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Accounting Policies of SJVN Ltd. Company

Mar 31, 2016

1.1 System of Accounting

The financial statements are prepared according to the historical cost convention on accrual basis in line with the generally accepted accounting principles in India and the provisions of the Companies Act, 2013, including accounting standards notified thereunder as amended from time to time.

1.2 Fixed Assets

a) Fixed Assets are stated at historical cost less accumulated depreciation and any impairment in value. Where final settlement of bills with contractors is pending/under dispute, capitalization is done on estimated/provisional basis subject to necessary adjustment in the year of final settlement.

b) Fixed Assets created on land not belonging to the company where the company is having control over the use and access of such assets are included under Fixed Assets.

c) Capital expenditure incurred on assets not owned by the Company is charged to Statement of Profit & Loss in the year of incurrence of such expenditure.

d) Payments made provisionally towards compensation and other expenses relatable to land in possession are treated as cost of land.

e) Expenditure incurred for compensatory afforestation, soil conservation and re-forestation towards forest land is shown as "Intangible Assets-Expenditure on compensatory afforestation" and is amortized pro-rata through depreciation over the period of likely use.

f) Assets and systems common to more than one generating unit are capitalized on the basis of engineering estimates/ assessments.

g) Assets/Equipments declared surplus are shown at lower of book value and net realisable value.

1.3 Machinery Spares

a) Machinery spares procured along with the Plant & Machinery or subsequently and whose use is expected to be irregular are capitalized and depreciated fully over the residual useful life of the related plant and machinery except as stated in para 1.3(b).

b) Cost / WDV of Machinery Spares is fully charged to revenue in the year in which such spares are replaced except in cases where retrieved spares have useful life after repairs.

c) Other spares forming part of inventory are expensed when consumed.

1.4 Capital Work-in-progress

a) In respect of supply-cum-erection contracts, the value of supplies received at site/construction store and accepted is treated as Capital Work-in-progress.

b) Administration and Other General Overhead expenses at the Corporate Office and Projects under Construction / Survey & Investigation attributable to construction of fixed assets are identified and allocated on systematic basis on major immovable assets other than land, infrastructure facilities and bought out items on commissioning of Projects. However, no allocation of such expenses pertaining to Corporate Office is made on projects taken on BOOT (Build, Own, Operate & Transfer) basis till the date of grant of generation license.

c) Expenditure on Survey and Investigation of the Projects is carried as capital work in progress and capitalized as cost of Project on completion of construction of the Project or the same is expensed in the year in which it is decided to abandon such project.

d) Expenditure against "Deposit Works" is accounted for on the basis of statement of account received from the concerned agency and acceptance by the Company. However, provision is made wherever considered necessary.

e) Claims for price variation /exchange rate variation in case of contracts are accounted for on acceptance.

1.5 Depreciation and Amortisation

a) Depreciation is charged on straight-line method following the rates & methodology notified by the Central Electricity Regulatory Commission (CERC) for the purpose of fixation of tariff as amended from time to time, except in case of:

i) Mobile phones which are depreciated @ 25% p.a.

ii) Computers & Peripherals which are to be Depreciated fully (100%) in three years.

b) Depreciation is provided on pro rata basis from the month in which the asset becomes available for use.

c) Depreciation on assets declared surplus/obsolete is provided till the end of the month in which such declaration is made.

d) Assets costing Rs.5,000/- or less are depreciated fully in the year of procurement.

e) Expenditure on software is recognized as ''Intangible Asset'' and amortized fully over three years on Straight Line Method or over a period of its legal rights to use whichever is less.

f) Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liability on account of exchange fluctuation, change in duties or similar factors, the revised unamortized balance of such assets is depreciated prospectively over the residual life. Depreciation on increase/decrease in the value of existing assets on account of settlement of disputes is charged retrospectively.

g) Leasehold land is amortized pro-rata through depreciation over the period of lease or 35 years, whichever is lower, following the rates & methodology notified by CERC for the purpose of fixation of Tariff as amended from time to time.

h) Expenditure on Catchment Area Treatment (CAT) Plan during construction is capitalized along with dam/civil works. Such expenditure during O&M stage is charged to revenue in the year of incurrence of such expenditure.

1.6 Rate Regulated Activities

Where an item of expenditure or income (including Exchange difference arising from settlement/ transaction denominated in foreign currency) is charged/credited to statement of profit & loss i.e. not allowed to be adjusted as part of cost of relevant fixed asset in accordance with the Accounting Standards, but permitted by Central Electricity Regulatory Commission (CERC), the regulator, to be adjusted in future tariff, such amount is accounted as Regulatory Asset/ Regulatory liability and corresponding Regulatory income/ expenses, as per the Guidance Note on Accounting for Rate Regulated Activities issued by the Institute of Chartered Accountants of India (ICAI).

1.7 Investments

a) Non Current Investments are valued at cost less provision for permanent diminution in value.

b) Current Investments are valued at lower of cost and fair value.

1.8 Inventories

a) Inventories and Carbon Credit are valued at the lower of cost arrived at on weighted average basis and net realizable value.

b) Loose tools issued during the year are charged to consumption.

c) Stores issued for operation and maintenance but lying unused at site are treated as part of inventory.

d) The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and provided for.

e) Scrap is accounted for as and when sold.

1.9 Foreign Currency Transactions

a) Foreign currency transactions are initially recorded at the rates of exchange ruling at the date of transaction.

b) Monetary items denominated in foreign currency are restated at exchange rates prevailing on the Balance Sheet date. Non- Monetary items denominated in foreign currency are reported at the exchange rate ruling at the date of transaction.

c) Exchange differences, except to the extent considered as adjustment to borrowing cost as per AS-16 read with ASI-10, are recognized as income or expense in the period in which they arise in case of operating projects and to EDC in case of projects under construction. However, the differences relating to Fixed Assets/Capital Works-in-progress arising out of transactions entered into prior to 01.04.2004 over & above those considered as borrowing cost are adjusted to the carrying cost of Fixed Assets/Capital Work-in-progress.

1.10 Borrowing Costs

Borrowing costs attributable to fixed assets during construction /renovation and modernization are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.

1.11 Provision, Contingent Liabilities & Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Contingent liabilities are not recognized, but are disclosed in the notes. Contingent assets are neither recognized, nor disclosed in the financial statements.

1.12 Impairment of Assets

The carrying amount of cash generating unit is reviewed at each Balance Sheet date where there is any indication of impairment based on internal / external indicators. An impairment loss is recognized in the Statement of Profit & Loss where the carrying amount exceeds the recoverable amount of the cash generating units. An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

1.13 Income

a) Sale of energy is accounted for based on tariff approved by the Central Electricity Regulatory Commission (CERC) except for sale of wind power energy which is accounted for on the basis of tariff rates notified by Electricity Regulatory Authorities of respective states as amended from time to time. Recovery/refund towards foreign currency variation in respect of foreign currency loans as per CERC notification is accounted for on year to year basis.

b) The incentives /disincentives are accounted for based on the norms notified/approved by the Central Electricity Regulatory Commission.

c) Advance against depreciation, forming part of tariff upto 31.03.2009 to facilitate repayment of loans, is reduced from sales and considered as deferred revenue to be included in the sales in subsequent years.

d) The Interest/surcharge on late payment/overdue sundry debtors for sale of energy is accounted for on receipt basis or when there is reasonable certainty of realisation.

e) Interest recoverable on advances to contractors/suppliers and other claims from contractors/suppliers under dispute are accounted for on receipt/acceptance.

f) Income from consultancy services is accounted for on the basis of actual progress / technical assessment of work executed or costs reimbursable, in line with the terms of respective consultancy contracts.

g) Income arising from carbon credit is recognized on transfer/sale of carbon credits i.e. when there is certainty regarding ultimate collection.

1.14 Employee Benefits

a) Provision for gratuity, leave encashment and other post retirement benefits as defined in Accounting Standard (AS) - 15 is made on the basis of actuarial valuation at the end of financial year.

b) Provident fund liability is accounted for on accrual basis.

c) Company''s contribution towards defined contribution pension scheme for employees is accounted for on accrual basis.

1.15 Miscellaneous

a) Insurance claims are accounted for in the year of receipt/ acceptance by the insurer / certainty of realisation.

b) Prepaid and prior period expenses/income of items of Rs.50,000/- and below are charged to natural heads of accounts in the year of payment/receipt.

c) Liability for claims against the Company is recognized on acceptance by the Company / receipt of award by the Arbitrator and the balance claim, if disputed /contested by the contractor is shown as contingent liability. The claims prior to Arbitration award stage are disclosed as contingent liability.

d) Minimum two percent of average Profit before Tax of three immediately preceding financial years is transferred to CSR Trust for incurring expenditure towards Corporate Social Responsibility (CSR) and Sustainable Development (SD).

1.16 Taxes on Income

a) Taxes on income are determined on the basis of taxable income under the Income Tax Act, 1961.

b) Deferred tax is recognized on timing differences between the accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognized and carried forward to the extent there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

1.17 Cash Flow Statement

Cash Flow Statement is prepared in accordance with the indirect method prescribed in Accounting Standard (AS) - 3 ''Cash Flow Statements''.


Mar 31, 2015

1.1 System of Accounting

The financial statements are prepared according to the historical cost convention on accrual basis in line with the generally accepted accounting principles in India and the provisions of the Companies Act, 2013, including accounting standards notified thereunder as amended from time to time.

1.2 Fixed Assets

a) Fixed Assets are stated at historical cost less accumulated depreciation and any impairment in value. Where final settlement of bills with contractors is pending/under dispute, capitalization is done on estimated/provisional basis subject to necessary adjustment in the year of final settlement.

b) Fixed Assets created on land not belonging to the company where the company is having control over the use and access of such assets are included under Fixed Assets.

c) Capital expenditure on assets not owned by the Company is reflected as a distinct item in Capital Work-in-progress / Fixed Assets.

d) Payments made provisionally towards compensation and other expenses relatable to land in possession are treated as cost of land.

e) Expenditure incurred for compensatory afforestation, soil conservation and re-forestation towards forest land is shown as "Intangible Assets-Expenditure on compensatory afforestation" and is amortized pro-rata through depreciation over the period of likely use.

f) Assets and systems common to more than one generating unit are capitalized on the basis of engineering estimates/assessments.

g) Assets/Equipments declared surplus are shown at lower of book value and net realisable value.

1.3 Machinery Spares

a) Machinery spares procured along with the Plant & Machinery or subsequently and whose use is expected to be irregular are capitalized and depreciated fully over the residual useful life of the related plant and machinery except as stated in para 1.3(b).

b) Cost / WDV of Machinery Spares is fully charged to revenue in the year in which such spares are replaced except in cases where retrieved spares have useful life after repairs.

c) Other spares forming part of inventory are expensed when consumed.

1.4 Capital Work-in-progress

a) In respect of supply-cum-erection contracts, the value of supplies received at site/construction store and accepted is treated as Capital Work-in-progress.

b) Administration and Other General Overhead expenses at the Corporate Office and Projects under Construction / Survey & Investigation attributable to construction of fixed assets are identified and allocated on systematic basis on major immovable assets other than land, infrastructure facilities and bought out items on commissioning of Projects. However, no allocation of such expenses pertaining to Corporate Office is made on projects taken on BOOT (Build, Own, Operate & Transfer) basis till the date of grant of generation license.

c) Expenditure on Survey and Investigation of the Projects is carried as capital work in progress and capitalized as cost of Project on completion of construction of the Project or the same is expensed in the year in which it is decided to abandon such project.

d) Expenditure against "Deposit Works" is accounted for on the basis of statement of account received from the concerned agency and acceptance by the Company. However, provision is made wherever considered necessary.

e) Claims for price variation /exchange rate variation in case of contracts are accounted for on acceptance.

1.5 Depreciation and Amortisation

a) Depreciation is charged on straight-line method following the rates & methodology notified by the Central Electricity Regulatory Commission (CERC) for the purpose of fixation of tariff as amended from time to time, except as referred in Policy No. 1.5(g) and in case of computers & peripherals, and mobile phones which are depreciated @ 25% p.a.

b) Depreciation is provided on pro rata basis from the month in which the asset becomes available for use.

c) Depreciation on assets declared surplus/obsolete is provided till the end of the month in which such declaration is made.

d) Assets costing Rs. 5,000/- or less are depreciated fully in the year of procurement.

e) Expenditure on software is recognized as ''Intangible Asset'' and amortized fully over four years on Straight Line Method or over a period of its legal rights to use whichever is less.

f) Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liability on account of exchange fluctuation, change in duties or similar factors, the revised unamortized balance of such assets is depreciated prospectively over the residual life. Depreciation on increase/decrease in the value of existing assets on account of settlement of disputes is charged retrospectively.

g) Capital Expenditure referred to in Policy No. 1.2(c) is fully depreciated and charged to Profit & Loss A/c in the year in which such Asset is capitalized and ready for use.

h) Leasehold land is amortized pro-rata through depreciation over the period of lease or 35 years, whichever is lower, following the rates & methodology notified by CERC for the purpose of fixation of Tariff as amended from time to time.

I) Expenditure on Catchment Area Treatment (CAT) Plan during construction is capitalized along with dam/civil works. Such expenditure during O&M stage is charged to revenue in the year of incurrence of such expenditure.

1.6 Investments

a) Non Current Investments are valued at cost less provision for permanent diminution in value.

b) Current Investments are valued at lower of cost and fair value.

1.7 Inventories

a) Inventories and Carbon Credit are valued at the lower of cost arrived at on weighted average basis and net realizable value.

b) Loose tools issued during the year are charged to consumption.

c) Stores issued for operation and maintenance but lying unused at site are treated as part of inventory.

d) The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and provided for.

e) Scrap is accounted for as and when sold.

1.8 Foreign Currency Transactions

a) Foreign currency transactions are initially recorded at the rates of exchange ruling at the date of transaction.

b) Monetary items denominated in foreign currency are restated at exchange rates prevailing on the Balance Sheet date. Non- Monetary items denominated in foreign currency are reported at the exchange rate ruling at the date of transaction.

c) Exchange differences, except to the extent considered as adjustment to borrowing cost as per AS-16 read with ASI-10, are recognized as income or expense in the period in which they arise in case of operating projects and to EDC in case of projects under construction. However, the differences relating to Fixed Assets/Capital Work-in-progress arising out of transactions entered into prior to 01.04.2004 over & above those considered as borrowing cost are adjusted to the carrying cost of Fixed Assets/Capital Work-in-progress.

1.9 Borrowing Costs

Borrowing costs attributable to fixed assets during construction /renovation and modernization are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.

1.10 Provision, Contingent Liabilities & Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Contingent liabilities are not recognized, but are disclosed in the notes. Contingent assets are neither recognized, nor disclosed in the financial statements.

1.11 Impairment of Assets

The carrying amount of cash generating unit is reviewed at each Balance Sheet date where there is any indication of impairment based on internal / external indicators. An impairment loss is recognized in the Statement of Profit & Loss where the carrying amount exceeds the recoverable amount of the cash generating units. An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

1.12 Income

a) Sale of energy is accounted for based on tariff approved by the Central Electricity Regulatory Commission (CERC) except for sale of wind power energy which is accounted for on the basis of tariff rates notified by Electricity Regulatory Authorities of respective states as amended from time to time. Recovery/refund towards foreign currency variation in respect of foreign currency loans as per CERC notification is accounted for on year to year basis.

b) The incentives /disincentives are accounted for based on the norms notified/approved by the Central Electricity Regulatory Commission.

c) Advance against depreciation, forming part of tariff upto 31.03.2009 to facilitate repayment of loans, is reduced from sales and considered as deferred revenue to be included in the sales in subsequent years.

d) The Interest/surcharge on late payment/overdue sundry debtors for sale of energy is accounted for on receipt basis or when there is reasonable certainty of realisation.

e) Interest recoverable on advances to contractors/suppliers and other claims from contractors/suppliers under dispute are accounted for on receipt/acceptance.

f) Income from consultancy services is accounted for on the basis of actual progress / technical assessment of work executed or costs reimbursable, in line with the terms of respective consultancy contracts.

g) Income arising from carbon credit is recognized on transfer/sale of carbon credits i.e. when there is certainty regarding ultimate collection.

1.13 Employee Benefits

a) Provision for gratuity, leave encashment and other post retirement benefits as defined in Accounting Standard (AS) - 15 is made on the basis of actuarial valuation at the end of financial year.

b) Provident fund liability is accounted for on accrual basis.

c) Company''s contribution towards defined contribution pension scheme for employees is accounted for on accrual basis.

1.14 Miscellaneous

a) Insurance claims are accounted for in the year of receipt/ acceptance by the insurer / certainty of realisation.

b) Prepaid and prior period expenses/income of items of Rs. 50,000/- and below are charged to natural heads of accounts in the year of payment/receipt.

c) Liability for claims against the Company is recognized on acceptance by the Company / receipt of award by the Arbitrator and the balance claim, if disputed /contested by the contractor is shown as contingent liability. The claims prior to Arbitration award stage are disclosed as contingent liability.

d) Minimum two percent of average Profit before Tax of three immediately preceding financial years is transferred to CSR Trust for incurring expenditure towards Corporate Social Responsibility (CSR) and Sustainable Development (SD).

1.15 Taxes on Income

a) Taxes on income are determined on the basis of taxable income under the Income Tax Act, 1961.

b) Deferred tax is recognized on timing differences between the accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognized and carried forward to the extent there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

1.16 Cash Flow Statement

Cash Flow Statement is prepared in accordance with the indirect method prescribed in Accounting Standard (AS) - 3 ''Cash Flow Statements''.


Mar 31, 2014

1.1 System of Accounting

The financial statements are prepared according to the historical cost convention on accrual basis in line with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956, including accounting standards notified thereunder.

1.2 Fixed Assets

a) Fixed Assets are stated at historical cost less accumulated depreciation and any impairment in value. Where final settlement of bills with contractors is pending/under dispute, capitalization is done on estimated/provisional basis subject to necessary adjustment in the year of final settlement.

b) Fixed Assets created on land not belonging to the Company are included under Fixed Assets.

c) Capital expenditure on assets not owned by the Company is reflected as a distinct item in Capital Work-in-Progress / Fixed Assets.

d) Payments made provisionally towards compensation and other expenses relatable to land in possession are treated as cost of land.

e) Expenditure incurred for compensatory afforestation, soil conservation and re-forestation towards forest land is shown as "Intangible Assets-Expenditure on compensatory afforestation" and is amortized pro-rata through depreciation over the period of likely use.

f) Assets and systems common to more than one generating unit are capitalized on the basis of engineering estimates/assessments.

g) Construction equipments declared surplus are shown at lower of book value and net realisable value.

1.3 Machinery Spares

a) Machinery spares procured along with the Plant & Machinery or subsequently and whose use is expected to be irregular are capitalized and depreciated fully over the residual useful life of the related plant and machinery except as stated in para 1.3(b).

b) Cost / WDV of Machinery Spares is fully charged to revenue in the year in which such spares are replaced except in cases where retrieved spares have useful life after repairs.

c) Other spares forming part of inventory are expensed when consumed.

1.4 Capital Work-in-Progress

a) In respect of supply-cum-erection contracts, the value of supplies received at site/construction store and accepted is treated as Capital Work-in-Progress.

b) Administration and Other General Overhead expenses at the Corporate Office and Projects under Construction / Survey & Investigation attributable to construction of fixed assets are identified and allocated on systematic basis on major immovable assets other than land, infrastructure facilities and bought out items on commissioning of Projects.However, no allocation of such expenses pertaining to Corporate Office is made on projects taken on BOOT ( Build, Own, Operate & Transfer) basis till the date of grant of generation license.

c) Expenditure on Survey and Investigation of the Projects is carried as capital work in progress and capitalized as cost of Project on completion of construction of the Project or the same is expensed in the year in which it is decided to abandon such project.

d) Expenditure against "Deposit Works" is accounted for on the basis of statement of account received from the concerned agency and acceptance by the Company. However, provision is made wherever considered necessary.

e) Claims for price variation /exchange rate variation in case of contracts are accounted for on acceptance.

1.5 Depreciation and Amortisation

a) Depreciation is charged on straight-line method following the rates & methodology notified by the Central Electricity Regulatory Commission (CERC) for the purpose of fixation of tariff from time to time, except as referred in Policy No. 1.5(g) and in case of computers & peripherals, and mobile phones which are depreciated @ 25% p.a.

b) Depreciation is provided on pro rata basis from the month in which the asset becomes available for use.

c) Depreciation on assets declared surplus/obsolete is provided till the end of the month in which such declaration is made.

d) Assets costing Rs. 5,000/- or less are depreciated fully in the year of procurement.

e) Expenditure on software is recognized as ''Intangible Asset'' and amortized fully over four years on Straight Line Method or over a period of its legal rights to use whichever is less.

f) Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liability on account of exchange fluctuation, change in duties or similar factors, the revised unamortized balance of such assets is depreciated prospectively over the residual life. Depreciation on increase/decrease in the value of existing assets on account of settlement of disputes is charged retrospectively.

g) Capital Expenditure referred to in Policy No. 1.2(c) is fully depreciated and charged to Profit & Loss A/c in the year in which such Asset is capitalized and ready for use.

h) Leasehold land is amortized pro-rata through depreciation over the period of lease or 35 years, whichever is lower, following the rates & methodology notified by CERC Tariff Regulations, 2009.

I) Expenditure on Catchment Area Treatment (CAT) Plan during construction is capitalized along with dam/civil works. Such expenditure during O&M stage is charged to revenue in the year of incurrence of such expenditure.

1.6 Investments

a) Non Current Investments are valued at cost less provision for permanent diminution in value.

b) Current Investments are valued at lower of cost and fair value.

1.7 Inventories

a) Inventories are valued at the lower of cost arrived at on weighted average basis and net realizable value.

b) Loose tools issued during the year are charged to consumption.

c) Stores issued for operation and maintenance but lying unused at site are treated as part of inventory.

d) The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and provided for.

e) Scrap is accounted for as and when sold.

1.8 Foreign Currency Transactions

a) Foreign currency transactions are initially recorded at the rates of exchange ruling at the date of transaction.

b) Monetary items denominated in foreign currency are restated at exchange rates prevailing on the Balance Sheet date. Non- Monetary items denominated in foreign currency are reported at the exchange rate ruling at the date of transaction.

c) Exchange differences, except to the extent considered as adjustment to borrowing cost as per AS-16 read with ASI-10, are recognized as income or expense in the period in which they arise in case of operating projects and to EDC in case of projects under construction. However, the differences relating to Fixed Assets/Capital Works-in-Progress arising out of transactions entered into prior to 01.04.2004 over & above those considered as borrowing cost are adjusted to the carrying cost of Fixed Assets/Capital Work-in-Progress.

1.9 Borrowing Costs

Borrowing costs attributable to fixed assets during construction /renovation and modernization are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.

1.10Provision, Contingent Liabilities & Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Contingent liabilities are not recognized, but are disclosed in the notes. Contingent assets are neither recognized, nor disclosed in the financial statements.

1.11Impairment of Assets

The carrying amount of cash generating unit is reviewed at each Balance Sheet date where there is any indication of impairment based on internal / external indicators. An impairment loss is recognized in the Statement of Profit & Loss where the carrying amount exceeds the recoverable amount of the cash generating units. An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

1.12Income

a) Sale of energy is accounted for based on tariff approved by the Central Electricity Regulatory Commission (CERC) except for sale of wind power energy which is accounted for on the basis of tariff rates notified by Electricity Regulatory Authorities of respective states from time to time. Recovery/refund towards foreign currency variation in respect of foreign currency loans as per CERC notification is accounted for on year to year basis.

b) The incentives /disincentives are accounted for based on the norms notified/approved by the Central Electricity Regulatory Commission.

c) Advance against depreciation, forming part of tariff upto 31.03.2009 to facilitate repayment of loans, is reduced from sales and considered as deferred revenue to be included in the sales in subsequent years.

d) The surcharge on late payment/overdue sundry debtors for sale of energy is accounted for on receipt basis or when there is reasonable certainty of realisation.

e) Interest recoverable on advances to contractors/suppliers and other claims from contractors/suppliers under dispute are accounted for on receipt/acceptance.

f) Income from consultancy services is accounted for on the basis of actual progress / technical assessment of work executed or costs reimbursable, in line with the terms of respective consultancy contracts.

1.13Employee Benefits

a) Provision for gratuity, leave encashment and other post retirement benefits as defined in Accounting Standard (AS) - 15 is made on the basis of actuarial valuation at the end of financial year.

b) Provident fund liability is accounted for on accrual basis.

c) Company''s contribution towards defined contribution pension scheme for employees is accounted for on accrual basis.

1.14Miscellaneous

a) Insurance claims are accounted for in the year of receipt/ acceptance by the insurer / certainty of realisation.

b) Prepaid and prior period expenses/income of items of Rs.50,000/- and below are charged to natural heads of accounts in the year of payment/receipt.

c) Liability for claims against the Company is recognized on acceptance by the Company / receipt of award by the Arbitrator and the balance claim, if disputed /contested by the contractor is shown as contingent liability. The claims prior to Arbitration award stage are disclosed as contingent liability.

d) A specified percentage of Net Profit after Tax of previous year is set aside for incurring expenditure towards Corporate Social Responsibility (CSR) and Sustainable Development (SD). The unspent amount is carried forward.

1.15Taxes on Income

a) Taxes on income are determined on the basis of taxable income under the Income Tax Act, 1961.

b) Deferred tax is recognized on timing differences between the accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognized and carried forward to the extent there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

1.16Cash Flow Statement

Cash Flow Statement is prepared in accordance with the indirect method prescribed in Accounting Standard (AS) – 3 ''Cash Flow Statements''.


Mar 31, 2013

1.1 System of Accounting

The financial statements are prepared according to the historical cost convention on accrual basis in line with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956, including accounting standards notified thereunder.

1.2 Fixed Assets

a) Fixed Assets are stated at historical cost less accumulated depreciation and any impairment in value. Where final settlement of bills with contractors is pending/under dispute, capitalization is done on estimated/provisional basis subject to necessary adjustment in the year of final settlement.

b) Fixed Assets created on land not belonging to the Company are included under Fixed Assets.

c) Capital expenditure on assets not owned by the Company is reflected as a distinct item in Capital Work-in-Progress / Fixed Assets.

d) Payments made provisionally towards compensation and other expenses relatable to land are treated as cost of land.

e) Expenditure incurred for compensatory afforestation, soil conservation and re-forestation towards forest land is shown as "Intangible Assets-Expenditure on compensatory afforestation" and is amortized pro-rata through depreciation over the period of likely use.

f) Assets and systems common to more than one generating unit are capitalized on the basis of engineering estimates/ assessments.

g) Construction equipments declared surplus are shown at lower of book value and net realisable value.

1.3 Machinery Spares

a) Machinery spares procured along with the Plant & Machinery or subsequently and whose use is expected to be irregular are capitalized and depreciated fully over the residual useful life of the related plant and machinery except as stated in para 1.3(b).

b) Cost / WDV of Machinery Spares is fully charged to revenue in the year in which such spares are replaced except in cases where retrieved spares have useful life after repairs.

c) Other spares forming part of inventory are expensed when consumed.

1.4 Capital Work-in-Progress

a) In respect of supply-cum-erection contracts, the value of supplies received at site/construction store and accepted is treated as Capital Work-in-Progress.

b) Administration and Other General Overhead expenses at the Corporate Office and Projects under Construction / Survey & Investigation attributable to construction of fixed assets are identified and allocated on systematic basis on major immovable assets other than land, infrastructure facilities and bought out items on commissioning of Projects. However, no allocation of such expenses pertaining to Corporate Office is made on projects taken on BOOT ( Build, Own, Operate & Transfer) basis till the date of grant of generation license.

c) Expenditure on Survey and Investigation of the Projects is carried as capital work in progress and capitalized as cost of Project on completion of construction of the Project or the same is expensed in the year in which it is decided to abandon such project.

d) Expenditure against "Deposit Works" is accounted for on the basis of statement of account received from the concerned agency and acceptance by the Company. However, provision is made wherever considered necessary.

e) Claims for price variation /exchange rate variation in case of contracts are accounted for on acceptance.

1.5 Depreciation and Amortisation

a) Depreciation is charged on straight-line method to the extent of 90% of the Cost of Asset following the rates & methodology notified by the Central Electricity Regulatory Commission (CERC) for the purpose of fixation of tariff. In respect of assets, where rate has not been notified by regulations by the CERC, depreciation is provided on straight line method at the rates corresponding to the rates laid down under the Income Tax Act, 1961, except in case of computers & peripherals, and mobile phones which are depreciated @ 25% p.a.

b) Depreciation is provided on pro rata basis from the month in which the asset becomes available for use.

c) Depreciation on assets declared surplus/obsolete is provided till the end of the month in which such declaration is made.

d) Assets costing Rs. 5,000/- or less are depreciated fully in the year of procurement.

e) Expenditure on software is recognized as ''Intangible Asset'' and amortized fully over four years.

f) Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liability on account of exchange fluctuation, change in duties or similar factors, the revised unamortized balance of such assets is depreciated prospectively over the residual life. Depreciation on increase/decrease in the value of existing assets on account of settlement of disputes is charged retrospectively.

g) Capital Expenditure referred to in Policy No. 1.2(c) is amortized over a period of four years starting from the year in which the first unit of the project comes into commercial operation and thereafter from the year in which the relevant asset becomes available for use. However, such expenditure for community development in case of projects under operation is charged off to revenue.

h) Leasehold land is amortized pro-rata through depreciation over the period of lease or 35 years, whichever is lower, following the rates & methodology notified by CERC Tariff Regulations, 2009.

i) Expenditure on Catchment Area Treatment (CAT) Plan during construction is capitalized along with dam/civil works. Such expenditure during O&M stage is charged to revenue in the year of incurrence of such expenditure.

1.6 Investments

a) Non Current Investments are valued at cost less provision for permanent diminution in value.

b) Current Investments are valued at lower of cost and fair value.

1.7 Inventories

a) Inventories are valued at the lower of cost arrived at on weighted average basis and net realizable value.

b) Loose tools issued during the year are charged to consumption.

c) Stores issued for operation and maintenance but lying unused at site are treated as part of inventory.

d) The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and provided for.

e) Scrap is accounted for as and when sold.

1.8 Foreign Currency Transactions

a) Foreign currency transactions are initially recorded at the rates of exchange ruling at the date of transaction. Monetary items denominated in foreign currency are restated at the year end at exchange rates prevailing on the Balance Sheet date.

b) Exchange differences, except to the extent considered as adjustment to borrowing cost as per AS-16 read with ASI-10, are recognized as income or expense in the period in which they arise in case of operating projects and to EDC in case of projects under construction. However, the differences relating to Fixed Assets/Capital Works-in-Progress arising out of transactions entered into prior to 01.04.2004 over & above those considered as borrowing cost are adjusted to the carrying cost of Fixed Assets/Capital Work-in-Progress.

1.9 Borrowing Costs

Borrowing costs attributable to fixed assets during construction/ renovation and modernization are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.

1.10 Provision, Contingent Liabilities & Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Contingent liabilities are not recognized, but are disclosed in the notes. Contingent assets are neither recognized, nor disclosed in the financial statements.

1.11 Income

a) Sale of energy is accounted for based on tariff approved by the Central Electricity Regulatory Commission (CERC). Recovery/ refund towards foreign currency variation in respect of foreign currency loans as per CERC notification is accounted for on year to year basis.

b) The incentives /disincentives are accounted for based on the norms notified/approved by the Central Electricity Regulatory Commission.

c) Advance against depreciation, forming part of tariff upto 31.03.2009 to facilitate repayment of loans, is reduced from sales and considered as deferred revenue to be included in the sales in subsequent years.

d) The surcharge on late payment/overdue sundry debtors for sale of energy is accounted for on receipt basis or when there is reasonable certainty of realisation.

e) Interest recoverable on advances to contractors/suppliers and other claims from contractors/suppliers under dispute are accounted for on receipt/acceptance.

f) Income from consultancy services is accounted for on the basis of actual progress / technical assessment of work executed or costs reimbursable, in line with the terms of respective consultancy contracts.

1.12 Employee Benefits

a) Provision for gratuity, leave encashment and other post retirement benefits as defined in Accounting Standard (AS) - 15 is made on the basis of actuarial valuation at the end of financial year.

b) Provident fund liability is accounted for on accrual basis.

c) Company''s contribution towards defined contribution pension scheme for employees is accounted for on accrual basis.

1.13 Miscellaneous

a) Insurance claims are accounted for in the year of receipt/ acceptance by the insurer / certainty of realisation.

b) Prepaid and prior period expenses/income of items of Rs. 50,000/- and below are charged to natural heads of accounts in the year of payment/receipt.

c) Liability for claims against the Company is recognized on acceptance by the Company / receipt of award by the Arbitrator and the balance claim, if disputed /contested by the contractor is shown as contingent liability. The claims prior to Arbitration award stage are disclosed as contingent liability.

d) A specified percentage of Net Profit after Tax of previous year is set aside for incurring expenditure towards Corporate Social Responsibility (CSR) and Sustainable Development (SD). The unspent amount is carried forward.

1.14 Taxes on Income

a) Taxes on income are determined on the basis of taxable income under the Income Tax Act, 1961.

b) Deferred tax is recognized on timing differences between the accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognized and carried forward to the extent there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

1.15 Cash Flow Statement

Cash Flow Statement is prepared in accordance with the indirect method prescribed in Accounting Standard (AS) - 3 ''Cash Flow Statements''.


Mar 31, 2012

1.1 System of Accounting

The financial statements are prepared according to the historical cost convention on accrual basis in line with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956, including accounting standards notified thereunder.

1.2 Fixed Assets

a) Fixed Assets are stated at historical cost less accumulated depreciation and any impairment in value. Where final settlement of bills with contractors is pending/under dispute, capitalization is done on estimated/provisional basis subject to necessary adjustment in the year of final settlement.

b) Fixed Assets created an land not belonging to the Company are included under Fixed Assets.

c) Capital expenditure on assets not owned by the Company is reflected as a distinct item in Capital Work-in-Progress/Fixed Assets.

d) Payments made provisionally towards compensation and other expenses relatable to land are treated as cost of land,

e) Expenditure incurred for compensatory afforestation, soil conservation and re-forestation towards forest land is shown as "Intangible Assets-Expenditure on compensatory afforestation" and is amortized pro-rata through depreciation over the period of likely use.

f) Assets and systems common to mo re than one generating unit are capitalized on the basis of engineering estimates/assessments.

g) Construction equipments declared surplus ore shown at lower of book value and net realisable value.

1.3 Machinery Spares

a) Machinery spares procured along with the Plant & Machinery or subsequently and whose use is expected to be irregular are capitalized and depreciated fully over the residual useful life of the related plant and machinery except as stated in para 1.3(b).

b) Cost/WDV of Machinery Spores is fully charged to revenue in the year in which such spares are replaced except in coses where retrieved spares have useful life after repairs.

c) Other spares forming part of inventory are expensed when consumed.

1.4 Capital Work-in-Progress

a) In respect of supply-cum-erection contracts, the value of supplies received at site/construction store and accepted is treated as Capital Work-in-Progress.

b) Administration and Other General Overhead expenses at the Corporate Office and Projects under Construction/Survey & investigation attributable to construction of fixed assets are identified and allocated on systematic basis on major immovable assets other than land, infrastructure facilities and bought out items on commissioning of Projects. However, no allocation of such expenses pertaining to Corporate Office is made on projects taken on BOOT (Build, Own, Operate & Transfer) basis till the date of grant of generation license.

c) Expenditure on Survey and Investigation of the Projects is carried as capital work in progress and capitalized as cost of Project on completion of construction of the Project or the same is expensed in the year in which it is decided to abandon such project,

d) Expenditure against "Deposit Works" is accounted for on the basis of statement of account received from the concerned agency and acceptance by the Company. However, provision is made wherever considered necessary.

e) Claims for price variation/exchange rate variation in case of contracts are accounted for on acceptance.

1.5 Depreciations Amortisation

a) Depreciation is charged on straight-line method to the extent of 90% of the Cost of Asset following the rates notified by the Central Electricity Regulatory Commission (CERC) for the purpose of fixation of tariff. In respect of assets, where rate has not been notified by regulations by the CERC, depreciation is provided on straight line method at the rates corresponding to the rates laid down under the Income Tax Act, 1961, except in case of computers & peripherals, and mobile phones which are depreciated @ 25% p.a.

b) Depreciation is provided on pro rata basis from the month in which the asset becomes available for use.

c} Depreciation on assets declared surplus/obsolete is provided till the end of the month in which such declaration is made.

d) Assets costing Rs. 5.000/- or less are depreciated fully in the year of procurement,

e) Expenditure on software is recognized as 'Intangible Asset' and amortized fully over four years.

f) Where the cast of depreciable assets has undergone a change during the year due to increase/decrease in long term liability on account of exchange fluctuation, change in duties or similar factors, the revised unamortized balance of such assets is depreciated prospectively over the residual life. Depreciation on increase/decrease in the value of existing assets on account of settlement of disputes is charged retrospectively.

g) Capital Expenditure referred to in Policy No 1.2(c) is amortized over a period of four years starting from the year in which the first unit of the project comes into commercial operation and there after from the year in which the relevant asset becomes available for use. However, such expenditure for community development in case of projects under operation is charged off to revenue.

h) Leasehold land is amortized pro-rata through depreciation over the period of lease.

i) Expenditure on Catchment Area Treatment (CAT) Plan during construction is capitalized along with dam/civil works. Such expenditure during O&M stage is charged to revenue in the year of incurrence of such expenditure,

1.6 Investments

a) Long Term investments are valued at cost less provision for permanent diminution in value.

b) Current Investments ore valued at lower of cost and fair value.

1.7 Inventories

a) Inventories are valued at the lower of cost arrived at on weighted average basis and net realizable value.

b) Loose tools issued during the year are charged to consumption.

c) Stores issued for operation and maintenance but lying unused at site are treated as port of inventory.

d) The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and provided for.

e) Scrap is accounted for as and when sold.

1.8 Foreign Currency Transactions

a) Foreign currency transactions are initially recorded at the rates of exchange ruling at the date of transaction. Monetary items denominated in foreign currency are restated at the year end at exchange rates prevailing on the Balance Sheet date.

b) Exchange differences, except to the extent considered as adjustment to borrowing cost as per AS-16 read with ASI-10, are recognized as income or expense in the period in which they arise in case of operating projects and to EDC in case of projects under construction. However, the differences relating to fixed Assets/Capital Works-in-Progress arising out of transactions entered into prior to 01.04.2004 over & above those considered as borrowing cost are adjusted to the carrying cost of Fixed Assets/Capital Work-in-Progress.

1.9 Borrowing Costs

Borrowing costs attributable to fixed assets during construction/ renovation and modernization are capitalized, Other borrowing costs are recognized as an expense in the period in which they are incurred.

1.10 Provision, Contingent Liabilities & Contingent Assets

Provisions involving substantial degree of estimation in measurement ore recognized when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Contingent liabilities ore not recognized, but ore disclosed in the notes. Contingent assets are neither recognized, nor disclosed in the financial statements.

1.11 Income

a) Sale of energy is accounted for based on tariff approved by the Central Electricity Regulatory Commission (CERC), Recovery/refund towards foreign currency variation in respect of foreign currency loans as per CERC notification is accounted for on year to year basis.

b) The incentives/disincentives are accounted for based on the norms notified/approved by the Central Electricity Regulatory Commission.

c) Advance against depreciation, forming part of tariff upto 31.03.2009 to facilitate repayment of loans, is reduced from soles and considered as deferred revenue to be included in the sales in subsequent years.

d) The surcharge on late payment/overdue sundry debtors for sale of energy is accounted for on receipt basis or when there is reasonable certainty of realisation.

e) Interest recoverable on advances to contractors/suppliers and other claims from contractors/suppliers under dispute are accounted for on receipt/acceptance.

f) Income from consultancy services is accounted for on the basis of actual progress/technical assessment of work executed or costs reimbursable, in line with the terms of respective consultancy contracts.

1.12 Employee Benefits

Provision for gratuity, leave encashment and other post retirement benefits as defined in Accounting standard (AS)-15 is made on the basis of actuarial valuation at the end of financial year. Provident fund liability is accounted for on accrual basis.

1.13 Miscellaneous

a) Insurance claims are accounted for in the year of receipt/ acceptance by the insurer/certainty of realisation.

b) Prepaid and prior period expenses/income of items of '50,000/- and below are charged to natural heads of accounts in the year of payment/receipt.

c) Liability far claims against the Company is recognised on acceptance by the Company/receipt of award by the Arbitrator and the balance claim, if disputed/contested by the contractor is shown as contingent liability. The claims prior to Arbitration award stage are disclosed as contingent liability.

d) A specified percentage of Net Profit after Tax of previous year is set aside for incurring expenditure towards Corporate Social Responsibility (CSR). The unspent a mount is carried forward.

1.14 Taxes on Income

a) Taxes, on income ore determined on the basis of taxable income under the Income Tax Act, 1961.

b) Deferred tax is recognised on timing differences between the accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognized and carried forward to the extent there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

1.15 Cash Flow Statement

Cash Flow Statement is prepared in accordance with the indirect method prescribed in Accounting Standard (AS)-3 'Cash Flow statements'.


Mar 31, 2011

1.0 SYSTEM OF ACCOUNTING

The financial statements are prepared according to the historical cost convention on accrual basis in line with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956, including accounting standards notified thereunder.

2.0 FIXEDA5SETS

2.1 Fixed Assets are stated at historical cost less accumulated depreciation and any impairment in value. Where final settlement of bills with contractors is pending/under dispute, capitalization is done on estimated/provisional basis subject to necessary adjustment in the year of final settlement.

2.2 Fixed Assets created on land not belonging to the Company are included under Fixed Assets.

2.3 Capital expenditure on assets not owned by the Company is reflected as a distinct item in Capital Work-in-Progress/Fixed Assets.

2.4 Payments made provisionally towards compensation and other expenses relatable to land are treated as cost of land.

2.5 Expenditure incurred for compensatory afforestation, soil conservation and re-forestation towards forest land is shown as "Intangible Assets-Expenditure on compensatory afforestation" and is amortized pro-rata through depreciation over the period of likely use.

2.6 Assets and systems common to more than one generating unit are capitalized on the basis of engineering estimates/assessments.

2.7 Construction equipments declared surplus are shown at lower of bookvalueand net realisable value.

3.0 MACHINERY SPARES

3.1 Machinery spares procured along with the Plant & Machinery or subsequently and whose use is expected to be irregular are capitalized and depreciated fully over the residual useful life of the related plant and machinery except as stated in para 3.2.

3.2 Cost/WDV of Machinery Spares is fully charged to revenue in the year in which such spares are replaced except in cases where retrieved spares have useful life after repairs.

3.3 Other spares forming part of inventory are expensed when consumed.

4.0 CAPITAL WORK-IN-PROGRESS

4.1 In respect of supply-cum-erection contracts, the valueof supplies received at site/construction store and accepted is treated as Capital Work-in-Progress.

4.2 Administration and Other General Overhead expenses at the Corporate Office and Projects under Construction / Survey & Investigation attributable to construction of fixed assets are identified and allocated on systematic basis on major immovable assets other than land, infrastructure facilities and bought out items on commissioning of Projects. However, no allocation of such expenses pertaining to Corporate Office is made on projects taken on BOOT ( Build, Own, Operate & Transfer) basis til I the date of grant of generation license.

4.3 Expenditure on Survey and Investigation of the Projects is carried as capital work in progress and capitalized as cost of Project on completion of construction of the Project or the same is expensed in the year in which it is decided to abandon such project.

4.4 Expenditure against "Deposit Works" is accounted for on the basis of statement of account received from the concerned agency and acceptance by the Company. However, provision is made wherever considered necessary.

4.5 Claims for price variation /exchange rate variation in case of contracts are accounted for on acceptance.

5.0 DEPRECIATION AND AMORTISATION

5.1 Depreciation is charged on straight-line method to the extent of 90% of the Cost of Asset following the rates notified by the Central Electricity Regulatory Commission (CERC) for the purpose of fixation of tariff. In respect of assets, where rate has not been notified by regulations by the CERC, depreciation is provided on straight line method at the rates corresponding to the rates laid down under the Income Tax Act, 1961, except in case of computers & peripherals, and mobile phones which are depreciated @ 25% p.a.

5.2 Depreciation is provided on pro rata basis from the month in which the asset becomes available for use.

5.3 Depreciation on assets declared surplus/obsolete is provided till the end of the month in which such declaration is made.

5.4 Assets costing Rs. 5000/- or less are depreciated fully in the year of procurement.

5.5 Expenditure on software is recognized as 'Intangible Asset' and amortized fu I ly over four years.

5.6 Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liability on account of exchange fluctuation, change in duties or similar factors, the revised unamortized balance of such assets is depreciated prospectively over the residual life. Depreciation on increase/decrease in the value of existing assets on account of settlementof disputes is charged retrospectively.

5.7 Capital Expenditure referred to in Policy No. 2.3 is amortized overa period of four years starting from the year in which the first unit of the project comes into commercial operation and thereafter from the year in which the relevant asset becomes available for use. However, such expenditure for community development in case of projects under operation is charged off to revenue.

5.8 Leasehold land is amortized pro-rata through depreciation over the period of lease.

5.9 Expenditure on Catchment Area Treatment (CAT) Plan during construction is capitalized along with dam/civil works. Such expenditure during O&M stage is charged to revenue in the year of incurrence of such expenditure.

6.0 INVESTMENTS

6.1 Long Term Investments are valued at cost less provision for permanentdiminution in value.

6.2 Current Investments are valued at lower of cost and fair value.

7.0 INVENTORIES

7.1 Inventories are valued at the lower of cost arrived at on weighted average basis and net realizable value.

7.2 Loose tools issued during the year are charged to consumption.

7.3 Stores issued for operation and maintenance but lying unused at site are treated as part of inventory.

7.4 The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and provided for.

7.5 Scrap is accounted for as and when sold.

8.O FOREIGN CURRENCY TRANSACTIONS

8.1 Foreign currency transactions are initially recorded at the rates of exchange ruling at the date of transaction. Monetary items denominated in foreign currency are restated at the year end at exchange rates prevailing on the Balance Sheet date.

8.2 Exchange differences, except to the extent considered as adjustment to borrowing cost as per AS-16 read with ASI-10, are recognized as income or expense in the period in which they arise in case of operating projects and to EDC in case of projects under construction. However, the differences relating to Fixed Assets/Capital Works-in-Progress arising out of transactions entered into prior to 01.04.2004 over & above those considered as borrowing cost are adjusted to the carrying cost of Fixed Assets/Capital Work-in-Progress.

9.0 BORROWING COSTS

Borrowing costs attributable to fixed assets during construction /renovation and modernization are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.

10.0 PROVISION, CONTINCENTLlABILITES & CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Contingent liabilities are not recognized, but are disclosed in the notes. Contingent assets are neither recognized, nordisclosed in the financial statements.

11.0 INCOME

11.1 Sale of energy is accounted for based on tariff approved by the Central Electricity Regulatory Commission (CERC). Recovery/refund towards foreign currency variation in respect of foreign currency loans as per CERC notification is accounted for on year to year basis.

11.2 The incentives /disincentives are accounted for based on the norms notified/approved by the Central Electricity Regulatory Commission.

11.3 Advance against depreciation, forming part of tariff upto 31.03.2009 to facilitate repayment of loans, is reduced from sales and considered as deferred revenue to be included in the sales in subsequent years.

11.4 The surcharge on late payment/overdue sundry debtors for sale of energy is accounted for on receipt basis or when there is reasonable certainty of realisation.

11.5 Interest recoverable on advances to contractors/suppliers and other claims from contractors/suppliers under dispute are accounted for on receipt/acceptance.

11.6 Income from consultancy services is accounted for on the basis of actual progress / technical assessment of work executed or costs reimbursable, in line with the terms of respective consultancy contracts.

12.0 EMPLOYEE BENEFITS

Provision for gratuity, leave encashment and other post retirement benefits as defined in Accounting Standard (AS) -15 is made on the basis of actuarial valuation at the end of financial year. Providentfund liability isaccounted for on accrual basis.

13.0 MISCELLANEOUS

13.1 Insurance claims are accounted for in the year of receipt/ acceptance by the insurer/certainty of realisation.

13.2 Prepaid and prior period expenses/income of items of Rs.50,000/- and below are charged to natural heads of accounts in the year of payment/receipt.

13.3 Liability for claims against the Company is recognized on acceptance by the Company / receipt of award by the Arbitrator and the balance claim, if disputed /contested by the contractor is shown as contingent liability. The claims prior to Arbitration award stage are disclosed as contingent liability.

13.4 A specified percentage of Net Profit after Tax of previous year is set aside for incurring expenditure towards Corporate Social Responsibility (CSR). The unspent amount is carried forward.

14.0 TAXES ON INCOME

14.1 Taxes on income are determined on the basis of taxable income under the Income Tax Act, 1961.

14.2 Deferred tax is recognized on timing differences between the accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognized and carried forward to the extentthere is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

15.0 CASH FLOW STATEMENT

Cash Flow Statement is prepared in accordance with the indirect method prescribed in Accounting Standard (AS) - 3 'Cash Flow Statements'.












Mar 31, 2010

1.0 SYSTEM OF ACCOUNTING

1.1 The financial statements are prepared according to the historical cost convention on accrual basis and in line with the fundamental accounting principles of prudence, consistency and materiality except when otherwise stated.

1.2 The financial statements are reported in Indian rupees and all values are rounded to the nearest lakh except when otherwise stated.

2.0 STATEMENT OF COMPLIANCE

The financial statements are prepared on the basis of generally accepted accounting principles in India and the provisions of the CompaniesAct, 1956.

3.0 FIXED ASSETS

3.1 Fixed Assets are stated at historical cost less accumulated depreciation and any impairment in value. Where final settlement of bills with contractors is pending/under dispute, capitalization is done on estimated/provisional basis subject to necessary adjustment in the year of final settlement.

3.2 Fixed Assets created on land not belonging to the Company are included under Fixed Assets.

3.3 Capital expenditure on assets not owned by the Company is refiected as a distinct item in Capital Work-in-Progress / Fixed Assets.

3.4 Payments made provisionally towards compensation and other expenses relatable to land are treated as cost of land.

3.5 Expenditure incurred for compensatory afforestation, soil conservation and re-forestation towards forest land is shown as "Intangible Assets-Expenditure on compensatory afforestation" and is amortized pro-rata through depreciation over the period of likely use.

3.6 Assets and systems common to more than one generating unit are capitalized on the basis of engineering estimates/ assessments.

3.7 Construction equipments declared surplus are shown at lower of book value and net realisable value.

4.0 MACHINERY SPARES

4.1 Machinery spares procured along with the Plant & Machinery or subsequently and whose use is expected to be irregular are capitalized and depreciated fully over the residual useful life of the related plant and machinery except as stated as para 4.2.

4.2 Cost / WDV of Machinery Spares is fully charged to revenue in the year in which such spares are replaced except in cases where retrieved spares have useful life after repairs.

4.3 Other spares forming part of inventory are expensed when consumed.

5.0 CAPITAL WORK-IN-PROGRESS

5.1 In respect of supply-cum-erection contracts, the value of supplies received at site/construction store and accepted is treated as Capital Work-in-Progress.

5.2 Administration and Other General Overhead expenses at the Corporate Office and Projects under Construction / Survey & Investigation attributable to construction of fixed assets are identified and allocated on systematic basis on major immovable assets other than land, infrastructure facilities and bought out items on commissioning of Projects. However, no allocation of such expenses pertaining to Corporate Office is made on projects taken on BOOT (Build, Own, Operate & Transfer) basis till the date of grant of generation license.

5.3 Expenditure on Survey and Investigation of the Projects is carried as capital work in progress and capitalized as cost of Project on completion of construction of the Project or the same is expensed in the year in which it is decided to abandon such project.

5.4 Expenditure against "Deposit Works" is accounted for on the basis of statement of account received from the concerned agency and acceptance by the Company. However, provision is made wherever considered necessary.

5.5 Claims for price variation /exchange rate variation in case of contracts are accounted for on acceptance.

6.0 DEPRECIATION AND AMORTISATION

6.1 Depreciation is charged on straight-line method to the extent of 90% of the Cost of Asset following the rates notified by the Central Electricity Regulatory Commission (CERC) for the purpose of fixation of tariff. In respect of assets, where rate has not been notified by regulations by the CERC, depreciation is provided on straight line method at the rates corresponding to the rates laid down under the Income Tax Act, 1961, except in case of computers and peripherals which are depreciated @ 25% p.a.

6.2 Depreciation is provided on pro rata basis from the month in which the asset becomes available for use.

6.3 Depreciation on assets declared surplus/obsolete is provided till the end of the month in which such declaration is made.

6.4 Assets costing Rs. 5000/- or less are depreciated fully in the year of procurement.

6.5 Expenditure on software is recognized as Intangible Asset and amortized fully over four years.

6.6 Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liability on account of exchange fluctuation, change in duties or similar factors, the revised unamortized balance of such assets is depreciated prospectively over the residual life. Depreciation on increase/decrease in the value of existing assets on account of settlement of disputes is charged retrospectively.

6.7 Capital Expenditure referred to in Policy No. 3.3 is amortized over a period of four years starting from the year in which the first unit of the project comes into commercial operation and thereafter from the year in which the relevant asset becomes available for use. However, such expenditure for community development in case of projects under operation is charged off to revenue.

6.8 Leasehold land is amortized pro-rata through depreciation over the period of lease.

6.9 Expenditure on Catchment Area Treatment (CAT) Plan during construction is capitalized along with dam. Such expenditure during O&M stage is charged to revenue in the year of incurrence of such expenditure.

7.0 INVESTMENTS

7.1 Long Term Investments are valued at cost less provision for permanent diminution in value.

7.2 Current Investments are valued at lower of cost and fair value.

8.0 INVENTORIES

8.1 Inventories are valued at the lower of cost arrived at on weighted average basis and net realizable value.

8.2 Loose tools issued during the year are charged to consumption.

8.3 Stores issued for operation and maintenance but lying unused at site are treated as part of inventory.

8.4 The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and provided for.

8.5 Scrap is accounted for as and when sold.

9.0 FOREIGN CURRENCY TRANSACTIONS

9.1 Foreign currency transactions are initially recorded at the rates of exchange ruling at the date of transaction. Monetary items denominated in foreign currency are restated at the year end at exchange rates prevailing on the Balance Sheet date.

9.2 Exchange differences, except to the extent considered as adjustment to borrowing cost as per AS-16 read with ASI-10, are recognized as income or expense in the period in which they arise in case of operating projects and to EDC in case of projects under construction. However, the differences relating to Fixed Assets/Capital Works-in-Progress arising out of transactions entered into prior to 01.04.2004 over & above those considered as borrowing cost are adjusted to the carrying cost of Fixed Assets/Capital Work-in-Progress.

10.0 BORROWING COSTS

Borrowing costs attributable to fixed assets during construction /renovation and modernization are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.

11.0 INCOME

11.1 Sale of energy is accounted for based on tariff approved by the Central Electricity Regulatory Commission (CERC). Recovery/refund towards foreign currency variation in respect of foreign currency loans as per CERC notification is accounted for on year to year basis.

11.2 The incentives /disincentives are accounted for based on the norms notified/approved by the Central Electricity Regulatory Commission.

11.3 Advance against depreciation, forming part of tariff to facilitate repayment of loans, is reduced from sales and considered as deferred revenue to be included in the sales in subsequent years.

11.4 The surcharge on late payment/overdue sundry debtors for sale of energy is accounted for on receipt basis or when there is reasonable certainty of realisation.

11.5 Interest recoverable on advances to contractors/suppliers and other claims from contractors/suppliers under dispute are accounted for on receipt/acceptance.

11.6 Income from consultancy services is accounted for on the basis of actual progress / technical assessment of work executed or costs reimbursable, in line with the terms of respective consultancy contracts.

12.0 EMPLOYEE BENEFITS

Provision for gratuity, leave encashment, leave travel concession and post retirement benefits is made on the basis of actuarial valuation at the end of financial year. Provident fund liability is accounted for on accrual basis.

13.0 MISCELLANEOUS

13.1 Insurance claims are accounted for in the year of receipt /acceptance by the insurer / certainty of realisation.

13.2 Prepaid and prior period expenses/income of items of Rs.50,000/- and below are charged to natural heads of accounts in the year of payment/receipt.

13.3 Liability for claims against the Company is recognized on acceptance by the Company / receipt of award by the Arbitrator and the balance claim, if disputed /contested by the contractor is shown as contingent liability. The claims prior to Arbitration award stage are disclosed as contingent liability.

14.0 TAXES ON INCOME

Taxes on income are determined on the basis of taxable income underthe Income TaxAct, 1961.

Deferred tax is recognized using the tax rates and laws enacted or substantively enacted as on the balance sheet date.


Mar 31, 2009

1.0 SYSTEM OF ACCOUNTING

1.1 The financial statements are prepared according to the historical cost convention on accrual basis and in line with the fundamental accounting principles of prudence, consistency and materiality except when otherwise stated.

1.2 The financial statements are reported in Indian rupees and all values are rounded to the nearest lakh except when otherwise stated.

2.0 STATEMENT OF COMPLIANCE

The financial statements are prepared on the basis of generally accepted accounting principles in India and the provisions of Companies Act, 1956.

3.0 FIXEDASSETS

3.1 Fixed Assets are stated at historical cost less accumulated depreciation and any impairment in value. Where final settlement of bills with contractors is pending/under dispute, capitalization is done on estimated/provisional basis subject to necessary adjustment in the year of final settlement.

3.2 Fixed Assets created on land not belonging to the Company are included under Fixed Assets.

3.3 Capital expenditure on assets not owned by the Company is reflected as a distinct item in Capital Work-in-Progress / Fixed Assets.

3.4 Payments made provisionally towards compensation and other expenses relatable to land are treated as cost of land.

3.5 Expenditure incurred for compensatory afforestation, soil conservation and re-forestation towards forest land is shown as "Intangible Assets- Expenditure on compensatory afforestation" and is amortized pro-rata through depreciation over the period of likely use.

3.6 Assets and systems common to more than one generating unit are capitalized on the basis of engineering estimates/assessments.

3.7 Construction equipments declared surplus are shown at lower of book value and net realisable value.

4.0 MACHINERY SPARES

4.1 Machinery spares procured along with the Plant & Machinery or subsequently and whose use is expected to be irregular are capitalized and depreciated fully over the residual useful life of the related plant and machinery except as stated as para 4.2.

4.2 Cost / WDV of Machinery Spares is fully charged to revenue in the year in which such spares are replaced except in cases where retrieved spares have useful life after repairs.

4.3 Other spares forming part of inventory are expensed when consumed.

5.0 CAPITAL WORK-IN-PROGRESS

5.1 In respect of supply-cum-erection contracts, the value of supplies received at site/construction store and accepted is treated as Capital Work-in-Progress.

5.2 Administration and Other General Overhead expenses at the Corporate Office and Projects under Construction / Survey & Investigation attributable to construction of fixed assets are identified and allocated on systematic basis on major immovable assets other than land, infrastructure and bought out items on commissioning of Projects. However, no allocation of such expenses pertaining to Corporate Office is made on projects taken on BOOT ( Build, Own, Operate & Transfer) basis till the date of grant of generation license.

5.3 Expenditure on Survey and Investigation of the Projects is carried as capital work in progress and capitalized as cost of Project on completion of construction of the Project or the same is expensed in the year in which it is decided to abandon such project.

5.4 Expenditure against "Deposit Works" is accounted for on the basis of statement of account received from the concerned agency and acceptance by the Company. However, the provision is made wherever considered necessary.

5.5 Claims for price variation /exchange rate variation in case of contracts are accounted for on acceptance.

6.0 DEPRECIATION AND AMORTISATION

6.1 Depreciation is charged on straight-line method to the extent of 90% of the Cost of Asset following the rates notified by the Central Electricity Regulatory Commission (CERC) for the purpose of fixation of tariff. In respect of assets, where rate has not been notified by regulations by the CERC, depreciation is provided on straight line method at the rates corresponding to the rates laid down under the Income Tax Act, 1961, except in case of computers and peripherals where it is depreciated @ 25% p. a.

6.2 Depreciation is provided on pro rata basis from the month in which the asset becomes available for use.

6.3 Depreciation on assets declared surplus/obsolete is provided till the end of the month in which such declaration is made.

6.4 Assets costing Rs. 5000/- or less are depreciated fully in the year of procurement.

6.5 Expenditure on software is recognized as "Intangible Asset" and amortized fully over four years.

6.6 Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liability on account of exchange fluctuation, change in duties or similar factors, the revised unamortized balance of such assets is depreciated prospectively over the residual life.

Depreciation on increase/decrease in the value of existing assets on account of settlement of disputes is charged retrospectively.

6.7 Capital Expenditure referred to in Policy No. 3.3 is amortized over a period of four years starting from the year in which the first unit of the project comes into commercial operation and thereafter from the year in which the relevant asset becomes available for use. However, such expenditure for community development in case of projects under operation is charged off to revenue.

6.8 Leasehold land is amortized pro-rata through depreciation over the period of lease.

6.9 Expenditure on Catchment Area Treatment (CAT) Plan during construction is capitalized along with dam. Such expenditure during O&M stage is charged to revenue in the year of incurrence of such expenditure.

70. INVESTMENTS

7.1 Long Term Investments are valued at cost less provision for permanent diminution in value.

7.2 Current Investments are valued at lower of cost and fair value.

8.0 INVENTORIES

8.1 Inventories are valued at the lower of cost arrived at on weighted average basis and net realizable value.

8.2 Loose tools issued during the year are charged to consumption.

8.3 Stores issued for operation and maintenance but lying unused at site are treated as part of inventory.

9.0 FOREIGN CURRENCY TRANSACTIONS

9.1 Foreign currency transactions are initially recorded at the rates of exchange ruling at the date of transaction. Monetary items denominated in foreign currency are restated at the year end at exchange rates prevailing on the Balance Sheet date.

9.2 Exchange differences, except to the extent considered as adjustment to borrowing cost as per AS-16 read with ASI-10, are recognized as income or expense in the period in which they arise in case of operating projects and to EDC in case of projects under construction. However, the differences relating to Fixed Assets/Capital Works-in-Progress arising out of transactions entered into prior to 01.04.2004 over & above those considered as borrowing cost are adjusted to the carrying cost of Fixed Assets/Capital Work-in-Progress.

10.0 BORROWING COSTS

Borrowing costs attributable to fixed assets during construction/renovation and modernization are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.

11.0 INCOME

11.1 Sale of energy is accounted for based on tariff approved by the Central Electricity Regulatory Commission (CERC). Recovery/refund towards foreign currency variation in respect of foreign currency loans and recovery towards income tax from beneficiaries as per CERC notification is accounted for on year to year basis.

11.2 The incentives /disincentives are accounted for based

on the norms notified/approved by the Central Electricity Regulatory Commission.

11.3 Advance against depreciation, forming part of tariff to facilitate repayment of loans, is reduced from sales and considered as deferred revenue to be included in the sales in subsequent years.

11.4 The surcharge on late payment/overdue sundry debtors for sale of energy is accounted for on receipt basis or when there is reasonable certainty of realisation.

11.5 Interest recoverable on advances to contractors/suppliers and other claims from contractors/suppliers under dispute are accounted for on receipt/ acceptance.

11.6 Income from consultancy services is accounted for on the basis of actual progress / technical assessment of work executed or costs reimbursable, in line with the terms of respective consultancy contracts.

12.0 EMPLOYEE BENEFITS

Provision for gratuity, leave encashment, leave travel concession and post retirement benefits is made on the basis of actuarial valuation at the end of financial year. Provident fund liability is accounted for on accrual basis.

13.0 MISCELLANEOUS

13.1 Insurance claims are accounted for in the year of receipt/acceptance by the insurer/certainty of realisation.

13.2 Prepaid and prior period expenses/income of items of Rs.50, 000/- and below are charged to natural heads of accounts in the year of payment/receipt.

13.3 Liability for claims against the Company is recognized on acceptance by the Company/receipt of award by the Arbitrator and the balance claim, if disputed/ contested by the contractor is shown as contingent liability. The claims prior to Arbitration award stage are disclosed as contingent liability.

14.0 TAXES ON INCOME

Taxes on income are determined on the basis of taxable income under the Income Tax Act, 1961. Income Tax is a pass-through to beneficiaries to the extent relatable to core activity i.e. Generation of electricity.

Deferred tax is recognized using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

 
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