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Accounting Policies of BF Utilities Ltd. Company

Sep 30, 2015

1 A. Corporate Information:

BF Utilities Ltd. ("the Company" or "BFUL") is a public company domiciled in India and incorporated on 15 September,2000 under the provisions of the Companies Act,1956 ("the Act"). Its shares are listed on National stock exchange and Bombay stock exchange in India. The Company is engaged in the generation of electricity through wind mills. The Company's CIN is L40108PN2000PLC015323.

1 B. Basis of preparation:

The financial statements of the Company for the year ended 30 September, 2015 have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) to comply in all material respects with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with the Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. These financial statements are prepared on an accrual basis and under the historical cost convention except financial instruments which have been measured at fair value. The accounting policies are consistently applied by the Company during the year and are consistent with those used in previous year.

1 C. Summary of significant accounting policies:

a) Use of estimates:

The preparation of the financial statements is in conformity with Indian GAAP and requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities at the end of reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

b) Tangible fixed assets:

Tangible fixed assets are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price and directly attributable costs of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. The Company has adopted the provisions of para 46A of AS 11 "The Effects of Changes in Foreign Exchange Rates", accordingly, exchange difference arising on settlement of long term foreign currency borrowing relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. Capital work-in-progress includes cost of fixed assets that are not ready to be put to use.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the year during which such expenses are incurred.

Gains or losses arising from disposal of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.

Expenditure on New Projects and Expenditure during Construction etc. :

In case of new projects or expansion at the existing units of the Company, expenditure incurred including interest and financing costs of specific borrowings, prior to commencement of commercial production is being capitalised to the cost of assets.

c) Intangible assets:

(i) Acquired intangible assets

Intangible assets acquired separately are measured on the initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

Gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.

(ii) Research and development cost

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the Company can demonstrate:

- technical feasibility of completing the intangible asset so that it will be available for use or sale;

- its intention to complete the asset and use or sell it;

- its ability to use or sell the asset;

- how the asset will generate probable future economic benefits;

- the availability of adequate resources to complete the development and to use or sell the asset;

- the ability to measure reliably the expenditure attributable to the intangible asset during development.

Such capitalized expenditure is reflected as intangible under development.

d) Capital work-in-progress:

Projects under which assets are not ready for their intended use or projects which are suspended during extended period in which active development is interrupted and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable /eligible interest.

e) Depreciation and amortization:

Depreciation on tangible fixed assets is provided using the Straight Line Method ('SLM') except in respect of Furniture & Fittings and Vehicle is provided using Written Down Value ('WDV') over the useful lives of the assets estimated by the management.

Useful lives of the above assets are as per prescribed under Part C of Schedule II of the Companies Act, 2013.

Individual assets whose cost does not exceed Rs. 5,000 are fully depreciated in the year of acquisition.

Depreciation on additions to assets during the year is being provided on pro-rate basis from the date of acquisition/ installation.

Depreciation on assets sold, discarded or demolished during the year, is being provided at their respective rates on pro-rate basis upto the date on which such assets are sold, discarded or demolished.

Intangible assets are amortized on a straight line basis over their estimated useful lives commencing from the day the asset is made available for use.

f) Impairment of tangible and intangible assets:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors.

Recoverable amount of intangible under development that is not yet available for use is estimated at least at each reporting period / year end even if there is no indication that the asset is impaired.

An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using an appropriate discount factor that reflects current market assessments of the time value of money and risks specific to the asset.

When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalue assets.

g) Investments:

Investments which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Current investments are carried in the financial statements at lower of cost and fair value, determined on category of investment basis. Long- term investments presented in the financial statements are carried at cost. However, provision for diminution in value is made to recognize a decline, other than temporary decline, in the value of investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

h) Inventory:

Unsold Certified Emission Reduction (CER) and Renewable Energy Certificate (REC) are considered as Inventory and valued on the basis of costs which are directly allocated to it, as per guidance note issued by ICAI dated 11 February 2012. The cost is assigned to inventories on First in First Out (FIFO) basis. This CERs and RECs are valued at lower of cost or net realisable value.

i) Cash and cash equivalents:

Cash and cash equivalents in the cash flow statement comprises of cash at bank, cash in hand and short term deposits with an original maturity period of three months or less.

j) Cash flow statement:

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

k) Borrowing Cost:

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings.

Borrowing costs directly attributable to the acquisition, construction or development of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the year they occur.

l) Leases:

(i) Where the Company as a less or,

Leased assets under finance leases, such amounts are recognised as receivables at an amount equal to the net investment in the lease and the finance income is recognised based on a constant rate of return on the outstanding net investment. Leased assets under operating lease, lease income from such lease is recognised in the statement of profit and loss account on straight line basis over the lease term unless another systematic basis is more representative of the time pattern in which benefit derived from the use of leases asset is diminished.

(ii) Where the Company is the lessee,

Leases, where the less or effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.

m) Revenue Recognition:

Revenue recognition is generally postponed if the receipt can not be estimated with reasonable certainty.

(a) Income from Electricity generated is accounted on the basis of electricity wheeled into MSEB grid and jointly certified.

(b) Interest is accrued over the period on the amount of loan/investment.

(c) Dividend is accrued in the year in which it is declared, whereby right to receive is established.

(d) Profit/Loss on sale of investment is recognised on contract date.

(e) Income from Certified Emission Reduction (CERs) units and Renewable Energy Certificates (RECs) is recognised in the year of its actual sales.

n) Foreign currency transaction:

Foreign currency transactions and balances:

Initial recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates at the date when the values were determined.

o) Retirement and other employee benefits:

(i) Provident fund

Eligible employees receive benefits from a provident fund, which is a defined benefit plan. Both the employee and the Company make monthly contributions to the provident fund plan equal to a specific percentage of the covered employee's salary. The Company contributes a part of the contributions to the "BF Utilities Limited Staff Provident Fund Trust". The rate at which the annual interest is payable to the beneficiaries by the trust is being administered by the government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate. The guidance note on implementation of AS- 15 (revised 2005) "Employee Benefits", states that benefits involving employer established provident funds, which requires interest shortfalls to be provided, are to be considered as defined benefit plans.

(ii) Gratuity

Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully cover the same under cash accumulation policy of the Life Insurance Corporation of India. The employee's gratuity is a defined benefit funded plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected unit credit method as at the date of the Balance Sheet and the shortfall in the fair value of the Plan Assets is recognized as an obligation.

(iii) Superannuation

Retirement benefit in the form of superannuation plan is defined contribution plan. Defined contribution to Life Insurance Corporation of India for employees covered under Superannuation scheme are accounted at the rate of 15% of such employee's basic salary.

(iv) Privilege Leave Benefits

Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.

The Company presents the entire leave encashment liability as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date. Where the Company has the unconditional legal and contractual right to defer the settlement for a period beyond twelve months, the same is presented as non-current liability.

p) Income taxes:

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current reporting period and reversal of timing differences of earlier reporting periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes- down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. MAT credit available is recognized as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as 'MAT Credit Entitlement.' The Company reviews the 'MAT credit entitlement' asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.

q) Provisions:

A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

r ) Earnings per share (EPS):

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares), if any, occurred during the reporting period, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year, are adjusted for the effects of all dilutive potential equity shares.

s ) Contingent liabilities:

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

t ) Domestic transfer pricing:

The Company enters into 'domestic transactions' with specified parties that are subject to the Transfer Pricing regulations under the Income Tax Act, 1961 (the 'Regulations'). The pricing of such domestic transactions will need to comply with the arm's length principle under the Regulations. These Regulations, inter alia, also require the maintenance of prescribed documents and information including furnishing a report from an accountant which is to be filed with the Income Tax authorities.

The Company has undertaken necessary steps to comply with the Regulations. The Management is of the opinion that the domestic transactions are at arm's length and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

u) Segment reporting:

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment Inter- segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue/ expenses/ assets/ liabilities".


Sep 30, 2014

Basis of Preparation

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs).

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

Current-Non Current classification :

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956.

Operating Cycle :

Based on nature of business and activities carried out by the Company, time between acquisition of assets and their realisation in cash and cash equivalent, the Company has ascertained its operating cycle as 12 months for the purpose of current / non-current classification of assets and liabilities.

I System of Accounting :

i) The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties.

ii) Financial Statements are based on historical cost. These costs are not adjusted to reflect the impact of the changing value in the purchasing power of money.

iii) The preparation of Financial Statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in accompanying financial statements are based upon Management''s evaluations of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from estimates and assumptions used in preparing the accompanying financial statements. Any revisions to accounting estimates are recognized prospectively in current and future periods.

II Fixed Assets and depreciation :

A. Fixed Assets are stated at their original cost of acquisition including incidental expenses related to acquisition and installation of the concerned assets. Fixed Assets are shown net of accumulated depreciation (except free hold land).

B. Expenditure on New Projects and Expenditure during Construction etc. :

In case of new projects or expansion at the existing units of the Company, expenditure incurred including interest and financing costs of specific borrowings, prior to commencement of commercial production is being capitalised to the cost of assets.

C. Depreciation:

Tangible Assets:

Fixed Assets:

i Depreciation on Buildings, Plant & Machinery, Electrical Installations, and Office Equipments is being provided on "Straight Line Method" basis in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956, in the manner and at the rates specified in Schedule XIV to the said Act.

ii Depreciation in respect of Furniture & Fittings and Vehicles is being provided on "Written down value" basis in accordance with the provisions of Section 205(2)(a) of the Companies Act, 1956 in the manner and at the rates specified in Schedule XIV to the said Act.

iii Depreciation on additions to assets during the year is being provided at their respective rates on pro-rata basis from the date of acquisition/installation.

iv Depreciation on assets sold, discarded or demolished during the year, is being provided at their respective rates on pro-rata basis up to the date on which such assets are sold, discarded or demolished.

v Project under which assets are not ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable or eligible interest.

Intangible Assets:

i) Acquired intangible assets

Intangible assets acquired separately are measured on the initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

Gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.

ii) Research and development cost

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the Company can demonstrate :

- technical feasibility of completing the intangible asset so that it will be available for use or sale;

- its intention to complete the asset and use or sell it;

- its ability to use or sell the asset;

- how the asset will generate probable future economic benefits;

- the availability of adequate resources to complete the development and to use or sell the asset; and

- the ability to measure reliably the expenditure attributable to the intangible asset during development.

Such capitalized expenditure is reflected as intangible under development.

iii) Capital work-in-progress:

Projects under which assets are not ready for their intended use or projects which are suspended during extended period in which active development is interrupted and other capital work-in- progress are carried at cost, comprising direct cost, related incidental expenses and attributable /eligible interest.

III Impairment of Assets :

The Company tests for impairments at the close of the accounting period, if and only if, there are indications that suggest a possible reduction in the recoverable value of an asset. If the recoverable value amount of an Asset, i.e. the net realisable value or the economic value in use of a cash generating unit, is lower than the carrying amount of the Asset, the difference is provided for as impairment. However, if subsequently, the position reverses and the recoverable amount becomes higher than the carrying value, then the provision to the extent of the difference is reversed, but not higher than the amount provided for.

IV Investments :

i) Non-Current Investments : Investments are valued at cost of acquisition. Trade and Other investments made by the Company are of a long Term nature and hence diminution in the value of investments are generally not considered to be of other than temporary nature. However where, in the opinion of the management, considering the facts and circumstances prevailing at the balance sheet date, diminution, if any, is determined to be other than temporary, provision for the same is made and investments are stated net of such provisions.

ii) Current Investment : Current Investments are stated at cost less provision for diminution, as necessary, if any.

V Cash and cash equivalents (for purposes of Cash Flow Statement) :

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition).

VI Cash flow statement :

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

VII Revenue Recognition :

Revenue recognition is generally postponed if the receipt can not be estimated with reasonable certainty.

a) Income from Electricity generated is accounted on the basis of electricity wheeled into MSEB grid and jointly certified.

b) Interest is accrued over the period and the amount of loan/investment.

c) Dividend is accrued in the year in which it is declared, whereby right to receive is established.

d) Profit/Loss on sale of investment is recognised on contract date.

e) Income from Certified Emission Reduction units (CERs) and Renewable Energy Certificates (RECs) is recognised in the year of its actual sales.

VIII Borrowing Cost :

Interest on borrowings is recognised in the Statement of Profit & Loss except interest incurred on borrowings specifically received for projects are capitalized to the cost of asset until such time the asset is ready to be put to use for intended purpose.

Borrowing Costs include foreign exchange differences on the long term foreign currency loan to the extent they are attributable to interests differential on the said loans.

IX Foreign Currency Transactions :

Foreign Currency transactions are recognised on the basis of foreign exchange rate on the date of transaction.

Foreign Currency Conversions :

Current Assets and other liabilities in foreign currency and foreign currency exposure in respect of foreign currency loans other than for financing fixed assets outstanding at the close of the financial year are valued at the contracted and/or appropriate exchange rates at the close of the year. The loss or gain due to fluctuation of exchange rates is charged to Statement of Profit and Loss.

X Employee Benefits :

i) Employee Benefit in the form of Provident Fund and Pension Scheme whether in pursuance of law or otherwise which are defined contributions are accounted on accrual basis and charged to Statement of Profit & Loss.

ii) Gratuity :

Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully cover the same under cash accumulation policy of the Life Insurance Corporation of India. The employee''s gratuity is a defined benefit funded plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet and the shortfall in the fair value of the Plan Assets is recognized as an obligation.

iii) Superannuation :

Defined contribution to Life Insurance Corporation of India for employees covered under Superannuation scheme are accounted at the rate of 15% of such employee''s annual salary.

iv) Privilege Leave Benefits :

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarialvaluation using the projected unit credit method at the reporting date. Actuarial gains/losses are immediately taken to the Statement of Profit and Loss and are not deferred.The Company presents the entire leave as a current liability in the Balance Sheet, since it does not have an unconditional right to defer its settlement for twelve months after the reporting date.

The Company presents the entire leave as a current liability in the Balance Sheet, since it does not have an unconditional right to defer its settlement for twelve months after the reporting date.

v) a. Defined contribution plansThe Company''s contribution to employee state insurance scheme, provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

b. Defined benefit plansFor defined benefit plans in the form of gratuity fund and post-employment medical benefits, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus - . the present value of available refunds and reductions in future contributions to the schemes.

XI Taxation :

Provision for taxation is made on the basis of taxable profits computed on current year profit in accordance with Income Tax Act. Deferred Tax resulting from timing differences is accounted for at the applicable rate of tax to the extent the timing differences are expected to crystallize, after ignoring deferred tax adjustments originating and reversing during tax holiday period, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Asset can be realized.

XII Provisions :

Necessary Provisions are made for present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions reflect best estimates based on available information.

XIII Inventories :

Unsold Certified Emission Reduction (CER) and Renewable Energy Certificate (REC) are considered as Inventory and valued on the basis of costs which are directly allocated to it, as per guidance note issued by ICAI dated 11 February 2012. The cost is assigned to inventories on First in First Out (FIFO) basis.

XIV Leases :

Where the Company is the lessee

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.

XV Earning Per Share (EPS) :

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares), if any occurred during the reporting period, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year, are adjusted for the effects of all dilutive potential equity shares.

XVI Contingent liabilities :

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrences or non occurrences of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is liability that can not be recognised because it cannot be measured reliably. The Group does not recognise a contingent liability but discloses its existence in the financial statements.

XVII Domestic Transfer Pricing :

The Company enters into "domestic transactions" with specified parties that are subject to the Transfer Pricing regulations under the Income Tax Act, 1961 (the ''Regulations''). The pricing of such domestic transactions will need to comply with the arm''s length principle under the Regulations. These Regulations, inter alia, also require the maintenance of prescribed documents and information including furnishing a report from an accountant which is to be filed with the Income Tax authorities. The Company has undertaken necessary steps to comply with the Regulations. The Management is of the opinion that the domestic transactions are at arm''s length and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.


Sep 30, 2013

Basis of Preparation

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

Current-Non Current classification: All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956.

Operating Cycle: Based on nature of business and activities carried out by the Company, time between acquisition of assets and their realisation in cash and cash equivalent, the Company has ascertained its operating cycle as 12 months for the purpose of current / non-current classification of assets and liabilities.

I System of Accounting :

i) The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties.

ii) Financial Statements are based on historical cost. These costs are not adjusted to reflect the impact of the changing value in the purchasing power of money.

iii) The preparation of Financial Statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in accompanying financial statements are based upon Management''s evaluations of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from estimates and assumptions used in preparing the accompanying financial statements. Any revisions to accounting estimates are recognized prospectively in current and future periods.

II Fixed Assets and depreciation :

A. Fixed Assets are stated at their original cost of acquisition including incidental expenses related to acquisition and installation of the concerned assets. Fixed Assets are shown net of accumulated depreciation (except free hold land).

B. Expenditure on New Projects and Expenditure during Construction etc. :

In case of new projects or expansion at the existing units of the Company, expenditure incurred including interest and financing costs of specific borrowings, prior to commencement of commercial production is being capitalised to the cost of assets.

C. Depreciation:

Fixed Assets:

i Depreciation on Buildings, Plant & Machinery, Electrical Installations, and Office Equipments is being provided on "Straight Line Method" basis in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956, in the manner and at the rates specified in Schedule XIV to the said Act.

ii Depreciation in respect of Furniture & Fittings and Vehicles is being provided on "Written down value" basis in accordance with the provisions of Section 205(2)(a) of the Companies Act, 1956 in the manner and at the rates specified in Schedule XIV to the said Act.

iii Depreciation on additions to assets during the year is being provided at their respective rates on pro-rata basis from the date of acquisition/installation.

iv Depreciation on assets sold, discarded or demolished during the year, is being provided at their respective rates on pro-rata basis up to the date on which such assets are sold, discarded or demolished.

III Impairment of Assets :

The Company tests for impairments at the close of the accounting period, if and only if, there are indications that suggest a possible reduction in the recoverable value of an asset. If the recoverable value amount of an Asset, i.e. the net realisable value or the economic value in use of a cash generating unit, is lower than the carrying amount of the Asset, the difference is provided for as impairment. However, if subsequently, the position reverses and the recoverable amount becomes higher than the carrying value, then the provision to the extent of the difference is reversed, but not higher than the amount provided for.

IV Investments:

i) Non-Current Investments : Investments are valued at cost of acquisition. Trade and Strategic investments made by the Company are of a long Term nature and hence diminution in the value of investments are generally not considered to be of other than temporary nature. However where, in the opinion of the management, considering the facts and circumstances prevailing at the balance sheet date, diminution, if any, is determined to be other than temporary, provision for the same is made and investments are stated net of such provisions.

ii) Current Investment : Current Investments are stated at cost less provision for diminution, as necessary, if any.

V Cash and cash equivalents (for purposes of Cash Flow Statement):

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition).

VI Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

VII Revenue Recognition : -

Revenue recognition is generally postponed if the receipt can not be estimated with reasonable certainty.

a) Income from Electricity generated is accounted on the basis of electricity wheeled into MSEB grid and jointly certified.

b) Interest is accrued over the period and the amount of loan/investment.

c) Dividend is accrued in the year in which it is declared, whereby right to receive is established.

d) Profit/Loss on sale of investment is recognised on contract date.

e) Income from Certified Emission Reduction units (CERs) and Renewable Energy Certificates (RECs) is recognised in the year of its actual sales.

VIII Borrowing Cost : - Interest on borrowings is recognised in the Statement of Profit & Loss except interest incurred on borrowings specifically received for projects are capitalized to the cost of asset until such time the asset is ready to be put to use for intended purpose.

Borrowing Costs include foreign exchange differences on the long term foreign currency loan to the extent they are attributable to interests differential on the said loans.

IX Foreign Currency Transactions : - Foreign Currency transactions are recognised on the basis of foreign exchange rate on the date of transaction.

Foreign Currency Conversions : - Current Assets and other liabilities in foreign currency and foreign currency exposure in respect of foreign currency loans other than for financing fixed assets outstanding at the close of the financial year are valued at the contracted and/or appropriate exchange rates at the close of the year. The loss or gain due to fluctuation of exchange rates is charged to Statement of Profit and Loss.

X Employee Benefits :

i) Employee Benefit in the form of Provident Fund and Pension Scheme whether in pursuance of law or otherwise which are defined contributions are accounted on accrual basis and charged to Statement of Profit & Loss.

ii) Gratuity:

Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully cover the same under cash accumulation policy of the Life Insurance Corporation of India. The employee''s gratuity is a defined benefit funded plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet and the shortfall in the fair value of the Plan Assets is recognized as an obligation.

iii) Superannuation:

Defined contribution to Life Insurance Corporation of India for employees covered under Superannuation scheme are accounted at the rate of 15% of such employee''s annual salary.

iv) Privilege Leave Benefits:

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Actuarial gains/losses are immediately taken to the Statement of Profit and Loss and are not deferred.

The Company presents the entire leave as a current liability in the Balance Sheet, since it does not have an unconditional right to defer its settlement for twelve months after the reporting date.

XI Taxation :

Provision for taxation is made on the basis of taxable profits computed on current year profit in accordance with Income Tax Act. Deferred Tax resulting from timing differences is accounted for at the applicable rate of tax to the extent the timing differences are expected to crystallize, after ignoring deferred tax adjustments originating and reversing during tax holiday period, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Asset can be realized.

XII Provisions :

Necessary Provisions are made for present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions reflect best estimates based on available information.

XIII Research & development Expenditure :

Research & development expenditure is charged to Revenue under the natural head of account in the year in which it is incurred. However, expenditure incurred at development phase, where it is reasonably certain that outcome of research will be commercially exploited to yield economic benefits to the Company, is considered as an intangible asset.

XIV Inventories

Unsold Certified Emission Reduction (CER) and Renewable Energy Certificate (REC) are considered as Inventory and valued on the basis of costs which are directly allocated to it, as per guidance note issued by ICAI dated 11 February 2012. The cost is assigned to inventories on First in First Out (FIFO) basis.

XV Leases

Where the Company is the lessee Leases, where the lesser effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.

XVI Earning Per Share (EPS)

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares), if any occurred during the reporting period, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year, are adjusted for the effects of all dilutive potential equity shares.


Sep 30, 2012

I System of Accounting:

i) The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties.

ii) Financial Statements are based on historical cost. These costs are not adjusted to reflect the impact of the changing value in the purchasing power of money.

iii) The preparation of Financial Statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in accompanying financial statements are based upon Management''s evaluations of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from estimates and assumptions used in preparing the accompanying financial statements. Any revisions to accounting estimates are recognized prospectively in current and future periods.

II Fixed Assets and depreciation:

A. Fixed Assets are stated at their original cost of acquisition including incidental expenses related to acquisition and installation of the concerned assets. Fixed Assets are shown net of accumulated depreciation (except free hold land).

B. Expenditure on New Projects and Expenditure during Construction etc. :

In case of new projects or expansion at the existing units of the Company, expenditure incurred including interest and financing costs of specific borrowings, prior to commencement of commercial production is being capitalised to the cost of assets.

C. Depreciation:

Fixed Assets:

i Depreciation on Buildings, Plant & Machinery, Electrical Installations, and Office Equipments is being provided on ''Straight Line Method'' basis in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956, in the manner and at the rates specified in Schedule XIV to the said Act.

ii Depreciation in respect of Furniture & Fittings, Vehicles is being provided on ''Written down value'' basis in accordance with the provisions of Section 205(2)(a) of the Companies Act, 1956 in the manner and at the rates specified in Schedule XIV to the said Act.

iii Depreciation on additions to assets during the year is being provided at their respective rates on pro-rata basis from the date of acquisition/installation.

iv Depreciation on assets sold, discarded or demolished during the year, is being provided at their respective rates on pro-rata basis up to the date on which such assets are sold, discarded or demolished.

III Impairment of Assets :

The Company tests for impairments at the close of the accounting period, if and only if, there are indications that suggest a possible reduction in the recoverable value of an asset. If the recoverable value amount of an Asset, i.e. the net realisable value or the economic value in use of a cash generating unit, is lower than the carrying amount of the Asset, the difference is provided for as impairment. However, if subsequently, the position reverses and the recoverable amount becomes higher than the carrying value, then the provision to the extent of the difference is reversed, but not higher than the amount provided for.

IV Investments:

i) Non-Current Investments : Investments are valued at cost of acquisition. Trade and Strategic investments made by the Company are of a long Term nature and hence diminution in the value of investments are generally not considered to be of other than temporary nature. However where, in the opinion of the management, considering the facts and circumstances prevailing at the balance sheet date, diminution, if any, is determined to be other than temporary, provision for the same is made and investments are stated net of such provisions.

ii) Current Investment : Current Investments are stated at cost less provision for diminution, as necessary, if any.

V Revenue Recognition : -

Revenue recognition is generally postponed if the receipt can not be estimated with reasonable certainty.

a) Income from Electricity generated is accounted on the basis of electricity wheeled into MSEB grid and jointly certified.

b) Interest is accrued over the period and the amount of loan/investment.

c) Dividend is accrued in the year in which it is declared, whereby right to receive is established.

d) Profit/Loss on sale of investment is recognised on contract date.

e) Income from Certified Emission Reduction units is accrued in the year of generation of wind power if the receipt of and value of units is reasonably certain.

f) Income from Renewable Energy Certificates is accrued in the year of generation of power (See Note No. 36)

VI Borrowing Cost : - Interest on borrowings is recognised in the Statement of Profit & Loss except interest incurred on borrowings specifically received for projects are capitalized to the cost of asset until such time the asset is ready to be put to use for intended purpose.

Borrowing Costs include foreign exchange differences on the long term foreign currency loan to the extent they are attributable to interests differential on the said loans.

VII Foreign Currency Transactions : - Foreign Currency transactions are recognised on the basis of foreign exchange rate on the date of transaction.

Foreign Currency Conversions : - Current Assets and other liabilities in foreign currency and foreign currency exposure in respect of foreign currency loans other than for financing fixed assets outstanding at the close of the financial year are valued at the contracted and/or appropriate exchange rates at the close of the year. The loss or gain due to fluctuation of exchange rates is charged to Statement of Profit and Loss.

VIII Employee Benefits :

i) Employee Benefit in the form of Provident Fund and Pension Scheme whether in pursuance of law or otherwise which are defined contributions are accounted on accrual basis and charged to Statement of Profit & Loss.

ii) Gratuity:

Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully cover the same under cash accumulation policy of the Life Insurance Corporation of India. The employee''s gratuity is a defined benefit funded plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet and the shortfall in the fair value of the Plan Assets is recognized as an obligation.

iii) Superannuation:

Defined contribution to Life Insurance Corporation of India for employees covered under Superannuation scheme are accounted at the rate of 15% of such employee''s annual salary.

iv) Privilege Leave Benefits:

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Actuarial gains/losses are immediately takento the Statement of Profit and Loss and are not deferred.

The Company presents the entire leave as a current liability in the Balance Sheet, since it does not have an unconditional right to defer its settlement for twelve months after the reporting date.

IX Taxation :

Provision for taxation is made on the basis of taxable profits computed on current year profit in accordance with Income Tax Act. Deferred Tax resulting from timing differences is accounted for at the applicable rate of tax to the extent the timing differences are expected to crystallize, after ignoring deferred tax adjustments originating and reversing during tax holiday period, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Asset can be realized.

X Provisions:

Necessary Provisions are made for present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions reflect best estimates based on available information.

XI Research & development Expenditure:

Research & development expenditure is charged to Revenue under the natural head of account in the year in which it is incurred. However, expenditure incurred at development phase, where it is reasonably certain that outcome of research will be commercially exploited to yield economic benefits to the Company, is considered as an intangible asset.


Sep 30, 2010

1. System of Accounting:

- The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties.

- Financial Statements are based on historical cost. These costs are not adjusted to reflect the impact of the changing value in the purchasing power of money.

- The preparation of Financial Statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. The estimates and Assumptions used in accompanying financial statements are based upon Managements evaluations of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from estimates and assumptions used in preparing the accompanying financial statements. Any revisions to accounting estimates are recognized prospectively in current and future periods.

2. Fixed Assets and depreciation:

A. Fixed Assets are stated at their original cost of acquisition including incidental expenses related to acquisition and installation of the concerned assets. Fixed Assets are shown net of accumulated depreciation (except free hold land).

B. Expenditure on New Projects and Expenditure during Construction etc. :

In case of new projects or expansion at the existing units of the Company, expenditure incurred including interest and financing costs of specific borrowings, prior to commencement of commercial production is being capitalised to the cost of assets.

C. Depreciation:

Fixed Assets:

i. Depreciation on Buildings, Plant & Machinery, Electrical Installations, and Office Equipments is being provided on "Straight Line Method" basis in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956, in the manner and at the rates specified in Schedule XIV to the said Act.

ii. Depreciation in respect of Furniture & Fittings, Vehicles is being provided on "Written down value" basis in accordance with the provisions of Section 205(2)(a) of the Companies Act, 1956 in the manner and at the rates specified in Schedule XIV to the said Act.

iii. Depreciation on additions to assets during the year is being provided at their respective rates on pro-rata basis from the date of acquisition/installation.

iv. Depreciation on assets sold, discarded or demolished during the year, is being provided at their respective rates on pro-rata basis up to the date on which such assets are sold, discarded or demolished.

3. Impairment of Assets :

The management, assesses for any impairment of assets or cash generating units, in indicators, external or internal, suggests possibilities of reduction in net realizable value of assets or value in use of cash generating units below its carrying costs. Impairments, if any, will be recognized in the Profit and Loss Account.

4. Investments:

Investments are valued at cost of acquisition.

i) Long Term: Long Term Investments are stated at cost. Diminution in the value of long term investments are generally not considered to be of a permanent nature. However where, in the opinion of the management, considering the facts and circumstances prevailing at the balance sheet date, diminution, if any, is determined to be of a permanent nature, provision for the same is made and investments are stated net of such provisions.

ii) Short Term : Short Term Investments are stated at cost less provision for diminution if any.

5. Revenue Recognition : -

Revenue recognition is generally postponed if the receipt can not be estimated with reasonable certainty.

a) Income from Electricity generated is accounted on the basis of electricity wheeled into MSEB grid and jointly certified.

b) Interest is accrued over the period and the amount of loan/investment.

c) Dividend is accrued in the year in which it is declared, whereby right to receive is established.

d) Profit/Loss on sale of investment is recognised on contract date.

e) Income from Certified Emission Reduction units in accrued in the year of generation of wind power if the receipt of and value of units is reasonably certain.

6. Borrowing Cost : - Interest on borrowings is recognised in the profit & Loss account except interest incurred on borrowings specifically received for projects are capitalized to the cost of asset until such time the asset is ready to be put to use for intended purpose.

7. Foreign Currency Conversions : - Current Assets and other liabilities in foreign currency and foreign currency exposure in respect of foreign currency loans other than for financing fixed assets outstanding at the close of the financial year are valued at the contracted and/or appropriate exchange rates at the close of the year. The loss or gain due to fluctuation of exchange rates is charged to Profit and Loss Account.

8. Share issue & Deferred Revenue expenses are written off in five years.

9. Preliminary Expenses are written off in five years.

10. Employee Benefits :

- Employee Benefit in the form of Provident Fund and Pension Scheme whether in pursuance of law or otherwise which are defined contributions are accounted on accrual basis and charged to Profit & Loss account.

- Gratuity:

Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully cover the same under cash accumulation policy of the Life Insurance Corporation of India. The employees gratuity is a defined benefit funded plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet and the shortfall in the fair value of the Plan Assets is recognized as an obligation.

- Superannuation:

Defined contribution to Life Insurance Corporation of India for employees covered under Superannuation scheme are accounted at the rate of 15% of such employees annual salary.

- Privilege Leave Benefits:

Privilege Leave benefits or compensated absences is considered as long term unfunded benefits and is recognized on the basis of an actuarial valuation using the Projected Unit Credit Method determined by an appointed Actuary.

11. Taxation :

Provision for taxation is made on the basis of taxable profits computed in accordance with the Previous Year as per Income Tax Act. Deferred Tax resulting from timing difference between Book Profits & Tax Profits is accounted for at the applicable rate of tax to the extent the timing differences are expected to crystallize, after ignoring deferred tax adjustments originating and reversing during tax holiday period, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Asset can be realized.

12. Provisions:

Necessary Provisions are made for present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions reflect best estimates based on available information.


Sep 30, 2009

1. System of Accounting:

- The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties.

- Financial Statements are based on historical cost. These costs are not adjusted to reflect the impact of the changing value in the purchasing power of money.

- Estimates and Assumptions used in preparation of the Financial Statements are based upon Managements evaluations of the relevant facts and circumstances as of the date of the Financial Statements, which may differ from the actual results at a subsequent date.

2. Fixed Assets and depreciation:

A. Fixed Assets are stated at their original cost of acquisition including incidental expenses related to acquisition and installation of the concerned assets. Fixed Assets are shown net of accumulated depreciation (except free hold land).

B. Expenditure on New Projects and Expenditure during Construction etc. :

In case of new projects or expansion at the existing units of the Company, expenditure incurred including interest and financing costs of specific borrowings, prior to commencement of commercial production is being capitalised to the cost of assets.

C. Depreciation:

Fixed Assets:

i. Depreciation on Buildings, Plant & Machinery, Electrical Installations, and Office Equipments is being provided on "Straight Line Method" basis in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956, in the manner and at the rates specified in Schedule XIV to the said Act.

ii. Depreciation in respect of Furniture & Fittings, Vehicles is being provided on "Written down value" basis in accordance with the provisions of Section 205(2)(a) of the Companies Act, 1956 in the manner and at the rates specified in Schedule XIV to the said Act.

iii. Depreciation on additions to assets during the year is being provided at their respective rates on pro-rata basis from the date of acquisition/installation.

iv. Depreciation on assets sold, discarded or demolished during the year, is being provided at their respective rates on pro-rata basis up to the date on which such assets are sold, discarded or demolished.

3. Impairment of Assets :

The management, assesses for any impairment of assets or cash generating units, in indicators, external or internal, suggests possibilities of reduction in net realizable value of assets or value in use of cash generating units below its carrying costs. Impairments, if any, will be recognized in the Profit and Loss Account.

4. Investments:

Investments are valued at cost of acquisition..

i) Long Term: Long Term Investments are stated at cost. Diminution in the value of long term investments are generally not considered to be of a permanent nature. However where, in the opinion of the management, considering the facts and circumstances prevailing at the balance sheet date, diminution, if any, is determined to be of a permanent nature, provision for the same is made and investments are stated net of such provisions.

ii) Short Term : Short Term Investments are stated at cost less provision for diminution if any.

5. Revenue Recognition : -

Revenue recognition is generally postponed if the receipt can not be estimated with reasonable certainty.

a) Income from Electricity generated is accounted on the basis of electricity wheeled into MSEB grid and jointly certified.

b) Interest is accrued over the period and the amount of loan/investment.

c) Dividend is accrued in the year in which it is declared, whereby right to receive is established.

d) Profit/Loss on sale of investment is recognised on contract date.

e) Income from Certified Emission Reduction units in accrued in the year of generation of wind power if the receipt of and value of units is reasonably certain.

6. Borrowing Cost: - Interest on borrowings are recognised in the profit & Loss account except interest incurred on borrowings specifically received for projects are capitalized to the cost of asset until such time the asset is ready to be put to use for intended purpose.

7. Share issue & Deferred Revenue expenses are written off in five years.

8. Preliminary Expenses are written off in five years.

9. Employee Benefits :

- Employee Benefit in the form of Provident Fund and Pension Scheme whether in pursuance of law or otherwise which are defined contributions are accounted on accrual basis and charged to Profit & Loss account.

- Gratuity:

Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully cover the same under cash accumulation policy of the Life Insurance Corporation of India. The employees gratuity is a defined benefit funded plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet and the shortfall in the fair value of the Plan Assets is recognized as an obligation.

- Superannuation:

Defined contribution to Life Insurance Corporation of India for employees covered under Superannuation scheme are accounted at the rate of 1 5% of such employees annual salary.

- Privilege Leave Benefits:

Privilege Leave benefits or compensated absences is considered as long term unfunded benefits and is recognized on the basis of an actuarial valuation using the Projected Unit Credit Method determined by an appointed Actuary.

10. Taxation :

Provision for taxation is made on the basis of taxable profits computed in accordance with the Previous Year as per Income Tax Act. Deferred Tax resulting from timing difference between Book Profits & Tax Profits is accounted for at the applicable rate of tax to the extent the timing differences are expected to crystallize, after ignoring deferred tax adjustments originating and reversing during tax holiday period, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Asset can be realized.

11. Provisions:

Necessary Provisions are made for present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions reflect best estimates based on available information.

 
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