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Notes forming part of the Standalone Financial Statements as at 31 March, 2020
39. Provision for Contingencies

i. As per the terms and conditions of project, the corporation is required to make good,
the defects in the project work undertaken for dened period of time depending on the
terms specied in the MOU/Agreement.

ii. However, the Corporation stipulates similar condition to the sub-contractor and
retains the Security Deposit/ obtains the nancial guarantees. As such, management
is of the view that there would not be any major nancial impact on Account of the
same and no provision is required to be made in accordance with IND-AS 37 on
“Provision, Contingent Liabilities and Contingent Assets.”

40. Contingent liabilities and Contingent Asset:

a. Claims/Disputed liabilities not acknowledged as debt:

i. Against the court cases/arbitration proceeding relating to USBRL project, if any
liability arises, then as per the MOU between Northern Railway (NR) and KRCL the
same will be absorbed by NR. In case of any dispute between KRCL & NR on said
claim, the same will be decided under Arbitration between NR & KRCL. Even if it is to
be shared by KRCL as per the outcome of Arbitration, the liability of KRCL should be
limited to 80% of the total prot of the project of that year.

ii. As such no contingent liability has been considered against the Arbitration claims
settled by KRCL up to 31st March 2020 amounting to ` 30.12 Crore (` 10.08 Crore)
charged to the project and accepted by Northern Railway. Similarly claims of ` 783.30
Crore. (` 1978.84 Crore) under Arbitration and Court case related to USBRL Project, in
case of an adverse outcome of cases, these claims also will be chargeable to the
project. No contingent liability arises until the claims settled by KRCL are disputed by
Northern Railway (NR).

iii. Out of the above ` 783.30 Crore one arbitration case with ILFS is settled in the month
of April 2020 and the award of ` 11.74 Crore. has been declared against the
corporation. However, the corporation has decided to contest the same as per the
legal advice. Accordingly, no liability is provided as on 31.03.2020.

iv. Apart from the above the Claims by contractors against the Corporation pending
under Arbitration are ` 30.78 Crore (` 40.11 Crore). Besides this, against the
arbitration award to the tune of ` 11.40 Crores (` 12.07 Crore) the corporation has
preferred an appeal in the Court.

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