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Accounting Policies of India Power Corporation Ltd. Company

Mar 31, 2015

(a) General:

The Financial Statements have been prepared under the historical cost convention on a going concern basis and in compliance with the relevant accounting standards and provisions as specified under the Companies Act, 2013, the Regulations issued from time to time by West Bengal Electricity Regulatory Commission (WBERC) under the Electricity Act, 2003 (Tariff Regulations).

(b) Use of Estimate :

The preparation and presentation of financial statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities and disclosures of contingent liabilities as on date of the financial statements and reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates is recognised in the period in which the results are known / materialised.

(c) Fixed Assets:

(i) Fixed Assets (both tangible and intangible) are stated at cost of acquisition or construction including any cost attributable to bringing the assets to their working condition.

(ii) All project related expenses via civil works, machinery under erection, construction and erection materials, pre- operative expenditure net of revenue incidental / attributable to the construction of project, borrowing cost incurred prior to the date of commercial operations are shown under Capital Work-In-Progress (CWIP).

(iii) Impairment loss is recognised wherever the carrying amount of fixed assets of a cash generating unit exceeds its recoverable amount, i.e. net selling price or value in use, whichever is higher.

(d) Depreciation/ Amortisation:

(i) Depreciation of fixed assets is computed on straight line method either at the rates specified in the Tariff Regulation or as per Schedule II of the Companies Act, 2013 as the case may be.

(ii) Cost of leasehold lands are amortised under the straight line method over the related lease period.

(iii) Cost of Intangible assets (Computer software) is amortised under straight line method over 5 years.

(iv) Assets constructed/acquired in relation to assets taken on operating lease are amortised over the primary period of lease.

(e) Operating Lease :

Lease payments under operating leases are recognised as expense in the Statement of Profit and Loss as per terms of lease agreements.

(f) Investments:

Current investments are stated at lower of cost or fair value and Long term investments are stated at cost. Provision is made where there is a decline, other than temporary, in the value of long term investments.

(g) Inventories:

Inventories are valued at lower of cost or net realisable value

Cost is calculated on weighted average basis and includes expenditure incurred for bringing such inventories to their present location and condition. Adjustments in the carrying amount of obsolete, defective and slow moving items as may be identified at the time of physical verification is made where appropriate, to cover any eventual loss on their ultimate realisation.

(h) Taxation:

Provision for tax is made for current and deferred taxes. Current tax is provided on the taxable revenue using the applicable tax rates and tax laws. Deferred tax assets and liabilities arising out of timing difference, which are capable of reversal in subsequent periods are recognised using rates and tax laws, which have been enacted or subsequently enacted. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets will be realised. In case of carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognised only if there is "virtual certainty" that such deferred tax assets can be realised against future taxable profits.

Entitlement Credit in respect of Minimum Alternate Tax is recognised only if there is convincing evidence of realisation of the same.

(i) Revenue Recognition:

Sale of energy on account of electricity supplied from regulated business is accounted for on the basis of billing to consumers at rates approved by WBERC and is net of rebate. It includes amount recoverable from/ refundable to consumers on account of Fuel and Power Purchase Cost Adjustment (FPPCA), and other adjustments based on tariff regulations and orders and are shown as Tariff Adjustment Account under Short-term loans and advances. Consequential adjustments are given effect to upon confirmation by the relevant authorities.

Sale of energy other than above is billed and accounted for at rates agreed with respective consumers.

(j) Borrowing Costs :

Borrowing costs that are attributable to the acquisition or construction of qualifying assets (being an asset that necessarily takes substantial period of time to get ready for intended use) are capitalised as part of the cost of such assets. All other borrowing costs are charged to revenue.

(k) Employee Benefits:

(i) Short Term Employee Benefits:

Recognised at the undiscounted amount as expense for the year in which the related service is rendered.

(ii) Post Employment Benefit Plans:

Contribution under Defined Contribution Plans payable in keeping with the related schemes are recognised as expenditure for the year.

In case of Defined Benefit Plans, the cost of providing the benefit is determined using the Projected Unit Credit Method with the actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in full in the Statement of Profit and Loss for the period in which they occur.

(iii) Other Long Term Employee Benefits (Unfunded):

The cost of providing Long-term employee benefits is determined using Projected Unit Credit Method with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses and past service cost are recognised immediately in the Statement of Profit and Loss for the period in which they occur. Other long term employee benefit obligation recognised in the Balance Sheet represents the present value of related obligation.

(iv) Employee separation costs :

Compensation to employees opting for voluntary retirement scheme of the Company is charged in the year of exercise of option.

(l) Provision, Contingent Liabilities and Contingent Assets :

A provision is recognised when the company has a present obligation as a result of past event and it is probable that outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements.

(m) Operating Cycle:

Considering the nature of business and prevailing practice current and non-current classification of assets and liabilities have been based on the operating cycle of 12 months.




Mar 31, 2014

(a) General:

The Financial Statements have been prepared under the historical cost convention on a going concern basis and in compliance with the relevant provisions of the Companies Act,1956 read with the general circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013, the Regulations issued from time to time by West Bengal Electricity Regulatory Commission (WBERC) under the Electricity Act, 2003.

(b) Use of Estimate :

The preparation and presentation of financial statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities and disclosures of contingent liabilities as on date of the financial statements and reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates is recognised in the period in which the results are known / materialised.

(c) Fixed Assets:

(i) Fixed Assets (both tangible and intangible) are stated at cost of acquisition or construction including any cost attributable to bringing the assets to their working condition.

(ii) All project related expenses via civil works, machinery under erection, construction and erection materials, pre-operative expenditure net of revenue incidental / attributable to the construction of project, borrowing cost incurred prior to the date of commercial operations are shown under Capital Work-in-Progress (CWIP).

(iii) Impairment loss is recognised wherever the carrying amount of fixed assets of a cash generating unit exceeds its recoverable amount, i.e. net selling price or value in use, whichever is higher.

(d) Depreciation/ Amortisation:

(i) Depreciation of fixed assets is computed on straight line method either at the rates specified in the Tariff Regulation or as per Schedule XIV of the Companies Act, 1956 as the case may be.

(ii) Cost of leasehold lands are amortised under the straight line method over the related lease period.

(iii) Cost of Intangible assets (Computer software) is amortised under straight line method over 5 years.

(iv) Assets constructed/acquired in relation to assets taken on operating lease are amortised over the primary period of lease.

(e) Operating Lease :

Lease payments under operating leases are recognised as expense in the Statement of Profit and Loss as per terms of lease agreements.

(f) Investments:

Current investments are stated at lower of cost or fair value and long term investments are stated at cost. Provision is made where there is a decline, other than temporary, in the value of long term investments.

(g) Inventories:

Inventories are valued at lower of cost or net realisable value

Cost is calculated on weighted average basis and includes expenditure incurred for bringing such inventories to their present location and condition. Adjustments in the carrying amount of obsolete, defective and slow moving items as may be identified at the time of physical verification is made where appropriate, to cover any eventual loss on their ultimate realisation.

(h) Taxation:

Provision for tax is made for current and deferred taxes. Current tax is provided on the taxable revenue using the applicable tax rates and tax laws. Deferred tax assets and liabilities arising out of timing difference, which are capable of reversal in subsequent periods are recognised using rates and tax laws, which have been enacted or subsequently enacted. Deferred tax assets are

recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets will be realised. In case of carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognised only if there is "virtual certainty" that such deferred tax assets can be realised against future taxable profits.

Entitlement Credit in respect of Minimum Alternate Tax is recognised only if there is convincing evidence of realisation of the same.

(i) Revenue Recognition:

Sale of energy on account of electricity supplied from regulated business is accounted for on the basis of billing to consumers at rates approved by West Bengal Electricity Regulatory Commission (WBERC) and is net of rebate. It includes amount recoverable from/ refundable to consumers on account of Fuel and Power Purchase Cost Adjustment (FPPCA) and other cost adjustments based on the prescribed formulae and are shown as Tariff Adjustment account under Short-term Loans and Advances. Consequential adjustments are given effect to upon confirmation by the relevant authorities.

Sale of energy other than above is billed and accounted for at rates agreed with respective consumers.

(j) Borrowing Costs :

Borrowing costs that are attributable to the acquisition or construction of qualifying assets (being an asset that necessarily takes substantial period of time to get ready for intended use) are capitalised as part of the cost of such assets. All other borrowing costs are charged to revenue.

(k) Employee Benefits:

(i) Short Term Employee Benefits:

Recognised at the undiscounted amount as expense for the year in which the related service is rendered.

(ii) Post Employment Benefit Plans:

Contribution under Defined Contribution Plans payable in keeping with the related schemes are recognised as expenditure for the year.

In case of Defined Benefit Plans, the cost of providing the benefit is determined using the projected Unit Credit Method with the actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in full in the Statement of Profit and Loss for the period in which they occur.

(iii) Other Long Term Employee Benefits (Unfunded):

The cost of providing long -term employee benefits is determined using Projected Unit Credit Method with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses and past service cost are recognised immediately in the Statement of Profit and Loss for the period in which they occur. Other long term employee benefit obligation recognised in the Balance Sheet represents the present value of related obligation.

(iv) Employee separation costs :

Compensation to employees opting for voluntary retirement scheme of the Company is charged in the year of exercise of option.

(l) Provision, Contingent Liabilities and Contingent Assets :

A provision is recognised when the Company has a present obligation as a result of past event and it is probable that outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements.

(m) Operating Cycle:

Considering the nature of business and prevailing practice current and non current classification of assets and liabilities have been based on the operating cycle of 12 months.


Mar 31, 2013

(a) General:

The Financial Statements have been prepared under the historical cost convention on a going concern basis and in compliance with the relevant provisions of the Companies Act, 1956, the Regulations under the Electricity Act,2003 and the provisions of West Bengal Electricity Regulatory Commission (WBERC) (Terms & Conditions of Tariff) Regulations, 2007.

(b) Use of Estimate:

The preparation and presentation of financial statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities and disclosures of contingent liabilities as on date of the financial statements and reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates is recognised in the period in which the results are known / materialised.

(c) Fixed Assets:

(i) Fixed Assets (both tangible and intangible) are stated at cost of acquisition or construction including any cost attributable to bringing the assets to their working condition.

(ii) All project related expenses viz civil works, machinery under erection, construction and erection materials, pre- operative expenditure net of revenue incidental / attributable to the construction of project, borrowing cost incurred prior to the date of commercial operations are shown under Capital Work -In-Progress (CWIP).

(iii) Impairment loss is recognised wherever the carrying amount of fixed assets of a cash generating unit exceeds its recoverable amount, i.e., net selling price or value in use, whichever is higher.

(d) Depreciation/Amortisation:

(i) Depreciation of fixed assets is computed on straight line method either at the rates specified in the Tariff Regulation or as per schedule XIV of the Companies Act,1956 as the case may be.

(ii) Cost of leasehold lands are amortised under the straight line method over the related lease period.

(iii) Cost of Intangible assets (Computer software) is amortized under straight line method over 5 years.

(iv) Assets constructed/acquired in relation to assets taken on operating lease are amortised over the primary period of lease.

(e) Operating Lease:

Lease payments under operating leases are recognised as expense in the statement of Profit and loss as per terms of lease agreements.

(f) Investments:

Current investments are stated at lower of cost or fair value and Long term investments are stated at cost. Provision is made where there is a decline, other than temporary, in the value of long term investments.

(g) Inventories:

Inventories are valued at lower of cost or net realisable value.

Cost is calculated on weighted average basis and includes expenditure incurred for bringing such inventories to their present location and condition. Adjustments in the carrying amount of obsolete, defective and slow moving items as may be identified at the time of physical verification is made where appropriate, to cover any eventual loss on their ultimate realisation.

(h) Taxation:

Provision for tax is made for current and deferred taxes. Current tax is provided on the taxable revenue using the applicable tax rates and tax laws. Deferred tax assets and liabilities arising out of timing difference, which are capable of reversal in subsequent periods are recognised using rates and tax laws, which have been enacted or subsequently enacted. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets will be realised. In case of carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognised only if there is "virtual certainty" that such deferred tax assets can be realised against future taxable profits.

Entitlement Credit in respect of Minimum Alternate Tax is recognised only if there is convincing evidence of realisation of the same.

(i) Revenue Recognition:

Sale of energy on account of electricity supplied from regulated business is accounted for on the basis of billing to consumers at rates approved by West Bengal Electricity Regulatory Commission (WBERC) and is net of rebate. It includes amount recoverable from/ refundable to consumers on account of Fuel and Power Purchase Cost Adjustment (FPPCA) and other cost adjustments based on the prescribed formulae and are shown as Tariff Adjustment account under Current Loans and Advances. Consequential adjustments are given effect to upon confirmation by the relevant authorities.

Sale of energy other than above is billed and accounted for at rates agreed with respective consumers.

(j) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets (being an asset that necessarily takes substantial period of time to get ready for intended use) are capitalised as part of the cost of such assets. All other borrowing costs are charged to revenue.

(k) Employee Benefits:

(i) Short Term Employee Benefits:

Recognised at the undiscounted amount as expense for the year in which the related service is rendered.

(ii) Post Employment Benefit Plans:

Contribution under Defined Contribution Plans payable in keeping with the related schemes are recognised as expenditure for the year.

In case of Defined Benefit Plans, the cost of providing the benefit is determined using the projected Unit Credit Method with the actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in full in the Profit and Loss Account for the period in which they occur.

(iii) Other Long Term Employee Benefits (Unfunded):

The cost of providing long -term employee benefits is determined using Projected Unit Credit Method with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses and past service cost are recognised immediately in the Profit and Loss Account for the period in which they occur. Other long term employee benefit obligation recognised in the Balance Sheet represents the present value of related obligation.

(iv) Employee separation costs:

Compensation to employees opting for voluntary retirement scheme of the Company is charged in the year of exercise of option.

(I) Provision, Contingent Liabilities and Contingent Assets:

A provision is recognised when the company has a present obligation as a result of past event and it is probable that outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements.

(m) Operating Cycle:

Considering the nature of business and prevailing practice current and non current classification of assets and liabilities have been based on the operating cycle of 12 months.


Mar 31, 2012

(a) General :

These accounts have been prepared under the historical cost convention in keeping with applicable provisions of the Companies Act, 1956 and West Bengal Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations, 2007 issued pursuant to the provisions of Electricity Act, 2003 and amended from time to time (Tariff Regulations) as applicable for the year.

(b) Use of Estimate:

The preparation and presentation of financial statements requires management to make estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosures of contingent liabilities as on date of the financial statements and reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates is recognised in the period in which the results are known / materialised.

(c) Fixed Assets :

(i) Fixed Assets (both tangible and intangible) are stated at cost of acquisition or construction including any cost attributable to bringing the assets to their working condition .

(ii) All project related expenses viz civil works, machinery under erection, construction and erection materials, pre-operative expenditure incidental / attributable to the construction of project, borrowing cost incurred prior to the date of commercial operations are shown under Capital Work-in-Progress (CWIP).

(iii) Impairment loss is recognised wherever the carrying amount of fixed assets of a cash generating unit exceeds its recoverable amount, i.e., net selling price or value in use, whichever is higher.

(d) Depreciation / Amortisation :

(i) In compliance with the Tariff Regulations, annual charge towards depreciation is calculated on straight line method at the rates specified therein on original cost of the fixed assets.

(ii) Cost of leasehold lands are amortised under the straight line method over the related lease period.

(iii) Cost of Computer software is amortized under straight Line method over 5 years.

(e) Investments :

Long term investments are stated at cost. Diminution, other than temporary, in their carrying amounts is either written down or provided for. Gain/losses on disposal of investments are recognised as income / expenditure.

(f) Inventories :

Inventories are valued at lower of cost or net realisable value

Cost is calculated on weighted average basis and includes expenditure incurred for bringing such inventories to their present location and condition. Adjustments in the carrying amount of obsolete, defective and slow moving items as may be identified at the time of physical verification is made where appropriate to cover any eventual loss on their ultimate realisation.

(g) Taxation :

Current Tax in respect of taxable income for the year is provided for as per applicable tax laws. Deferred Tax is recognised subject to the consideration of prudence in respect of Deferred Tax Asset, on timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are reviewed at each Balance Sheet date to reassess readability thereof.

Entitlement Credit in respect of Minimum Alternate Tax is recognised only if there is convincing evidence of realisation of the same.

(h) Revenue Recognition :

Sale of energy on account of electricity supplied is billed to consumers at rates approved by West Bengal Electricity Regulatory Commission (WBERC). Amount recoverable from / refundable to consumers on account of Fuel and Power Purchase Cost Adjustment (FPPCA) and other cost adjustments based on the formulae prescribed in the Tariff Regulations / order is adjusted to sale of energy and are carried forward as Tariff Adjustment account under Current Loans and Advances. Consequential adjustments are given effect to on confirmation by the relevant authorities.

(i) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets (being an asset that necessarily takes substantial period of time to get ready for intended use) are capitalised as part of the cost of such assets. All other borrowing costs are charged to revenue.

(j) Employee Benefits :

(i) Short Term Employee Benefits :

These are recognised at the undiscounted amount as expense for the year in which the related service is rendered.

(ii) Post Employment Benefit Plans :

Contribution under Defined Contribution Plans payable in keeping with the related schemes are recognised as expenditure for the year.

In case of Defined Benefit Plans, the cost of providing the benefit is determined using the projected Unit Credit Method with the actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in full in the Profit and Loss Account for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight- line basis over the average period until the benefit 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, if any, and as reduced by the fair value of plan assets, where funded. Any asset resulting from this calculation is limited to the present value of any economic benefit available in the form of refunds from the plan or deductions in future contributions to the plan.

(iii) Other Long Term Employee Benefits (Unfunded) :

The cost of providing long-term employee benefits is determined using Projected Unit Credit Method with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses and past service cost are recognised immediately in the Profit and Loss Account for the period in which they occur. Other long term employee benefit obligation recognised in the Balance Sheet represents the present value of related obligation.

(k) Provisions, Contingent Liabilities and Contingent Assets :

A provision is recognised when the company has a present obligation as a result of past event and it is probable that outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2011

General:

These accounts have been prepared in keeping with applicable provisions of the Companies Act, 1956 and West Bengal Electricity Regulatory Commission Regulations, 2007 issued pursuant to the provisions of Electricity Act,2003 and amended from time to time as applicable for the year.

Reserves

Contingencies Reserves was created by appropriation out of revenue of each year till the year ended 31st March, 2004 in accordance with the provisions of the Sixth schedule to the erstwhile Electricity Act, 1948. As permitted by the Tariff Regulations, an amount not exceeding 0.25% of the value of gross fixed assets at the beginning of the year is appropriated to a Reserve for Unforeseen exigencies each year effective 2006-07, subject to the over all ceiling that the balance in this reserve together with the balance in Contingency reserve shall not exceed 5% of the value of gross fixed assets at the beginning of the year. For the purpose of arriving at such ceiling re investments of interest accrued on reserve for unforeseen exigencies investment are required to be excluded as per the tariff regulations.

Fixed assets:

Fixed assets are stated at cost of acquisition or contraction including any cost attributable to bringing the assets to their working condition. In case of a project, cost also includes pre- operative expenses, where applicable, and expenditure during trail run

Impairment loss is recongnised wherever the carrying amount of fixed assets of a cash generating unit exceeds its recoverable amount, i.e net selling price or value in use, whichever is higher.

Depreciation/ Amortisation:

In compliance with the Tariff regulations, effective 2006-07 annual charge towards depreciation is calculated on straight line method at the rates specified there in on original cost of the fixed assets. Based on a legal opinion obtained by the company, changing of depreciation as per the provisions of the Tariff Regulations as aforesaid is in sufficient compliance with the requirements under the provisions of the companies act, 1956 for declaration of dividend determination of net profit and computation of managerial remuneration.

Additions to fixed assets made by the company after commencement of lease premises at Chinakurl Power station are depreciated on the basis mentioned In 1 above. As per the terms of the lease agreement, in the event of Non- renewal of the lease on expiry of term, all such additions to fixed assets owned by the company would be taken over by the less or at their respective written down values as on date of the termination of the lease. After the expiry of existing lease the same has been extended upto 31.3.2012 in terms of letter from Eastern Coal fields Ltd dated 27th April,2011,

Cost of lease hold lands are amortised under the straight line method over the related lease period.

Cost of Computer software is amortized under straight line method over 5 years.

investments

Long term investments are stated at Cost. Diminution, other than temporary, in their carrying amounts is either written down or provided for. Gain/losses on disposal of investments are recognized as income/expenditure.

Inventories:

inventories are valued are lower of cost or net realisble value.

Cost is calculated on weighted average basis and includes expenditure incurred for bringing such inventories to their present location and condition. Adjustments in the carrying amount on obsolete, defective and slow moving items as may be identified at the time physical verification is made appropriate to cover any eventual loss on their ultimate realiation.

Taxation:

Current tax in respect of taxable income for the year is provided for as per applicable tax laws. Deferred Tax is recognised subject to the consideration of purchase in respect of Deferred Tax Asset, on timing difference, being the difference, between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws a that have been enacted or subsequently enacted by the Balance sheet date. Deferred Tax Assets are reviewed at each Balance sheet date to reassess realisablity there of.

Entitlement Credit in respect of Minimum Alternate Tax is recognised only is convincing evidence of realisation of the same.

Revenue recognition:

sale of energy on account of Electricity supplied is billed to consumer at rates approved by West Bengal Electricity Regulatory Commission . Amount recoverable from/refundable to consumers on account of fuel and power purchase cost adjustment based on the approved formulae is considered as a part of sale of energy. This inter alia include estimated fuel and power purchase and other cost adjustments considering the formulae prescribed in the Tariff regulations/ Order and may necessitate adjustments upon confirmation there of the relevant authorities.

Dividends on shares held as long term investments are accounted for when the Company's right to receive payment is established and interest income from bonds other securities held as long term investments are accounted for on accrual basis.

Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are catialised a part of the cost of such assets. All other borrowing costs are charged to revenue.

Employee Benefits;

Short term Employee Benefits:

These are recongnised at the undiscounted amount as expense for the year in which the related service is rendered

Post Employment Benefit plans:

Contribution under Defined Contribution plans payable in keep with the related schemes are recognised as expenditure of the year.

In case of defined Benefit Plans, the cost of providing the benefit is determined using the projected unit credit Method with the actuarial Valuation being carried out at each Balance sheet date. Actuarial gains and losses are recognised in full in the profit and loss for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and other wise is amortized on a straight - line basis over the average period until the benefit become vested. the retirement benefit obligation recognised in the Balance sheet represents the present value of the defined benefit obligation as adjusted for unrecongnised past service cost, if any and as reduced by the fair value of plan assets, where funded. Any asset resulting from this calculation is limited to the present value of any economic benefit available in the form of refunds the plan or deductions in future contributions to the plan.

Other Long term Employee Benefits :

The cost of providing long term employee benefits is determined using projected Unit Credit Method with actuarial Valuation being carried out at each Balance sheet. Actuarial gains and losses and past service cost are recognised immediately in the profit and loss account for the period in which they occur. Other long term employee benefit obligation recognised in the Balance sheet represents the present value of related obligation.

Payments under voluntary retirement scheme is amortised over the period for which benefit by way of cost reduction is expected to arise limited to the lower of -
the remaining period of service of the employee, 5 years and year ending 31st March 2010>


Mar 31, 2010

(a) General:

These accounts have been prepared in keeping with applicable provisions of the Companies Act, 1956 and West Bengal Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations, 2007 issued pursuant to the provisions of Electricity Act, 2003 and amended from time to time (Tariff Regulations) as applicable for the year.

(b) Reserves:

Contingencies Reserve was created by appropriation out of revenue of each year till the year ended 31 st March, 2004 in accordance with the provisions of the Sixth Schedule to the erstwhile Electricity (Supply) Act, 1948. As permitted by the Tariff Regulations, an amount not exceeding 0.25% of the value of gross fixed assets at the beginning of the year is appropriated to a Reserve for Unforeseen Exigencies each year effective 2006-07, subject to the overall ceiling that the balance in this Reserve together with the balance in Contingency Reserve shall not exceed 5% of the value of gross fixed assets at the beginning of the year. For the purpose of arriving at such ceiling reinvestment of interest accrued on Reserve for Unforseen Exegencies Investment (ascertained seperately) are required to be excluded as pertheTarriff Regulations.

(c) Fixed Assets:

(i) Fixed Assets (both tangible and intangible) are stated at cost of acquisition or construction including any cost attributable to bringing the assets to their working condition. In case of a project, cost also includes pre- operative expenses, where applicable, and expenditure during trial run (net of income).

(ii) Impairment loss is recognised wherever the carrying amount of fixed assets of a cash generating unit exceeds its recoverable amount, i.e., net selling price or value in use, whichever is higher.

(d) Depreciation/Amortisation:

(i) In compliance with the Tariff Regulations, effective 2006-07, annual charge towards depreciation is calculated on straight line method at the rates specified therein on original cost of the fixed assets. Based on a legal opinion obtained by the Company, charging of depreciation as per the provisions of the Tariff Regulations as aforesaid is in sufficient compliance with the requirements under the provisions of the Companies Act, 1956 for declaration of dividend, determination of net profit and computation of managerial remuneration.

(ii) Additions to fixed assets made by the Company after commencement of lease in the leased premises at Chinakuri Power Station (under operating lease) are depreciated on the basis mentioned in 1 (d)(i) above. As per the terms of the lease agreement, in the event of non-renewal of the lease on expiry of the terms, all such additions to fixed assets owned by the Company would be taken over by the lessor at their respective written down values as on the date of the termination of the lease.

(iii) Cost of leasehold lands are amortised overthe related lease period.

(iv) Cost of Computer software is amortized under straight Line method over 5 years.

(e) Investments:

Long term investments are stated at cost. Diminution, other than temporary, in their carrying amounts is either written down or provided for. Gain / Losses on disposal of investments are recognised as income / expenditure.

(f) Inventories:

Items intended for own consumption/use comprising:

(i) Stores and spares are stated at cost or under;

(ii) Other inventory items are stated at cost.

Cost is calculated on weighted average basis and includes expenditure incurred for bringing such inventories to their present location and condition. Adjustments in the carrying amount of obsolete, defective and slow moving items as may be identified at the time of physical verification is made where appropriate to cover any eventual loss on their ultimate realisation.

(g) Taxation:

Current Tax in respect of taxable income for the year is provided for as per applicable tax laws. Deferred Tax is recognised subject to the consideration of prudence in respect of Deferred Tax Asset, on timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are reviewed at each Balance Sheet date to reassess realisability thereof.

(h) Revenue Recognition:

(i) Sale of energy on account of electricity supplied is billed to consumers at rates approved by West Bengal Electricity Regulatory Commission (WBERC). Amount recoverable from / refundable to consumers on account of Fuel and Power Purchase Cost Adjustment (FPPCA) based on the approved formulae is considered as a part of sale of energy.

(ii) Dividends on shares held as long term investments are accounted for when the Companys right to receive payment is established and interest income from bonds and other securities held as long term investments are accounted for on accrual basis.

(i) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets (being an asset that necessarily takes substantial period of time to get ready for intended use) are capitalised as part of the cost of such assets. All other borrowing costs are charged to revenue.

(j) Employee Benefits:

(i) Short Term Employee Benefits:

These are recognised at the undiscounted amount as expense for the year in which the related service is rendered.

(ii) Post Employment Benefit Plans:

Contribution under Defined Contribution Plans payable in keeping with the related schemes are recognised as expenditure for the year.

In case of Defined Benefit Plans, the cost of providing the benefit is determined using the Projected Unit Credit Method with the acturial valuation being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in full in the Profit and Loss Account for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefit become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligations as adjusted for unrecognised past service cost, if any, and as reduced by the fair value of plan assets, where funded. Any assets resulting from this calculation is limited to the present value of any economic benefit available in the form of refunds from the plan or deductions in future contributions to the plan.

(iii) Other Long Term Employees Benefits (Unfunded):

The cost of providing long-term employee benefits determined using Projected Unt Credit Method with actuarial valuation being carried out at each Balance Sheet date. Acturial gains and losses and past service cost are recognised immediately in the Profit and Loss Account for the period in which they occur. Other long term employee benefit obligation recognised in the Balance Sheet represents the present value of related obligation.

(iv) Payments under Voluntary Retirement Scheme (VRS) is amortised over the period for which benefit by way of cost reduction is expected to arise [limited to the lower of - (a) the remaining period of service of the employee, (b) 5 years and (c) year ending 31 st March 2010]