GMR Infrastructure's Auditors flag up the dangers in Accounting Standards
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The auditors - S R Batliboi & Associates - to publicly-held GMRInfrastructure, have raised red flags over accounting norms followed by the infrastructure developer with respect to certain of its power, airports and highway projects.
One of GMR's power projects which has been hit due to lack to gas on the Eastern Coast of India has been idle for a while. The power project in Rajahmundhry has capitalised Rs 397 crore and Rs 679 crore towards indirect expenditure and borrowing costs on this plant where active construction has been put on hold pending securing supply of requisitite natural gas.
GMR has approached the Ministry of Corporate Affairs for clarification on the applicability of relaxation from the provisions of Accounting Standard - 10 and AS-16 on the capitalisation.
"However, in our opinion, the aforesaid capitalisation of such expenses is not in accordance with the relevant accounting standards," the auditors mentioned.
In addition to this, the auditors too have raised concerns over how GMR has capitalised indirect expenditure and borrowing costs of Rs 124.42 crore over a highway project in Ahmedabad.
GMR had issued a notice of intention to terminate the concession agreement with the NHAI which has been disputed by NHAI. Subsequently, the management of the project subect to certain conditions which is pending acceptance by NHAI, had capitalised the indirect expenditure and borrowing costs.
However, the auditors have said that in their opinion, in view of the uncertainty, such expenses should have been charged off in the consolidated financial statements. (Business Standard)
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