
NOTE: 30 CAPITAL MANAGEMENT
The Company manages its capital in a manner to ensure and safeguard their ability to continue as a going concern so that Company can continue to provide maximum returns to shareholders and benefit to other stake holders. Company has paid dividend as per the guidelines issued by Department of Public Enterprises (DPE) as follows:-
Further, Company manages its capital structure to make adjustments in light of changes in economic conditions and the requirements of the financial covenants. Company has borrowed the funds from IRFC for railway projects. For repayment of IRFC loan, Ministry of Railways would make available to RVNL the required funds thereafter, to enable them to do the debt servicing. The debt servicing will pass through RVNL books.
In order to achieve the overall objective of the Company's capital management, amongst other things, aims to ensure that it meet financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
No changes were made in the objectives, policies or processes for managing capital during the year ended 31 March 2024.
i) The carrying amounts of trade receivables, trade payables, unbilled revenue, cash and cash equivalents and other short term trade receivables and payables which are due to be settled within 12 months are considered to the same as their fair values, due to short term nature.
ii) Long term variable rate borrowings and lease receivables are evaluated by Company on parameters such as interest rates, specific country risk factors and other risk factors. Based on this evaluation the fair value of such payables are not materially different from their carrying amount.
iii) The fair value of Security Deposits, Performance Security Deposit, Miscellaneous Deposit and Retention Money are calculated based on cash flows discounted using current market rate. Average SBI fixed deposit rate i.e 7.58% is being considered as discounting rate for financial Assets and Average SBI Lending rate i.e 10.18% is being considered as discounting rate for financial liability for the FY 2023-24. They are classified as level 3 fair values in fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.
iv) Investment in unquoted equity of subsidiaries, joint ventures and associates are stated at cost as per exemption provided by Para 10 of IND-AS 27.
v) Staff loans and advances have been continued at carrying value as measurement implications are immaterial.
vi) RVNL determined fair value of investment those are carried through Other Comprehensive Income based on adjusted intrinsic value, through independent valuer. Valuation of Investment of Indian Port Rail & Ropeway Corporation Limited is based on financial statements for 31st March 2023 as financial statements for the year ended on 31st March 2024 of the Indian Port Rail & Ropeway Corporation Limited are not available. Based on the valuation, no changes has been made in the value of investment and investment is shown at its original cost.
Fair Value hierarchy
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 assets or liability, either
directly (i.e. as prices) or indirectly (i.e. derived form prices)
(iii) Financial risk management
The Company's principal financial liabilities comprise Borrowings from IRFC, trade payable and other payables. The Company's principal financial assets include trade and lease receivables and cash & cash equivalents that are derived directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's financial risk activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with the company's policies and risk objectives. The board of directors reviews the policies for managing each of these risk, which are summarised below:-
a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of changes in market prices. Market risk comprises Interest rate risk and foreign currency risk. Financial instruments affected by market risk includes loans and borrowing, deposits and other non derivative financial instruments.
i) Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of change in market interest rate. The Company has only loan from IRFC, the payment of interest and repayment of principal of that is ensured by the Ministry of Railways; therefore the risk related to said loan is Nil, debt servicing will pass through RVNL books only.
ii) Foreign Currency Risk
The Company takes services from countries outside India for projects and is exposed to foreign currency risk arising from such foreign currency transactions. Due to immateriality of foreign exchange amount, Company does not hedge any risk.
b) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers. The Company is exposed to credit risk from its
financial activities in respect of financial instruments and the risk is negligible since the receivable are mainly from Ministry of Railways and State Governments. Also Company does not have any history of bad debts.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed in accordance with the Company's policy. Investment of surplus are made only with approved with counterparty on the basis of the financial quotes received from the counterparty.
c) Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company's reputation.
The Company's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company believes that the working capital is sufficient to meet its current operational requirements. Any short term- surplus cash generated, over and above the amount required for working capital management and other operational requirements, are retained as cash and investment in short term deposits with banks. The said investments are made in instruments with appropriate maturities and sufficient liquidity.
Note 32 Key sources of estimation uncertainty
The followings are the key assumptions concerning the future, and the key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities with next financial year.
a) Fair valuation measurement and valuation process
Financial instruments in respect of Security Deposit Asset Office Premise and Miscellaneous are measured initially at fair value and subsequently at amortised cost on the basis of materiality, transaction value upto H 12.00 lakhs are measured at fair value on initial recognition and subsequently at amortised
cost on group basis and Income and amortisation on such financial instruments has been considered on yearly basis. Transaction value of 12.00 lakhs or more are measured at fair value at initial recognition and subsequently at amortised cost on individual transaction basis.
Impact of fair valuation of Staff loans and advances are immaterial therefore it has been continuing at the carrying value.
The fair values of financial assets and financial liabilities is measured the valuation techniques including the DCF model. The inputs to these method are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Note 31 for further disclosures.
b) Taxes
Deferred tax assets are recognized for unused tax losses and unabsorbed depreciation to the extent it is probable that taxable profit will be available against which losses can be utilised. Significant management judgement is required to determine the amount of deferred tax asset that can be recognised, based upon the likely timing and level of future taxable profit together with future tax planning strategies.
c) Borrowings from IRFC and Lease Receivables from Railway
Company has borrowed funds from Indian Railway Finance Corporation for the purpose of construction of railway projects. There is a moratorium period of 3 years for each year's loan. During the said moratorium period, no amount on account of interest and principal shall be payable. The interest shall be charged on yearly basis and repayment of loan along with interest shall made be once in a year (for a period of 12 years) after the completion of moratorium period. Ministry of Railways would make available to RVNL the required funds thereafter, to enable them to do the debt servicing. The debt servicing will pass through RVNL books. Accordingly, funds are received by RVNL on each year from MoR and the same is transferred to IRFC. Therefore, there is no major impact on Statement of Profit & Loss of the Company.
i) Trade receivables are non-interest bearing except receivable from related party (other than RVNL-DTCPL JV and Dighi Roha Pvt Ltd) amounting to H 866.68 crore (Previous year H 819.14 crore) which are interest bearing at SBI base rate 1%. Customer profile include Ministry of Railways, Public Sector Enterprises and State Owned Companies in India. The Company's average project execution cycle is around 24 to 36 months. General payment terms include mobilisation advance, monthly progress payments with a credit period ranging from 45 to 60 days.
ii) Contract Assets are recognised over the period in which services are performed to represent the Company's right to consideration in exchange for goods or services transferred to the customer. It includes balances due from customers under construction contracts that arise when the Company receives payments from customers as per terms of the contracts, however the revenue is recognised over the period under input method. Any amount previously recognised as a contract asset is reclassified to trade receivables on satisfaction of the condition attached i.e. future service which is necessary to achieve the billing milestone.
iii) Contract liabilities relating to construction contracts are obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer. These mainly arise when a particular milestone payment exceeds the revenue recognised to date under the input method and advance received in long term construction contracts, the amount of advance received gets adjusted over the construction period as and when invoicing is made to the customer.
D. Cost to obtain the contract
Amount recognised as asset as at 31 March 2024 is Nil (Previous year: Nil)
Amount of amortisation recognised in the Statement of profit and loss during the year is Nil (Previous year: Nil)
NOTE: 37 CONTINGENT LIABILITIES
37.1 Claims Against the Company not acknowledged as debts:
In respect of claims pending under adjudication in arbitration invoked by the Contractor not acknowledged as debts by the Company are H 3,364.10 crore as at 31 March 2024 (Previous year H3,276.71 crore). The cases pending in courts involve an amount of H 551.99 crore as at 31st March 2024 (Previous year H551.99 crore). All the claims, if become payable, will form part of the project cost and reimbursable by respective clients.
37.3. Indirect taxes:
a). Service Tax
In respect of Service-tax, the company has received show cause notice from Director General Goods & Service Tax Intelligence, Delhi Zonal Unit raising a demand of H279.46 crore (Previous year H79.46 crore ) for nonpayment of service tax for the period from July 2012 to June 2017 under forward/reverse charge mechanism on services provided/ received to/by Ministry of Railway and Zonal Railways contested by the company. The Company has received order from Additional Director General(Adjudication) dated 24.08.2021 reduced the demand to 148.68 crore plus applicable interest and imposed penalty of H 130.78 crore .The Company has filed an appeal before CESTAT, New Delhi against the said demand. If the liability is decided against the Company in future ,the same will be borne by Ministry of Railways.
37.4 National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange (BSE) have levied a fine of H1.31 Crore (Upto Previous year H0.99 crore ) for non-compliance with the requirements pertaining to the composition of the Board and its committees upto March 31, 2024. Directors of the Company are appointed by the Government of India and the Company has no role to play in this regard and accordingly has requested Stock exchanges for waiver of fine.
37.5 Amount of Letter of Credit/Bank Guarantee as on 31 March 2024 is H 2475.78 crore (Previous year H 1,191.64 crore)
NOTE: 38 CAPITAL COMMITMENT:
- Contribution towards share capital in Joint Venture is H 34.96 crore (Previous Year: H163.25 crore).
- Contracts awarded for construction of flats is Nil (Previous Year: H2.81 crore ).
- Office Premise at World Trade Center, Nauroji Nagar New Delhi being constructed by NBCC H 60.68 crore incl. GST (Previous Year: H270.28 crore)
- Implementation of ERP is H 1.01 crore (Previous Year: H Nil)
38.1 Other Commitment
Commitment towards Contractual Payments of Project expenditure is H 31,763.85 crores (Previous Year: H 56,019.00 crore).
i) One of the former employees Mr. Devendra Singh on deputation from Indian Railways has filed a writ petition on 22.07.2010 against the Company in respect of dues on account of difference in pay scales. The impact of the same has not been quantified in the writ.
ii) During the financial year 2014-15, Company received a show cause notice from the Director General of Central Excise Intelligence, regarding the liability of Service Tax of H213.59 crore and interest and penalty thereon. The Company has not accepted the liability and has submitted its reply to the Show Cause Notice on 06.01.2015. A personal hearing has also been held in this regard on 21.09.2015 before the Principal Commissioner of Service Tax, Delhi-I. A similar statement of demand cum show cause notice has also been received for F. Yr. 2014-15 on 05.04.2016 in which a demand of H82.07 crore has been raised. It has also been replied on 24.05.2016. For F.Y. 2015- 16, 2016-17, 2017-18 (upto 30.06.2017), the statement of demand cum show cause notice in which a total demand of H211.65 crore cum show cause notice was served on 22.03.2018, which was replied on 18.05.2018. During the current financial year department has communciated that matter is kept in abeyance in view of the appeal on the identical issue filed by the department in the case of M/s Mundra port and special economic zone limited before the Hon'ble supreme court.
iii) Western Railway has carried out the work of elimination of 30 level crossings by converting them into mannad or by construction of RUB /LHS against the estimate of H 21.25 crore. H13.85 crore has been deposited by the company towards this work till 31-03-2021 . For elimination of unmanned level crossing, Railway Board has issued instructions that the cost shall be borne by Railways, Whereas WR is of opinion that this amount should be borne by SPV/Company. Accordingly Company has requested to WR to refund the amount of H13.85 crore paid to WR towards elimination of unmand level crossing.
iv) As per the Construction Agreement for Palanpur-Samakhiali doubling, there is a provision for contingencies of 0.5% as mentioned in estimated project cost.
v) During the Financial year 2017-18 Goods and Service Tax(GST) has subsumed the Service Tax with effect from 1st July 2017. The company has maintained same stand as was taken in the matter of service tax, with respect to applicability of the taxes on the share of the freight recieved by the company from indian railways and the operations & Maintainence cost recovered by the company. The company is of the view that no supply is involved by the company to the railway and vice-versa in sharing of freight revenue &
cost by Railway with the Company including furnishing of the particulars/Details for the same. However / Ministry of Railways has taken up the issue with Finance Ministry for issuing clarification/exemption.
Further, the matter had also been referred to Ministry of Railways for taking up the case with the Finance Ministry Clarifications/ confirmation and resolution of issue in the best Interest both for Railways and SVPs in this regard. During the current year, Tax Research Unit( TRU) of the Ministry of Finance, Government of India, has conveyed the recommendations of the GST council In its 48th Meeting held on 17th December, 2022 to MOR that Indian Railways (IR) and SPV are distinct person and supply of services by SPV to IR by way of allowing IR to use the infrastructure built and owned by them during the concession period against consideration in form of pro rata share of revenue is a taxable supply, Similarly, service of maintenance supplied by IR to SPV is also a taxable service.
TRU in Its decision has concluded the decision based on the fact that there is "supply of services by SPV to IR by way of allowing IR to use the infrastructure built and owned by them during the concession period against consideration in form of pro rata share of revenue.
However in case of company as per Clause 2.2 of concession agreement.""The Parties agree that the Project Assets shall remain the property Assets shall remain the property of MoR, the Project Railway being a Government Railway within the meaning of the Railway Act 1989.
It is clear from reading of above para that assets are not owned by company as well company is Government Railway applied in case of company. Pursuant to this, MOR has made further representations on various dates to ministry of finance, Government of India on the basis of representation made by company requesting them to reconsider the recommendation:
Railway Board has informed to Company that in terms of the ministry of Finance Office Memorandum it would transfer apportioned revenue to Company inclusive of GST.
Further Ministry has also issued guidelines for issuing of invoices for this transaction. Wherein it is provided that revenue shall be inclusive of GST for example, in case of H100 as apportioned revenue.
GST shall be H15.25 and revenue shall be H 84.75 for SPVs. Company has not recorded any GST liability on apportioned revenue and full amount recieved from railways is recorded as revenue, therefore company reported revenue till March 2024 may be reduced in future by 15.25%(ie impact of GST liabilty).
The matter is subjudice before Hon'ble High Court of Delhi an interim stay has been awarded by Delhi High Court, Therefore direction directions of railway board are on hold.
vi) KRCL has received claim of H1.43 Crore, towards expenditure incurred on doubling during the quarter ending December 2023 and March 2024 from RVNL.
However the same has not been accounted, since the same is not approved by board of KRCL and approved for increase in estimate was not taken from KRCL by RVNL. Further, corrosponding interest component on the same has not been accounted.
Capital commitment: (RVNL share- 50%)
H307.60 Crores (Previous Year H666.38 crore)
(i) Landowners (from whom land was purchased) have filed various cases from time to time for enhanced compensation. The amount of claims pending as at year-end is not quantifiable.
(ii) Income-tax amounting H2.77 crore (Previous year H 2.77 crore) pertains to the AY-2013-14. 2014-15, & 2017-18.
(iii) A sum of H33.15 crore up to 31 March 2024 ( Previous year H 44.24 crore ) towards interest and other changes demanded by M/s RVNL.
Capital Commitments: (RVNL Share : 30%)
(i) Estimated amount of works remaining to be executed on capital account (based on EPC cost) and not provided for H150.62 Crores (Previous Year H174.96 crore ).
Contingent liabilities: (Share of RVNL:49.76%)
(i) Department has raised demand in respect of alleged offence of evasion of Service Tax amounting to H 7.58 Crores and H 2.86 Crores for financial year 2014-15 and 2015-16 respectively. Also department has raised demand of H 2.95 Crores for the F.Y. 2016-17 and 2017-18 (upto June'17), However Company has not accepted the liability and has submitted its reply to department. Since the Company had earlier received favourable ruling from CESTAT, it is confident that no additional liability will devolve on it. Further for the period F.Y. 2011-12 to F.Y. 2013-14, KRCL has received favourable order from CESTAT for demand of 13.42 Crores. In case of similar companies on same matter department has moved to Hon'ble Supreme court in this case.
(ii) During the F.Y. 2019-20 Income Tax Department has moved to Hon'ble High Court of Delhi in respect of Tax demand of H 5.17 Crores for A.Y. 2011-12, Company has already received favourable order from ITAT in this case. Therefore, liability for this case has not been recorded in the books of Accounts.
(iii) Arbitration proceedings between KRCL and MOR (Respondent) is on going. As against the KRCL's claim, MoR has also filed counter claims. It is to be stated that as per Section 42A of The Arbitration and Conciliation Act 1996, Either Arbitral details of proceedings or of Claims ought to be kept confidential by the parties till the same is concluded. Therefore, KRCL is not in a position to disclose details of Arbitration proceedings including claims of KRCL/counter claims of MoR in Financial Statements.
(iv) During the previous years, company has received certain bills under protest from contractor pertaining to phase 1 on which a future liability may arise. Financial impact of the same is not ascertainable at present.
(v) Contingent liability in respect of departmental charges not claimed by RVNL @ 5% of project cost is estimated at 114.49 Crores.
Capital commitment: (Share of RVNL:49.76%) NIL (Previous Year NIL)
(i) The Company had received a Show Cause Notice (SCN) during financial year 2014-15 from tax authorities in the matter of applicability of service tax on the Company in respect of apportioned freight received by the Company from Railways. The SCN covered a period of three years from financial year 2011-12 to financial year 2013-14 and involved service tax of H 16.33 Crores plus interest and penalties. The Company contested the SCN and submitted its position through are joinder thereon to the adjudicating authorities, pleading that no service is rendered by BDRCL to Western Railway that might warrant liability to pay Service Tax. The Company got relief and favorable order from the Commi ssioner of Service Tax vide her order dated 25.01.2016 and has therefore not provided for the amount in the aforesaid claim its books for the above period. However, the department has filed appeal with CESTAT against the order of Commissioner for 25/03/2019 rejected the appeals filed by department. The Department has filed a appeal in Hon'ble Supreme Court against the order of CESTAT in response to the same the company has submitted a statement in Hon'ble Supreme Court. The tax authorities issued another SCN to the Company on the same grounds of involving a demand of H 16.38 Crores plus interest and penalties for the FY 2014-15. The company has duly submitted its reply to the adjudicating authorities for withdrawal of the claim in the aforesaid SCN on the same grounds as pleaded in the earlier rejoinder. Since the Company's stand is based on sound principles and immutable facts, and it had received a favourable ruling from the Commissioner of Service Tax. on the earlier occasion, it is confident that no additional liability on account of Service Tax will devolve on it. The Company has not yet received any adjudication order in the matter. Further, the tax authorities issued another SCN to the Company on the same grounds involving a demand of H 16.15 Crores plus interest and penalties for FY 2015-16 on 21st March 2018, the company has duly submitted its reply to the adjudicating authorities for withdrawal of the claim in the aforesaid SCN on the same grounds as pleaded in the earlier rejoinder.
Furthermore, the tax authorities issued another SCN to the Company on the same grounds involving a demand of H8.99 Crores plus interest and penalties for FY 2016-17 & 2017-18 (Upto Jun-17) on 22th April 2019. The company has duly submitted its reply to the adjudicating authorities for withdrawal of the claim in the aforesaid SCN on the same grounds as pleaded in the earlier rejoinder.
(ii) The O & M expenditure pertaining to Bharuch-Chavaj section has been provided in financial statement to the extent information provided by Western Railway and information available with company, remaining O & M will be provided in the year in which information will be received from Railways.
(iii) Company has terminated some contractual employees, due to misconduct at workplace and unauthorised absence from office, aggreived by the decision of the company employees have filed application with labour court for compensation towards their termination. However, based on the facts of the case, company expects favourable decision. Financial impact of the same is not ascertainable.
(iv) The Company has acquired land for its project. The compensation paid at the time of acquisition was on the basis of collector order. Further, some of the person has disputed the compensation and file a case before the Civil Court. The Civil Court order additional compensation of H315per sq. meter plus increment a 12% PA from the 23-11-2010 to date of award plus 30% solatium plus interest @ 9% for one year from date of possession and thereafter @ 15% pa vide order dated 03-02-2018. The amount of compensation determined by the Civil Court is H0.6074 Crores.The estimated liability of the interest that may arise on the amount of compensation is about H0.7681 Crores upto 31-03-2020. Against the said order, the Company has filed an appeal in Hon'ble High Court of Gujarat. The Hon'ble High Court of Gujarat has instructed for deposit of the 50% of the amount of claim of H0.6074 Crores for admitting the appeal. Accordingly, during the FY 2019-20 the Company has deposited a sum of H0.3037 Crores in lieu of the instruction made by Hon'ble High Court of Gujarat and the appeal has been admitted by the Hon'ble High Court of Gujarat.
Further, it has come to knowledge that the HC has passed further order vide order dated 30.06.2023, it has been submitted that the remaining 50% amount of the compensation shall be deposited within a period of four weeks from 30.06.2023. The Court shall disburse the 50% amount to the claimants and remaining 50% amount shall be Invested in a 1 cumulative fixed deposit initially for a period of five years to he renewed from time to time till final disposal of the appeals in the name of claimants.
Accordingly, the Company has provided a cheque an amount of H 30,37,214/- with the High Court of Ahmedabad, for the same.
(v) The Company had received a claim of H6.96 Crores from Rail Vikas Nigam Limited (RVNL) pertaining to arbitral award for construction of BDRCL Project under construction agreement for gauge conversion of Bharuch Samni-Dahej Section. The claim of H5.51 Crores has been accepted and paid by the company. The remaining amount of H 1.45 Crores has not been accepted by the Company and the necessary facts in this regard have been intimated to RVNL.Till date there is no details and clarification on the same is received from RVNL
Capital commitment: (Share of RVNL:35.46%)
(i) Capital commitment in respect of S&T Work-project H 4.59 crore (Previous year H 1.87 crore)
Contingent liabilities: (Share of RVNL:34.06%)
(i) During the financials year 2022-23, Company had received a show cause notice dated 23.12.2022 from the Principal Commissioner (Audit) Central GST & Central Excise Bhubaneshwar ,regarding the liability of irregular availment of ITC amounting H 209.02 Crores along with the interest under section 50 of the CGST Act, 2017 and also Penalty under Section 73 of the CGST Act. The Company had appeared before the Principal Commissioner (Audit) Central GST & Central Excise Bhubaneshwar for adjudication.
An order has issued by the Adjudicating Authority on 30-11-23 against the company. Therefore, the Adjudicating authority has imposed interest of H 4,09,41,732 and penalty of H 20,90,15,258 under GST Act, 2017. However, the company has filed appeal against the order on 7th March, 2024.
Capital commitment: (Share of RVNL:34.06%)
H 167.11 Crore (Previous Year H 399.74 Cr. ).
Contingent liabilities: (Share of RVNL:50.00%) RVNL has incurred project expenditure of HNil crore (Previous year H Nil).
Capital commitment: (Share of RVNL:50.00%) H 0.42 Crores (previous year: Nil)
4. Company has no commitments towards Leases yet to be commenced as on 31.03.2024.
5. The company has not sub-leased any of the assets taken on lease.
II. The Company elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option ('short- term leases') and lease contracts for which the underlying asset is of low value ('low-value assets').
Note 45.
Based on the upto date reconciliation of GST accounts as per financial books with the GST portal and considering the outcome of GST proceedings for F.Y 2017-18 and F.Y 2018-19, Company has reviewed its likely liability on account of GST for the pending assessments.
Company has also accepted and accounted for liability of 0.88 crores in the books of accounts for F.Y 2017-18 and F.Y 2018-19. In cases, where based on the opinion obtained from experts, the company has filed appeal in respect of adjudication orders passed during the assessment proceedings for F.Y 2017-18 and F.Y 2018-19.
In respect of pending assessments, based on the experts advice company does not foresee further GST liability for the company for the amount not exceeding H2.60 crores for the pending assessment years. Accordingly the provision of H 2.60 Crores has been made in the financial accounts for the F.Y 2023-24 in line with the concept of conservatism and as a prudent measure. The above amount of provision has been made after considering the accounting of RVNL for GST which has been strengthened on implementation of auto populated GSTR-2A/2B by the authority. Demand raised by department which, in the opinion of Management and based on the experts advice is not likely to sustain amounting to H124.38 Crores has been shown as contingent liability. (Refer Note no 37.3)
In respect of Krishnapatnam Railway Company Limited (KRCL), RVNL is entitled for departmental charges @ 5% of the total cost of work as per the detailed estimate/revised estimate/completion estimate as provided in paragraph 1137 of the Code for Engineering Department of Indian Railways. RVNL has received representation from KRCL for waiver of the aforesaid departmental charges apart from other relaxations from contractual obligations. Based on the representation made by KRCL, the management of the Company has decided to keep in abeyance the claim of the said departmental charges pending detailed review of the subject matter by the Board of Directors of the Company.
Note 47. Segment Reporting as per IND AS 108 General Information
Operating segments are defined as components of an enterprise for which discrete financial information is available which is being evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and assessing performance. Chairman and Managing Director of the company has been identified as CODM.
The company has identified one reportable operating segments as "Development of Rail Infrastructure".
Information about reportable segments and reconciliation to amounts reflected in the financial statement:
Income and expenses directly attributable to segments are reported under the respective operating segment. Income and Expenses which are not directly identifiable have been disclosed as un-allocable expenses or income.
Information about major customer:
During the year ended March 31, 2024, Operating Revenue of approximately 89.39% (Previous Year 93.29%) derived from a single external customer in Domestic Segment.
Note: 48. Additional reporting requirement (Schedule 111):
(i) The Company does not have any Benami Property and further no proceedings has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any pending charges or satisaction to be registered with ROC.
(iv) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.
(v) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Act, 1961 (such as search or survey or any other relevant provisions of the Income Tax Act, 1961).
(vi) The Company has no loans and advances which are either repayable on demand or are without specifying any terms or period of repayment.
(vii) The Company has not been classified as willful defaulter by the Bank or Financial Instituitions.
(viii) The Realisable Value of financial assets of the Company is not lower than value disclosed in financial statements and subject to confirmation.
Note 49. Operating Cycle
Earlier, the operating cycle of the Company was more than 12 months and extends upto 5 to 6 years based on the time required from initiation of the project to completion of the project. Now the operating cycle of the Company is 12 months after change in procedure order of MoR in respects of transfer of PWIP as per the note no 9.
Note 50. Securities released to State Electricity Board/Public Companies
Securities paid to Electricity Boards/ Public Companies towards provision of High Tension Power Lines for electricity connections are booked as project expenditure being part of the project cost.
Note 51. The President of India, acting through and represented by the Ministry of Railways, disinvested 5.36% (Offer Shares) of its holdings through an Offer for Sale (OFS) to retail and non-retail investors on July 26, 2023, and July 27, 2023. The OFS was successful.
Additionally, the Department of Investment and Public Asset Management, via a letter dated August 1, 2023 offered 5,58,785 equity shares of H 10 each to employees, representing approximately 0.5% of the ""Offer Shares,"" i.e., 5.36% of RVNL. Against the offer, employees exercised an option for 200 shares. The total holding of the Government of India as of March 31,2024, is 72.84% (compared to 78.20% in the previous year).
Note 52. Balances of some of the Trade receivables, Other assets, Trade and Other payables accounts are subject to confirmations/reconciliations and consequential adjustment, if any. Reconciliations are carried out on on-going basis.
Provisions, wherever considered necessary, have been made. However, management does not expect to have any material financial impact of such pending confirmations/reconciliations.
Previous year figures has been reaaranged, reclassified and regrouped to make them confirmatory with current year reported figures.
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