(b) Terms/rights attached to equity shares

The Company has only one class of equity shares having par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March 2016, the amount of per share dividend recognized as distributions to equity shareholders was Rs. Nil (31 March 2015: Rs. Nil).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(c) Shares held by holding/ultimate holding Company and/or their subsidiaries/associates

a. Term loans from bank amounting to Rs.1,300 lacs (31 March 2015: Rs.1,950 lacs) (taken during the financial year 2012-13) carrying interest at Bank rate 2%, which is currently 12.40% p.a. The loan is repayable in 16 quarterly installments after a moratorium period of 12 months (as per the repayment schedule). The loan is secured by collateral security on Land & Building at Mahape and certain cranes. Also first pari passu charge on the fixed assets of the company excluding certain assets specifically charged to certain lenders, along with other working capital lenders and term lenders.

b. Term loans from a Non Banking Financial Company amounting to Rs.45 lacs (31 March 2015: Rs.90 lacs) (taken during the financial year 2010-11) carrying interest @ 10% to 13.75% p.a. The loans are repayable in 46 to 57 monthly installments including interest (as per the repayment schedules). The loans are secured by primary security of the assets being funded, viz. Plant & Machinery, Motor car & Cranes.

c. Term loans from a Non Banking Financial Company amounting to Rs.261 lacs (31 March 2015: Rs.702 lacs) (taken during the financial year 2012-13) carrying interest @ 15.25% p.a. (floating). The loan is repayable in 42 monthly installments including interest (as per the repayment schedules). The loan is secured by Equitable Mortgage of factory freehold land & super structure thereon, located at Pen, Maharashtra and Corporate Guarantee of KSS Petron Pvt. Ltd.

I] (a) Cash credit facilities from banks are secured by way of:

I. Tari passu charge on entire current assets including stock of raw materials, stock-in-process, semifinished & finished goods, consumables, stores, spares, book debts and all other movables both present and future.

II. Collateral securities as follows:

i. Pari passu charge by way of equitable mortgage on the following assets of the Company:

a) Office Blocks at Swastik Chambers, Chembur, Mumbai

b) Factory land and building at Dabhasa, Gujarat

ii. Pari passu charge on entire heavy plant & machinery, fixtures and certain crawler cranes

iii. Corporate guarantee by the holding company - KSS Petron Private Limited

III. T he Company has also offered the following security for project specific credit facilities from banks by way of ;

a) Exclusive charge on all current assets specific to the project contracts (including but not limited to raw material, finished goods, work in progress, receivables and the contract receipts from the obligators)

b) Exclusive charge on all monies deposited/credited or caused to be deposited/credited into the project specific bank accounts

(b) The cash credit is repayable on demand and carries interest in the range of 13.35% to 16.75%.

II] Inter corporate deposits

Inter corporate deposits are unsecured and carries interest in the range of 11.00% to 16.00% and are repayable on the expiry of the term for which it was taken. Inter corporate deposits include Rs.3,505 lacs (31 March 2015: Rs.3,941 lacs) taken from related party.

1. Buildings include:

(a) Temporary establishments at sites of gross block of Rs.1,213 lacs and net block of Rs.174 lacs (31 March 2015: Rs.1,784 lacs and Rs.195 lacs respectively), these are written off over the expected life of the project or three years whichever is earlier.

(b) Rs. 753 , being the value of unquoted fully paid shares held in Swastik Chambers Owners' Co-operative Society Limited in connection with the ownership rights of the office.

(c) Building includes those constructed on leasehold land:

Gross block Rs.103 lacs (31 March 2015: Rs.103 lacs)

Depreciation charge for the year Rs.3 lacs (31 March 2015: Rs.0.85 lacs)

Accumulated depreciation till 31 March 2015 Rs.68 lacs (31 March 2015: Rs.62 lacs)

Net book value Rs.35 lacs (31 March 2015: Rs.40 lacs)

2. M he Company has revalued its office buildings on 31 March 1994, at the fair values determined by an independent external valuer. The valuer determined the fair value by reference to market-based evidence. The valuations performed by the valuer were based on active market prices, adjusted for any difference in the nature, location or condition of the specific property.

The historical cost of office building fair valued by the Company was Rs.61 lacs and its fair value was Rs.934 lacs. Hence, the revaluation resulted in an increase in the value of office building by Rs.873 lacs. The revaluation of the building results an additional depreciation charge of Rs.16 lacs every year. In accordance with the option given in the Guidance Note on Accounting for Depreciation in Companies, the Company recouped such additional depreciation out of revaluation reserve up to 31st March 2014.

3. Gratuity and other post employment benefit plans

Gratuity :The Company operates gratuity plan which is administered through a gratuity trust for its employees as per the provisions of the Payment of Gratuity Act, 1972 [Amended]. The gratuity plan envisages annual contribution by employer to the trust as per actuarial valuation. The payment of gratuity to the employees are payable as per the Payment of Gratuity Act, 1972 [Amended] at the time of separation from service or retirement, whichever is earlier, subject to completion of the minimum qualifying service of 5 years. The payment of gratuity to the eligible employees by the trust is guaranteed by the Company. The Guidance issued by the Accounting Standard Board - the 'ASB' - on implementing AS-15, Employee Benefits [Revised 2005] states that employee benefits fund set up by employers which guarantee any shortfall to be made good by the employer is treated as defined benefit plan.

The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the respective plans.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

4. Segment information

The Company's operations comprise of only one business segment ""Engineering, Procurement and Construction"" in the context of reporting business / geographical segment as required under mandatory Accounting Standard AS-17 ""Segment Reporting"". The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.

The geographical segment considered for disclosure are in India and Outside India.

f. Corporate guarantee given by KSS Petron Pvt. Ltd.

KSS Petron Pvt. Ltd. has given a corporate guarantee of Rs.37,000 lacs towards Cash credit and other facilities taken by the Company from banks and Rs.1,850 lacs towards term loan from a non-banking financial company.

Note: The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefits, as they are determined on an actuarial basis for the Company as a whole.

5. Capital and other commitments

Commitment for capital expenditure is Rs. Nil (31 March 2015: Rs. Nil).

6. Legal matters

T ne of the vendor (party) has invoked arbitration proceedings which have been challenged by the Company (earlier the company has made payment of Rs.750 lacs as per the interim orded of the Hon'ble High Court of Mumbai, on winding up petition filed in earlier year for non payment of Rs.1,277 lacs to the party, pending for final decision). Due liability in this regard have been fully provided in the books. The Company believes that it has creditable case on merits in its favour and does not expect any additional liability.

7. Update on Suspended / delayed contracts

The Company had entered into three contracts aggregating to Rs.27,974 lacs with one of the customers for design, engineering, supplies and construction of refinery heater & piping packages. This is a mega project (the largest private investment in the region)-which is nearly 60% completed and which had hit a temporary road block because of cost escalation, natural disaster and financial constraint. In March 2015 the Company had a meeting with the client, wherein the client had confirmed that they are in advanced stage for tying up with an investor for financial support to restart the project. The amount outstanding in the form of trade receivables of Rs.1,267 lacs (net of mobilization advance of Rs.2,926 lacs) is pending negotiations with the customer and the unbilled revenues are in the form of unfinished works and inventories, most of which are marketable, if required. The management is confident of its recovery in due course of time, in view of re-affirmation from top executives of said client for restarting the project and recently initiative taken by the central government in this regard. Further, in the current year, the company was successful in arriving settlement with one client which has resulted in reduction.

As regards Trade payables of Rs.819 lacs (as at 31st March, 2015 Rs.1,323 Lacs)relating to the said contract, the same is subject to reconciliation of work performed and can be accurately ascertained after re-negotiation upon re-start of the project or otherwise as the case may be.

In addition to the above there are trade receivables of Rs.656 lacs (net of mobilization advance and provisions of Rs.8 lacs) pertaining to some other old / delayed contracts. The Company is negotiating with these clients for recovery and is confident of realization of these receivables.

8. Revenue recognition - Cost Overruns / Extended Stay

(a) The Company had recognized in earlies period revenue and receivables of Rs.1,353 lacs (till 31st March, 2015 Rs.2,555 lacs) on account of cost overruns arising due to design changes and delay in completion of certain contracts, in respect of which the change order /customer acceptances are awaited. The contracts have provisions for issuance of change orders due to modifications in specifications, scope and methodology of execution of work. During execution of works, some of the specifications had undergone changes for which change order requests have been sent to the respective clients.

(b) Further, the company has recognized revenue of Rs.1,621 lacs during the current year (till date ' 2,922 lacs) on account of cost overruns arising due to extended stay in certain contracts. There are contractual provisions in these contracts for claims against extended stay at pre-determined rates per month as specified in the respective contracts.

The company is currently in discussion for getting change orders issued. The management is confident of receiving the recognized revenue after completion of pending formalities in due course of time. Therefore, there will not be any impact on reported profit for the year ended 31 March 2016 and on corresponding assets as at that date.

9. Going concern

T he Company is executing certain projects which have very high back ended billing and payment terms, release of which is linked to contracts achieving certain milestones and getting approvals from clients. This temporarily affects the liquidity of the Company. To mitigate the above, the Company has also obtained funding support from its Parent Company.

In the opinion of the management, current assets, loans and advances have a realizable value in ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

(b) The Company is contesting the above demands and does not expect any material liability in respect of above contingent items, the effect of which, if any, will be taken as and when these are settled.

(c) Bank guarantees & Inland/Foreign letters of credit issued by the banks on behalf of the Company of ' 1,890,117,125.

Apart from the above, the Company believes that there are no other balances outstanding to micro and small enterprises as defined under the MSMED Act, 2006. This has been relied upon by the auditors.

To the extent information available with the Company in respect of MSME {as defined in The Micro, Small and Medium Enterprises Development Act, 2006 (the Act)}, the management has identified such enterprises which have provided goods and services to the company and qualify under the definition of MSME. As certified by the management there is no delay/default in payment. However, the company is in the process of compiling the additional information required to be disclosed under the act; accordingly, the amount of interest paid / payable in view of the management if any, will not be material.

10. Revision of estimated revenue, cost and project related provision

(a) During the current year as per the past practice, the Company has revised the estimated revenue, cost and project related provisions on account of prolongation of the contracts' tenure as per the requirement of the clients owing to uncertainty surrounding completion of the projects which were due to reasons beyond the Company's control. This is being done in line with the general business practice followed in the industry, however additional steps have been initiated during the year for fair estimation of revenue and project related provisions. Accordingly, adjustments on this account and/also on cost reassessment done during the year been charged/carried out to the Statement of Profit and Loss. (read with below Note No (b).

(b) Balance of certain trade receivables, other current liabilities and loans and advances are subject to confirmation / reconciliation. Management believes that on reconciliation / confirmation, there will not be any material impact on profit for the year and also on state of affairs.

11. Depreciation adjustment

Pursuant to the Companies Act, 2013 ("the Act"), the management, based on their evaluation has reassessed the useful life of fixed assets. Consequently, where the revised residual life of the fixed assets was nil as of 1st April 2014 (at that date), after retaining the residual value, balance carring value has been adjusted against the retained earnings in the year 2014-15 by Rs.57.15 lacs (Net of Deferred Tax Rs.29.43 lacs).

12. Previous numbers have been regrouped/reclassified to meet current year classification.

The accompanying notes are an integral part of the financial statements,