Mar 31, 2023
Significant accounting policies
a. Basis of preparation
The Standalone Financial Statements of the Company have been prepared in accordance with Indian
Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 ("the Act") read
with Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of
the Act.
The Standalone Financial Statements have been prepared on an accrual basis and under historical cost
convention, except Defined Benefit Plan - Plan assets and certain financial Assets & Liabilities which are
measured at fair value (refer accounting policy regarding financial instruments). The accounting policies
are consistently applied by the Company during the year and are consistent with those used in previous
year except for the changes in accounting policies required to be made on adoption of Indian Accounting
Standards notified under the Companies Act, 2013.
b. Significant accounting judgements, estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgements,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities
and the accompanying disclosures, including the disclosure of contingent liabilities. Uncertainty about
these assumptions and estimates could result in outcomes that require a material adjustment to the
carrying amount of assets or liabilities affected in future periods.
This note provides an overview of the areas that involved a higher degree of judgement or complexity and
of items which are likely to be materially adjusted due to estimates and assumptions turning out to be
different than those originally assessed.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised prospectively.
c. Critical estimates and judgements
Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired.
If any indication exists, the Company estimates the asset''s recoverable amount. An asset''s recoverable
amount is the higher of an asset''s or Cash Generating Units (CGU''s) fair value less costs of disposal and its
value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or a group of assets. Where the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their
present value using pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. In determining fair value less costs of disposal, recent market
transactions are taken into account, if no such transactions can be identified, an appropriate valuation
model is used.
Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected
cash loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the
impairment calculation, based on Company''s past history, existing market conditions as well as forward
looking estimates at the end of each reporting period.
Fair Value of Financial Instruments
The fair value of financial instruments is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction in the principal (or most advantageous) market at the
measurement date under current market conditions, (i.e., an exit price) regardless of whether that price
is directly observable or estimated using another valuation technique. When the fair values of financial
assets and financial liabilities recorded in the Balance Sheet cannot be derived from active markets, they
are determined using a variety of valuation techniques that include the use of valuation models. The
inputs to these models are taken from observable markets where possible, but where this is not feasible,
estimation is required in establishing fair values. For further details about determination of fair value
refer note 1(h).
Defined Benefit Plans
The cost of the defined benefit gratuity plan and other post-employment benefits and the present value
of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making
various assumptions that may differ from actual developments in the future. These include the
determination of the discount rate, future salary increases and mortality rates. Due to the complexities
involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to
changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most
subject to change is the discount rate. In determining the appropriate discount rate for plans operated in
India, the management considers the interest rates of government bonds. The mortality rate is based on
publicly available mortality tables. Those mortality tables tend to change only at interval in response to
demographic changes. Future salary increases and gratuity increases are based on expected future inflation
rates. Further details about defined benefit plans obligations are given in note 31.
Provisions
Provisions are determined based on the best estimate required to settle the obligation at the reporting
date. If the effect of time value of money is material, provisions are discounted using a current pre-tax
rate that reflects the risks specific to the liability. These estimates are reviewed at each balance sheet
date and adjusted to reflect the current best estimates.
Estimate of current and deferred tax
The Company''s tax charge on ordinary activities is the sum of the total current and deferred tax charges.
The calculation of the Company''s total tax charge necessarily involves a degree of estimation and judgement
in respect of certain items whose tax treatment cannot be finally determined until resolution has been
reached with the relevant tax authority or, as appropriate, through a formal legal process. The final
resolution of some of these items may give rise to material profits/losses and/or cash flows.
The complexity of the Company''s structure makes the degree of estimation and judgement more
challenging. The resolution of issues is not always within the control of the Company and it is often
dependent on the efficiency of the legal processes in the relevant taxing jurisdictions in which the Company
operates. Issues can, and often do, take many years to resolve. Payments in respect of tax liabilities for an
accounting period result from payments on account and on the final resolution of open items. As a result,
there can be substantial differences between the tax charge in the statement of profit and loss and tax
payments.
d. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in
cash and cash equivalents. The Company has identified twelve months as its operating cycle.
e. Functional and presentation currency
The Items included in the financial statements of the Company are measured using the currency of the
primary economic environment in which the company operates (''the functional currency''). The standalone
financial statements are presented in Indian rupee (Rs.) rounded off to nearest million (unless otherwise
stated), which is the Company''s functional and presentation currency.
f. Foreign currencies
Transactions and translations
Foreign currency transactions are recorded, on initial recognition in the functional currency, by applying to
the foreign currency amount the spot exchange rate between the functional currency and the foreign
currency at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency
spot rates of exchange at the reporting date. Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value is determined.
Exchange difference that arise on settlement of monetary items or on reporting at each balance sheet
date of the Company''s monetary items at the closing rate are recognized as income or expenses in the
period in which they arise.
The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with
the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on
items whose fair value gain or loss is recognised in OCI or statement of profit and loss are also recognised
in OCI or statement of profit and loss, respectively).
g. Investment in subsidiaries
The Company has accounted for its investment in subsidiaries at cost less accumulated impairment, if any.
h. Fair value measurement
The Company measures financial instruments at fair value on initial recognition.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based
on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming that market participants act in their economic best
interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another market
participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the use of relevant observable inputs and minimising
the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
⢠Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
⢠Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the Standalone Financial Statements on a recurring basis,
the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant to the fair value measurement as a
_whole) at the end of each reporting period._
External valuers are involved for valuation of significant assets, such as properties and unquoted financial
assets. Involvement of external valuers is decided upon annually by the management. Selection criteria
include market knowledge, reputation, independence and whether professional standards are maintained.
The management decides, after discussions with the Company''s external valuers, which valuation techniques
and inputs to use for each case.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on
the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value
hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the
relevant notes. Please refer to Note No 30
⢠Disclosures for valuation methods, significant estimates and assumptions
⢠Quantitative disclosures of fair value measurement hierarchy
⢠Financial instruments (including those carried at amortised cost)
i. Property, plant and equipment
Recognition and measurement
Property, plant and equipment are stated at cost of acquisition or construction net of accumulated
depreciation and impairment loss (if any). Internally manufactured property, plant and equipment are
capitalised at cost, including non-cenvatable excise duty (blocked ITC credit under GST), wherever applicable.
All significant costs relating to the acquisition and installation of property, plant and equipment are
capitalised. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing
costs for long-term construction projects if the recognition criteria are met. When significant parts of plant
and equipment are required to be replaced at intervals, the Company depreciates them separately based
on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All
other repair and maintenance costs are recognised in statement of profit and loss as incurred. The present
value of the expected cost for the decommissioning of an asset after its use is included in the cost of the
respective asset if the recognition criteria for a provision are met.
Subsequent costs
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part
is derecognised.
Depreciation
The identified components are depreciated over their useful lives, the remaining asset is depreciated over
the life of the principal asset.
Depreciation for identified components is computed on Straight Line Method (''SLM'') except in respect of
Furniture & Fixtures and Vehicles is computed on Written Down Value (''WDV'') method based on useful
lives estimated by the management.
*The Company, based on technical assessments made by technical experts and management estimates
depreciates certain items of plant and machinery over estimated useful lives which are different from the
useful life prescribed in Schedule II to the Companies Act, 2013. The management believes that these
estimated useful lives are realistic and reflect fair approximation of the period over which the assets are
likely to be used.
De-recognition / Disposal
An item of property, plant and equipment and any significant part initially recognised is derecognised
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in the income statement when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed
at each financial year end and adjusted prospectively, if appropriate.
j. Intangible assets
Recognition and measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and accumulated impairment
losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and
the related expenditure is reflected in statement of profit and loss in the period in which the expenditure
is incurred.
Amortisation
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end
of each reporting period. Changes in the expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset are considered to modify the amortisation period or
method, as appropriate, and are treated as changes in accounting estimates.
The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and
loss unless such expenditure forms part of carrying value of another asset, as provided by another Ind-AS.
De-recognition / Disposal
Gains or losses arising from derecognition of an intangible asset are measured as the difference between
the net disposal proceeds and the net carrying amount of the asset and are recognised in the statement
of profit and loss when the asset is derecognised.
Research and development costs
Research costs are expensed as incurred.
Development expenditures on an individual project are recognised as an intangible asset when the Company
can demonstrate:
⢠The technical feasibility of completing the intangible asset so that the asset will be available for use
or sale
⢠Its intention to complete and its ability and intention to use or sell the asset
⢠How the asset will generate future economic benefits
⢠The availability of resources to complete the asset
⢠The ability to measure reliably the expenditure during development
Such capitalized expenditure is reflected as intangible under development.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less
any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins
when development is complete and the asset is available for use. It is amortised over the period of
expected future benefit. Amortisation expense is recognised in the statement of profit and loss unless
such expenditure forms part of carrying value of another asset.
During the period of development, the asset is tested for impairment annually.
k. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is
measured at the amount of transaction price excluding payment of taxes and duties collected on behalf of
the government. The transaction price of goods sold and services rendered is net of variable consideration
on account of various discount and schemes offered by the Company
Any amount of income accrued but not billed to customers in respect of any contracts is recorded as a
contract asset. Such contract assets are transferred to trade receivables on actual billing to customers.
Company has received consideration or an amount of consideration is due from the customer. Such contract
liabilities are recognised as revenue when the Company performs under the contract.
Revenue from sales of electricity is recognized when all the significant risks and rewards of ownership
have been passed to the buyer, usually on the basis of electricity wheeled into MSEB grid and jointly
certified. In case of sale of electricity, revenue is recognised based on the transaction price.
Income from Certified Emission Reduction (CERs) units and Renewable Energy Certificates (RECs) is recognised
in the period of its actual sales and is measured at its transaction price.
Claims / Insurance Claim etc. are accounted for when no significant uncertainties are attached to their
eventual receipt
Interest income
Interest on fixed deposits with banks, bonds, etc., is recognised on a time proportion basis taking into
account the amount outstanding and rate applicable. In case of significant uncertainty of receiving interest,
the same is not recognised though accrued and is recognised only when received. Interest income from
debt instruments is recognised using Effective Interest Rate method (EIR). EIR is the rate that exactly
discounts the estimated future cash payments or receipts over the expected life of the financial instruments
or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the
amortised cost of a financial liability.
Interest income is included in other income in the statement of profit and loss.
Profit / Loss of the sale / redemption of investments is dealt with at the time of actual sale / redemption.
Dividend income
Dividend income from investments is recognised when the right to receive the payment is established,
which is generally when shareholders approve the dividend. Dividend income is included in other income in
the statement of profit and loss.
l. Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received
and all attached conditions will be complied with. When the grant or subsidy relates to revenue, it is
recognized as income on a systematic basis in the statement of profit and loss over the periods necessary
to match them with the related costs, which they are intended to compensate. Where the grant relates to
an asset, it is recognized as deferred income and is allocated to statement of profit and loss over the
periods and in the proportions in which depreciation on those assets is charged.
When loans or similar assistance are provided by governments or related institutions, with an interest rate
below the current applicable market rate, the effect of this favourable interest is regarded as a government
grant. The loan or assistance is initially recognised and measured at fair value and the government grant
is measured as the difference between the initial carrying value of the loan and the proceeds received.
The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
m. Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted, at the reporting date in the countries where the Company operates
and generates taxable income.
Current income tax relating to items recognised outside the statement of profit and loss is recognised
outside the statement of profit and loss (either in other comprehensive income or in equity). Current tax
items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Management periodically evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
⢠When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss
⢠In respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, when the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable
future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused
tax credits and any unused tax losses.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and
unused tax losses can be utilised, except:
⢠When the deferred tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss
⢠In respect of deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are recognised only to the extent that it is
probable that the temporary differences will reverse in the foreseeable future and taxable profit
will be available against which the temporary differences can be utilized
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date
and are recognised to the extent that it has become probable that future taxable profits will allow the
deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside the statement of profit and loss is recognised outside
the statement of profit and loss (either in other comprehensive income or in equity). Deferred tax items
are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity
and the same taxation authority.
Minimum alternate tax (MAT)
MAT paid in a year is charged to the statement of profit and loss as current tax. MAT credit available is
recognized as an asset only to the extent that there is convincing evidence that the Company will pay
normal income tax during the period, i.e., the period for which MAT credit is allowed to be carried forward.
In the year in which the Company recognizes MAT credit as an asset for Credit Available in respect of
Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The Company reviews the "MAT
credit entitlement" asset at each reporting date and writes down the asset to the extent the Company
does not have convincing evidence that it will pay normal tax during the specified period.
n. Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement
of borrowings. Borrowing costs directly attributable to the acquisition, construction or development of an
asset that necessarily takes a substantial period of time to get ready for its intended use or sale are
capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the year
they occur.
o. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the
arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the
arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to
use the asset or assets, even if that right is not explicitly specified in an arrangement.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers
substantially all the risks and rewards incidental to ownership to the Company is classified as a finance
lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the
leased property or, if lower, at the present value of the minimum lease payments. Lease payments are
apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the
statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they
are capitalized in accordance with the Company''s general policy on the borrowing costs.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty
that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the
shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight¬
line basis over the lease term unless the same is in line with inflation.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an
asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line
basis over the term of the relevant lease unless the same is in line with inflation. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and
recognised over the lease term on the same basis as rental income. Contingent rents are recognised as
revenue in the period in which they are earned.
p. Inventories
Cost of inventories have been computed to include all cost of purchases, cost of conversion and other cost
incurred in bringing the inventories of their present location and condition.
Stores and spares and loose tools are valued at lower of cost or net realisable value. However, materials
and other items held for operation and maintenance of fixed assets are not written down below cost.
Costs are determined on unsold Certified Emission Reduction (CER) and Renewable Energy Certificate
(REC) are considered as Inventory and valued on the basis of costs which are directly allocated to it. The
cost is assigned to inventories on First in First Out (FIFO) basis. This CERs and RECs are valued at lower of
cost or net realisable value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and estimated costs necessary to make the sale.
q. Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be
impaired. If any indication exists, the Company estimates the asset''s recoverable amount. An asset''s
recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of
disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of those from other assets or group of assets.
When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre¬
tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken
into account. If no such transactions can be identified, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or
other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are
prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These
budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term
growth rate is calculated and applied to project future cash flows after the fifth year. To estimate cash
flow projections beyond periods covered by the most recent budgets/forecasts, the Company extrapolates
cashflow projections in the budget using a steady or declining growth rate for subsequent years, unless an
increasing rate can be justified. In any case, this growth rate does not exceed the long-term average
growth rate for the products, industries, or country or countries in which the entity operates, or for the
market in which the asset is used.
Intangible assets under development are tested for impairment annually. Impairment losses including
impairment on inventories are recognised in the statement of profit and loss.
For the assets, an assessment is made at each reporting date to determine whether there is an indication
that previously recognised impairment losses no longer exist or have decreased. If such indication exists,
the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss
is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable
amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount
of the asset does not exceed its recoverable amount, nor exceeds the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
Such reversal is recognised in the statement of profit and loss.
Mar 31, 2018
a. Basis of Preparation
The financial statements have been prepared on an accrual basis and under historical cost convention, except Defined benefit Plan - Plan assets and certain financial Assets & Liabilities which are measured at fair value (refer accounting policy regarding financial instruments). The accounting policies are consistently applied by the Company during the year and are consistent with those used in previous year except for the changes in accounting policies required to be made on adoption of Indian Accounting Standards notified under the Companies Act, 2013.
Statement of compliance
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (referred to as âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015. These are the Companyâs 1st Ind AS financial statements. The date of transition is April 1, 2016. Previous yearâs numbers in the financial statements have been restated to Ind AS. In accordance with Ind AS 101 First-time Adoption of Indian Accounting Standards, the Company has presented a reconciliation from the presentation of financial statements under Accounting Standards notified under the Companies (Accounting Standards) Rules,2006 (âPrevious GAAPâ) to Ind AS of Shareholdersâ equity as at March 31, 2017 and April 1, 2016 and of the comprehensive net income for the year ended March 31, 2017. Refer to note 30 for information on how the Company adoptedInd-AS.
b. Significant accounting judgements, estimates and assumptions
The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures, including the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
This note provides an overview of the areas that involved a higher degree of judgement or complexity and of items which are likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.
c. Critical Estimates and Judgements Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or Cash Generating Units (CGUâs) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if no such transactions can be identified, an appropriat evaluation model is used.
Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates.The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
Provisions
Provisions are determined based on the best estimate required to settle the obligation at the reporting date. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Estimate of current and deferred tax
The Companyâs tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the Companyâs total tax charge necessarily involves a degree of estimation and judgement in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through a formal legal process. The final resolution of some of these items may give rise to material profits/losses and/or cash flows.
The complexity of the Companyâs structure makes the degree of estimation and judgement more challenging. The resolution of issues is not always within the control of the Company and it is often dependent on the efficiency of the legal processes in the relevant taxing jurisdictions in which the Company operates. Issues can, and often do, take many years to resolve. Payments in respect of tax liabilities for an accounting period result from payments on account and on the final resolution of open items. As a result, there can be substantial differences between the tax charge in the statement of profit and loss and tax payments.
d. Property, Plant and Equipment Recognition and Measurement
Property, plant and equipment are stated at cost of acquisition or construction net of accumulated depreciation and impairment loss (if any). Internally manufactured property, plant and equipment are capitalised at cost, including non-cenvatable excise duty (blocked ITC credit under GST), wherever applicable. All significant costs relating to the acquisition and installation of property, plant and equipment are capitalised. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in statement of profit and loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
Subsequent costs
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised.
Depreciation
The identified components are depreciated over their useful lives, the remaining asset is depreciated over the life of the principal asset.
Depreciation for identified components, other than Furniture & Fixtures and Vehicles is computed on straight line method, and for Furniture & Fixtures and Vehicleson written down value method based on useful lives, determined based on internal technical evaluation as follows:
Useful lives of the above assets are as per prescribed under Part C of Schedule II of the Companies Act, 2013.
De-reocgnition / Disposal
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
e. Intangible assets
Recognition and Measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in statement of profit and loss in the period in which the expenditure is incurred.
Amortisation
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.
The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset, as provided by another Ind-AS.
The summary of amortization policy applied to the Companyâs intangible assets is as below:
De-reocgnition / Disposal
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the net carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.
Research and development costs
Research costs are expensed as incurred.
Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate:
- The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
- Its intention to complete and its ability and intention to use or sell the asset
- How the asset will generate future economic benefits
- The availability of resources to complete the asset
- The ability to measure reliably the expenditure during development Such capitalized expenditure is reflected as intangible under development.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation expense is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
During the period of development, the asset is tested for impairment annually.
f. Investment in subsidiaries and joint ventures
The Company has accounted for its investment in subsidiaries and joint ventures at cost less accumulated impairment.
g. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
h. Financial Instruments
In accordance with Ind AS 101 provisions related to first time adoption, the Company has elected to apply following exceptions/exemptions prospectively from April 1, 2016.
- Classification and measurement of financial assets have been done based on facts and circumstances existed on transition date.
- Elected to continue carrying value of equity instruments in subsidiaries, associates and jointly controlled entities as deemed cost on transition date.
- De-recognition of financial assets and financial liabilities have been applied prospectively.
- Applied the requirements of relating to accounting for difference between fair value of financial asset or financial liability from its transaction price of Ind-AS 109 prospectively.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
- Debt instruments at amortized cost
- Debt instruments at fair value through other comprehensive income (FVTOCI)
- Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL)
- Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in other income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.
Debt instrument at FVTOCI
A âdebt instrumentâ is classified as at the FVTOCI if both of the following criteria are met :
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The assetâs contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the P&L. On de-recognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatchâ).
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. For all equity instruments not held for trading, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the Companyâs balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpassthroughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance
b) Financial assets that are debt instruments and are measured as at FVTOCI
c) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind-AS11 and Ind-AS 18
d) Loan commitments which are not measured as at FVTPL
e) Financial guarantee contracts which are not measured as at FVTPL
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables or contract revenue receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:
- All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss. This amount is reflected under the head âother expensesâ in the statement of profit and loss.
- The balance sheet presentation for various financial instruments is described below:
Financial assets measured as at amortised cost, contractual revenue receivables and lease receivables:
ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
- Debt instruments measured at FVTOCI:
Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value. Rather, ECL amount is presented as âaccumulated impairment amountâ in the OCI.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
The Company does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which are credit impaired on purchase/ origination.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities designated upon initial recognition as at fair value through profit or loss. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Loans and borrowings
This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
This category generally applies to borrowings.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
i. Fair value measurement
The Company measures financial instruments at fair value on initial recognition. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
External valuers are involved for valuation of significant assets, such as properties and unquoted financial assets. Involvement of external valuers is decided upon annually by the management. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The management decides, after discussions with the Companyâs external valuers, which valuation techniques and inputs to use for each case.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes. Please refer to Note No 27
- Disclosures for valuation methods, significant estimates and assumptions
- Quantitative disclosures of fair value measurement hierarchy
- Financial instruments (including those carried at amortised cost)
j. Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Company operates and generates taxable income.
Current income tax relating to items recognised outside the statement of profit and loss is recognised outside the statement of profit and loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
- When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
- In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
- When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
- In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside the statement of profit and loss is recognised outside the statement of profit and loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT)
MAT paid in a year is charged to the statement of profit and loss as current tax. MAT credit available is recognized as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as ââMAT Credit Entitlement.ââ The Company reviews the ââMAT credit entitlementââ asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
k. Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings.Borrowing costs directly attributable to the acquisition, construction or development of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the year they occur.
l. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to April 1, 2016, the Company has determined whether the arrangements contain a lease on the basis of facts and circumstances existing on the date of transition.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Companyâs general policy on the borrowing costs.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term unless the same is in line with inflation.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease unless the same is in line with inflation. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
m. Inventories
Cost of inventories have been computed to include all cost of purchases, cost of conversion and other cost incurred in bringing the inventories of their present location and condition.
Stores and spares and loose tools are valued at lower of cost or net realisable value. However, materials and other items held for operation and maintenance of fixed assets are not written down below cost.
Costs are determined on unsold Certified Emmision Reduction (CER) and Renewable Energy Certificate (REC) are considered as Inventory and valued on the basis of costs which are directly allocated to it. The cost is assigned to inventories on First in First Out (FIFO) basis. This CERs and RECs are valued at lower of cost or net realisable value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
n. Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, the Company extrapolates cashflow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the entity operates, or for the market in which the asset is used.
Intangible assets under development are tested for impairment annually. Impairment losses including impairment on inventories, are recognised in the statement of profit and loss.
For the assets, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the assetâs or CGUâs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assetâs recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceeds the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss.
o. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consists of cash and short-term deposits, as defined above, net of outstanding bank overdrafts and cash credit facilities as they are considered an integral part of the Companyâs cash management.
p. Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant relates to an asset, it is recognized as deferred income and is allocated to statement of profit and loss over the periods and in the proportions in which depreciation on those assets is charged.
When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognised and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
q. Provisions
A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value (unless the effect of time value of money is material) and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities and contingent assets, if any, are disclosed in the notes to accounts.
r. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Revenue from sales of electricity is recognized when all the significant risks and rewards of ownership have been passed to the buyer, usually on the basis of electricity wheeled into MSEB grid and jointly certified.
Income from Certified Emission Reduction (CERs) units and Renewable Energy Certificates (RECs) is recognised in the period of its actual sales.
Claims / Insurance Claim etc. are accounted for when no significant uncertainties are attached to their eventual receipt.
Interest income
For all financial assets measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
Interest income is included in other income in the statement of profit and loss.
Dividend income
Dividend income from investments is recognised when the right to receive the payment is established, which is generally when shareholders approve the dividend. Dividend income is included in other income in the statement of profit and loss.
s. Foreign currencies
The Companyâs financial statements are presented in INR, which is also its functional currency.
Transactions and Translations
Foreign currency transactions are recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
Exchange difference that arise on settlement of monetary items or on reporting at each balance sheet date of the Companyâs monetary items at the closing rate are recognized as income or expenses in the period in which they arise.
The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or statement of profit and loss are also recognised in OCI or statement of profit and loss, respectively).
t. Post employment and other employee benefits
Post-employment benefits are employee benefits (other than termination benefits and short term employee benefits) that are payable after the completion of employment.
Provident fund
Provident fund is a defined contribution plan covering eligible employees. The Company and the eligible employees make a monthly contribution to the provident fund maintained by the Regional Provident Fund Commissioner equal to the specified percentage of the basic salary of the eligible employees as per the scheme. The contributions to the provident fund are charged to the statement of profit and loss for the year when the contributions are due. The Company has no obligation, other than the contribution payable to the provident fund.
Gratuity
Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully cover the same under cash accumulation policy of the Life Insurance Corporation of India. The employeeâs gratuity is a defined benefit funded plan.
The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected unit credit method.
Remeasurements, comprising of actuarial gains and losses, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet as asset/liability with a corresponding debit or credit to retained earnings through OCI in the period in which they occur.
Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognised in statement of profit and loss on the earlier of:
- The date of the plan amendment or curtailment, and
- The date that the Company recognises related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
- Service costs comprising of current service costs, past-service costs, gains and losses on curtailments and nonroutine settlements; and
- Net interest expense or income Superannuation
Superannuation is a defined contribution plan covering eligible employees. The contribution to the superannuation fund managed by the insurer is equal to the specified percentage of the basic salary of the eligible employees as per the scheme. The contribution to this scheme is charged to the statement of profit and loss on an accrual basis. There are no other contributions payable other than contribution payable to the respective fund.
Privilege Leave Benefits
Accumulated leave, which is expected to be utilized within the next twelve months, is treated as shortterm employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date.
Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the entire leave encashment liability as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date. Where the Company has the unconditional legal and contractual right to defer the settlement for a period beyond twelve months, the same is presented as non-current liability.
u. Contingent Liabilities
A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
v. Dividend to equity holders of the Company
The Company recognises a liability to make cash or non-cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
w. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.
x. Earnings per share
The Company reports basic and diluted earnings per share (EPS) in accordance with Indian Accounting Standard 33 ââEarnings per Shareââ.Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
y. Recent Accounting Pronouncements
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration
On March 28, 2018, Ministry of Corporate Affairs (ââMCAââ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018.
Ind AS 115- Revenue from Contract with Customers
On March 28, 2018, Ministry of Corporate Affairs (ââMCAââ) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers. The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.
Mar 31, 2017
1 A. Corporate Information:
BF Utilities Ltd. ("the Company" or "BFUL") is a public company domiciled in India and incorporated on 15 September,2000 under the provisions of the Companies Act,1956 ("the Act"). Its shares are listed on National stock exchange and Bombay stock exchange in India. The Company is engaged in the generation of electricity through wind mills. The Company''s CIN is L40108PN2000PLC015323.
In Previous Year, the Company has changed its Financial Year as under.
Earlier Financial Year was 1st October to 30th September to New Financial year -1st April to 31st March, every year.
Accordingly, the Company has closed its Financial year on 31st March, 2016 for the broken period of 1st Ocotber, 2015 to 31st March, 2016. Therefore previous period''s figures are for six months only.
This change in Financial year is made to align the Financial year of the Company with the provisions of the Companies Act, 2013.
1 B. Basis of preparation:
The financial statements of the Company for the year ended 31st March, 2017 have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) to comply in all material respects with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with the Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. These financial statements are prepared on an accrual basis and under the historical cost convention except financial instruments which have been measured at fair value. The accounting policies are consistently applied by the Company during the year and are consistent with those used in previous period.The Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities. The accounting policies adopted in the preparation of the financial statements are consistent with those of previous period.
1 C. Summary of significant accounting policies:
a) Use of estimates:
The preparation of the financial statements is in conformity with Indian GAAP and requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities at the end of reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
b) Tangible fixed assets (Property, Plant and Equipment):
Tangible fixed assets (Property, Plant and Equipment) are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price and directly attributable costs of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. The Company has adopted the provisions of para 46A of AS
11 "The Effects of Changes in Foreign Exchange Rates", accordingly, exchange difference arising on settlement of long term foreign currency borrowing relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. Capital work-in-progress includes cost of fixed assets that are not ready to be put to use. Subsequent expenditure related to an item of fixed asset (Property, Plant and Equipment) is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the year/ period during which such expenses are incurred. Gains or losses arising from disposal of fixed assets (Property, Plant and Equipment) are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.
c) Intangible assets:
(i) Acquired intangible assets
Intangible assets acquired separately are measured on the initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the assets to its working condition for its intended use. Gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.
(ii) Research and development cost
Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the Company can demonstrate:
- technical feasibility of completing the intangible asset so that it will be available for use or sale;
- its intention to complete the asset and use or sell it;
- its ability to use or sell the asset;
- how the asset will generate probable future economic benefits;
- the availability of adequate resources to complete the development and to use or sell the asset;
- the ability to measure reliably the expenditure attributable to the intangible asset during development.
Such capitalized expenditure is reflected as intangible under development.
Expenditure on New Projects and Expenditure during Construction etc. on Tangible and Intangible Assets :In case of new projects or expansion at the existing units of the Company, expenditure incurred including interest and financing costs of specific borrowings, prior to commencement of commercial production is being capitalized to the cost of assets.
d) Capital work-in-progress:
Projects under which assets are not ready for their intended use or projects which are suspended during extended period in which active development is interrupted and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable /eligible interest.
e) Depreciation and amortization:
Depreciation on tangible fixed assets (Property, Plant and Equipment) is provided using the Straight Line Method (''SLM'') except in respect of Furniture & Fittings and Vehicle is provided using Written down value (''WDV'') over the useful lives of the assets estimated by the management.
Useful lives of the above assets are as per prescribed under Part C of Schedule II of the Companies Act, 2013.
Individual assets whose cost does not exceed Rs. 5,000 are fully depreciated in the year of acquisition.
Depreciation on additions to assets during the year/ period is being provided on pro-rate basis from the date of acquisition/ installation. Depreciation on assets sold, discarded or demolished during the year, is being provided at their respective rates on pro-rate basis upto the date on which such assets are sold, discarded or demolished.
Intangible assets are amortized on a straight line basis over their estimated useful lives commencing from the day the asset is made available for use.
f) Impairment of tangible and intangible assets:
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. Recoverable amount of intangible under development that is not yet available for use is estimated at least at each year/ period end even if there is no indication that the asset is impaired. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using an appropriate discount factor that reflects current market assessments of the time value of money and risks specific to the asset. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, except in case of revalued assets.
g) Investments:
Investments which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Current investments are carried in the financial statements at lower of cost and fair value, determined on category of investment basis. Long-term investments presented in the financial statements are carried at cost. However, provision for diminution in value is made to recognize a decline, other than temporary decline, in the value of investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.
h) Inventory:
Cost of inventories have been computed to include all cost of purchases, cost of conversion and other cost incurred in bringing the inventories of their present location and condition.
Stores and spares and loose tools are valued at lower of cost or net realizable value. However, materials and other items held for operation and maintenance of fixed assets are not written down below cost.
Costs are determined on unsold Certified Emmision Reduction (CER) and Renewable Energy Certificate (REC) are considered as Inventory and valued on the basis of costs which are directly allocated to it, as per guidance note issued by ICAI dated 11th February, 2012. The cost is assigned to inventories on First in First Out (FIFO) basis. This CERs and RECs are valued at lower of cost or net realizable value.
i) Cash and cash equivalents:
Cash and cash equivalents in the cash flow statement comprises of cash at bank, cash in hand and short term deposits with an original maturity period of three months or less.
j) Cash flow statement:
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
k) Borrowing Cost:
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings. Borrowing costs directly attributable to the acquisition, construction or development of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the year they occur.
l) Leases:
(i) Where the Company as a less or, Leased assets under finance leases, such amounts are recognized as receivables at an amount equal to the net investment in the lease and the finance income is recognized based on a constant rate of return on the outstanding net investment.Leased assets under operating lease, lease income from such lease is recognized in the statement of profit and loss account on straight line basis over the lease term unless another systematic basis is more representative of the time pattern in which benefit derived from the use of leases asset is diminished.
(ii) Where the Company is the lessee,Leases, where the less or effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
m) Revenue Recognition:
Revenue recognition is generally postponed if the receipt can not be estimated with reasonable certainty.
(a) Income from Electricity generated is accounted on the basis of electricity wheeled into MSEB grid and jointly certified.
(b) Interest is accrued over the period on the amount of loan/investment.
(c) Dividend is accrued in the year in which it is declared, whereby right to receive is established.
(d) Profit/Loss on sale of investment is recognized on contract date.
(e) Income from Certified Emission Reduction (CERs) units and Renewable Energy Certificates (RECs) is recognized in the period of its actual sales.
n) Foreign currency translation:
Foreign currency transactions and balances:
Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates at the date when the values were determined.
o) Retirement and other employee benefits:
(i) Provident fund
Eligible employees receive benefits from a provident fund, which is a defined benefit plan. Both the employee and the Company make monthly contributions to the provident fund plan equal to a specific percentage of the covered employee''s salary. The Company contributes a part of the contributions to the "BFUL Staff Provident Fund Trust". The rate at which the annual interest is payable to the beneficiaries by the trust is being administered by the government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate. The guidance note on implementation of AS-15 (revised 2005) "Employee Benefits", states that benefits involving employer established provident funds, which requires interest shortfalls to be provided, are to be considered as defined benefit plans. On and From 1st March, 2017 Company deposit the required contribution to the Government Provident Fund.
(ii) Gratuity
Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully cover the same under cash accumulation policy of the Life Insurance Corporation of India. The employee''s gratuity is a defined benefit funded plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected unit credit method as at the date of the Balance Sheet and the shortfall in the fair value of the Plan Assets is recognized as an obligation.
(iii) Superannuation
Retirement benefit in the form of superannuation plan is defined contribution plan. Defined contribution to Life Insurance Corporation of India for employees covered under Superannuation scheme are accounted at the rate of 15% of such employee''s basic salary.
(iv) Privilege Leave Benefits
Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the entire leave encashment liability as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date. Where the Company has the unconditional legal and contractual right to defer the settlement for a period beyond twelve months, the same is presented as non-current liability.
p) Income taxes:
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current reporting period and reversal of timing differences of earlier reporting periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. MAT credit available is recognized as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement." The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
q) Provisions:
A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
r) Earnings per share (EPS):
Basic earnings per share are calculated by dividing the net profit for the year/ period attributable to equity shareholders by weighted average number of equity shares outstanding during the year/ period. The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares), if any, occurred during the reporting period, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit for the year/ period attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year/ period, are adjusted for the effects of all dilutive potential equity shares.
s) Contingent liabilities:
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
t) Domestic transfer pricing:
The Company enters into "domestic transactions" with specified parties that are subject to the Transfer Pricing regulations under the Income Tax Act, 1961 (the ''Regulations''). The pricing of such domestic transactions will need to comply with the arm''s length principle under the Regulations. These Regulations, inter alia, also require the maintenance of prescribed documents and information including furnishing a report from an accountant which is to be filed with the Income Tax authorities. The Company has undertaken necessary steps to comply with the Regulations. The Management is of the opinion that the domestic transactions are at arm''s length and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
u) Segment reporting:
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment Intersegment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses/ assets / liabilities".
2 (b) Terms / rights attached to equity shares :
The Company has only one class of equity shares having a par value of Rs. 5/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend, as and when proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting except in case of interim dividend.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
2 (c) Shares held by holding/ultimate holding company and/or their subsidiaries/associates
The Company being ultimate holding company there are no shares held by any other holding, ultimate holding company and their subsidiaries/associates
2 (d) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date
There are no bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding reporting date.
* The shareholding information is based on legal ownership of shares and has been extracted from the records of the Company including register of shareholders / members.
5 (a) As required by and in accordance with Accounting Standard 22 - ''Taxes on Income'' prescribed by Companies (Accounts) Rules, 2014, the Company recognizes deferred tax which result from timing differences after ignoring deferred tax adjustments originating and reversing during the tax holiday period. The deferred tax adjustments reversing outside the tax holiday period have been recomputed consequent to the company''s claim of determining the tax holiday period with reference to the date of each phase of implementation as against the earlier intended period with reference to a single date of implementation for the wind power generation business.
Mar 31, 2016
1 A. Corporate Information:
BF Utilities Ltd. ("the Company" or "BFUL") is a public company domiciled in India and incorporated on 15 September, 2000 under the provisions of the Companies Act,1956 ("the Act"). Its shares are listed on National stock exchange and Bombay stock exchange in India. The Company is engaged in the generation of electricity through wind mills. The Company''s CIN is L40108PN2000PLC015323.
The Company has changed its Financial Year as under.
Existing Financial Year -1st October to 30th September, every year to New Financial year -1st April to 31st March, every year.
Accordingly, the Company has closed its Financial year on 31st March, 2016 for the broken period of 1st October, 2015 to 31st March, 2016
This change in Financial year is made to align the existing Financial year of the Company with the provisions of the Companies Act, 2013.
1 B. Basis of preparation:
The financial statements of the Company for the period ended 31 March, 2016 have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) to comply in all material respects with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with the Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. These financial statements are prepared on an accrual basis and under the historical cost convention except financial instruments which have been measured at fair value. The accounting policies are consistently applied by the Company during the period and are consistent with those used in previous year.
1 C. Summary of significant accounting policies:
a) Use of estimates:
The preparation of the financial statements is in conformity with Indian GAAP and requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities at the end of reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
b) Tangible fixed assets:
Tangible fixed assets are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price and directly attributable costs of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. The Company has adopted the provisions of para 46A of AS 11 "The Effects of Changes in Foreign Exchange Rates", accordingly, exchange difference arising on settlement of long term foreign currency borrowing relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. Capital work-in-progress includes cost of fixed assets that are not ready to be put to use. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period / year during which such expenses are incurred. Gains or losses arising from disposal of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.
c) Intangible assets:
(i) Acquired intangible assets
Intangible assets acquired separately are measured on the initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the assets to its working condition for its intended use. Gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.
(ii) Research and development cost
Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the Company can demonstrate:
- technical feasibility of completing the intangible asset so that it will be available for use or sale;
- its intention to complete the asset and use or sell it;
- its ability to use or sell the asset;
- how the asset will generate probable future economic benefits;
- the availability of adequate resources to complete the development and to use or sell the asset;
- the ability to measure reliably the expenditure attributable to the intangible asset during development.
Such capitalized expenditure is reflected as intangible under development.
Expenditure on New Projects and Expenditure during Construction etc. on Tangible and Intangible Assets :In case of new projects or expansion at the existing units of the Company, expenditure incurred including interest and financing costs of specific borrowings, prior to commencement of commercial production is being capitalized to the cost of assets.
d) Capital work-in-progress:
Projects under which assets are not ready for their intended use or projects which are suspended during extended period in which active development is interrupted and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable /eligible interest.
e) Depreciation and amortization:
Depreciation on tangible fixed assets is provided using the Straight Line Method (''SLM'') except in respect of Furniture & Fittings and Vehicle is provided using Written down value (''WDV'') over the useful lives of the assets estimated by the management.
Useful lives of the above assets are as per prescribed under Part C of Schedule II of the Companies Act, 2013.
Individual assets whose cost does not exceed Rs. 5,000 are fully depreciated in the year of acquisition.
Depreciation on additions to assets during the period / year is being provided on pro-rate basis from the date of acquisition/ installation. Depreciation on assets sold, discarded or demolished during the year, is being provided at their respective rates on pro-rate basis up to the date on which such assets are sold, discarded or demolished.
Intangible assets are amortized on a straight line basis over their estimated useful lives commencing from the day the asset is made available for use.
f) Impairment of tangible and intangible assets:
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. Recoverable amount of intangible under development that is not yet available for use is estimated at least at each reporting period / year end even if there is no indication that the asset is impaired. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using an appropriate discount factor that reflects current market assessments of the time value of money and risks specific to the asset. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, except in case of revalued assets.
g) Investments:
Investments which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Current investments are carried in the financial statements at lower of cost and fair value, determined on category of investment basis. Long-term investments presented in the financial statements are carried at cost. However, provision for diminution in value is made to recognize a decline, other than temporary decline, in the value of investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.
h) Inventory:
Unsold Certified Emission Reduction (CER) and Renewable Energy Certificate (REC) are considered as Inventory and valued on the basis of costs which are directly allocated to it, as per guidance note issued by ICAI dated 11 February 2012. The cost is assigned to inventories on First in First Out (FIFO) basis. This CERs and RECs are valued at lower of cost or net realizable value.
i) Cash and cash equivalents:
Cash and cash equivalents in the cash flow statement comprises of cash at bank, cash in hand and short term deposits with an original maturity period of three months or less.
j) Cash flow statement:
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
k) Borrowing Cost:
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings. Borrowing costs directly attributable to the acquisition, construction or development of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the year they occur.
l) Leases:
(i) Where the Company as a less or, Leased assets under finance leases, such amounts are recognized as receivables at an amount equal to the net investment in the lease and the finance income is recognized based on a constant rate of return on the outstanding net investment. Leased assets under operating lease, lease income from such lease is recognized in the statement of profit and loss account on straight line basis over the lease term unless another systematic basis is more representative of the time pattern in which benefit derived from the use of leases asset is diminished.
(ii) Where the Company is the lessee, Leases, where the less or effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
m) Revenue Recognition:
Revenue recognition is generally postponed if the receipt cannot be estimated with reasonable certainty
(a) Income from Electricity generated is accounted on the basis of electricity wheeled into MSEB grid and jointly certified.
(b) Interest is accrued over the period on the amount of loan/investment.
(c) Dividend is accrued in the year in which it is declared, whereby right to receive is established.
(d) Profit/Loss on sale of investment is recognized on contract date.
(e) Income from Certified Emission Reduction (CERs) units and Renewable Energy Certificates (RECs) is recognized in the period of its actual sales.
n) Foreign currency transaction:
Foreign currency transactions and balances:
Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates at the date when the values were determined.
o) Retirement and other employee benefits:
(i) Provident fund
Eligible employees receive benefits from a provident fund, which is a defined benefit plan. Both the employee and the Company make monthly contributions to the provident fund plan equal to a specific percentage of the covered employee''s salary. The Company contributes a part of the contributions to the "BF Utilities Limited Staff Provident Fund Trust". The rate at which the annual interest is payable to the beneficiaries by the trust is being administered by the government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate. The guidance note on implementation of AS-15 (revised 2005) "Employee Benefits", states that benefits involving employer established provident funds, which requires interest shortfalls to be provided, are to be considered as defined benefit plans.
(ii) Gratuity
Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully cover the same under cash accumulation policy of the Life Insurance Corporation of India. The employee''s gratuity is a defined benefit funded plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected unit credit method as at the date of the Balance Sheet and the shortfall in the fair value of the Plan Assets is recognized as an obligation.
(iii) Superannuation
Retirement benefit in the form of superannuation plan is defined contribution plan. Defined contribution to Life Insurance Corporation of India for employees covered under Superannuation scheme are accounted at the rate of 15% of such employee''s basic salary.
(iv) Privilege Leave Benefits
Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the entire leave encashment liability as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date. Where the Company has the unconditional legal and contractual right to defer the settlement for a period beyond twelve months, the same is presented as non-current liability.
p) Income taxes:
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current reporting period and reversal of timing differences of earlier reporting periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. MAT credit available is recognized as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement". The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
q) Provisions:
A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
r) Earnings per share (EPS):
Basic earnings per share are calculated by dividing the net profit for the period / year attributable to equity shareholders by weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares), if any, occurred during the reporting period, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year, are adjusted for the effects of all dilutive potential equity shares.
s) Contingent liabilities:
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
t) Domestic transfer pricing:
The Company enters into "domestic transactions" with specified parties that are subject to the Transfer Pricing regulations under the Income Tax Act, 1961 (the ''Regulations''). The pricing of such domestic transactions will need to comply with the arm''s length principle under the Regulations. These Regulations, inter alia, also require the maintenance of prescribed documents and information including furnishing a report from an accountant which is to be filed with the Income Tax authorities. The Company has undertaken necessary steps to comply with the Regulations. The Management is of the opinion that the domestic transactions are at arm''s length and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
u) Segment reporting:
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment Intersegment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue/ expenses/ assets/ liabilities".
Sep 30, 2015
1 A. Corporate Information:
BF Utilities Ltd. ("the Company" or "BFUL") is a public company
domiciled in India and incorporated on 15 September,2000 under the
provisions of the Companies Act,1956 ("the Act"). Its shares are listed
on National stock exchange and Bombay stock exchange in India. The
Company is engaged in the generation of electricity through wind mills.
The Company's CIN is L40108PN2000PLC015323.
1 B. Basis of preparation:
The financial statements of the Company for the year ended 30
September, 2015 have been prepared in accordance with generally
accepted accounting principles in India (Indian GAAP) to comply in all
material respects with the Accounting Standards specified under Section
133 of the Companies Act, 2013, read with the Rule 7 of the Companies
(Accounts) Rules, 2014 and the relevant provisions of the Companies
Act, 2013. These financial statements are prepared on an accrual basis
and under the historical cost convention except financial instruments
which have been measured at fair value. The accounting policies are
consistently applied by the Company during the year and are consistent
with those used in previous year.
1 C. Summary of significant accounting policies:
a) Use of estimates:
The preparation of the financial statements is in conformity with
Indian GAAP and requires the management to make judgments, estimates and
assumptions that affect the reported amounts of revenue, expenses,
assets and liabilities and disclosure of contingent liabilities at the
end of reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
b) Tangible fixed assets:
Tangible fixed assets are stated at cost, less accumulated depreciation
and accumulated impairment losses, if any. The cost comprises the
purchase price and directly attributable costs of bringing the asset to
its working condition for its intended use. Any trade discounts and
rebates are deducted in arriving at the purchase price. The Company has
adopted the provisions of para 46A of AS 11 "The Effects of Changes in
Foreign Exchange Rates", accordingly, exchange difference arising on
settlement of long term foreign currency borrowing relating to
acquisition of depreciable fixed assets are adjusted to the cost of the
respective assets and depreciated over the remaining useful life of
such assets. Capital work-in-progress includes cost of fixed assets
that are not ready to be put to use.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the year during which
such expenses are incurred.
Gains or losses arising from disposal of fixed assets are measured as
the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is disposed.
Expenditure on New Projects and Expenditure during Construction etc. :
In case of new projects or expansion at the existing units of the
Company, expenditure incurred including interest and financing costs of
specific borrowings, prior to commencement of commercial production is
being capitalised to the cost of assets.
c) Intangible assets:
(i) Acquired intangible assets
Intangible assets acquired separately are measured on the initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the assets to its working condition for
its intended use.
Gains or losses arising from disposal of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is disposed.
(ii) Research and development cost
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is recognized as an intangible asset
when the Company can demonstrate:
- technical feasibility of completing the intangible asset so that it
will be available for use or sale;
- its intention to complete the asset and use or sell it;
- its ability to use or sell the asset;
- how the asset will generate probable future economic benefits;
- the availability of adequate resources to complete the development
and to use or sell the asset;
- the ability to measure reliably the expenditure attributable to the
intangible asset during development.
Such capitalized expenditure is reflected as intangible under
development.
d) Capital work-in-progress:
Projects under which assets are not ready for their intended use or
projects which are suspended during extended period in which active
development is interrupted and other capital work-in-progress are
carried at cost, comprising direct cost, related incidental expenses
and attributable /eligible interest.
e) Depreciation and amortization:
Depreciation on tangible fixed assets is provided using the Straight
Line Method ('SLM') except in respect of Furniture & Fittings and
Vehicle is provided using Written Down Value ('WDV') over the useful
lives of the assets estimated by the management.
Useful lives of the above assets are as per prescribed under Part C of
Schedule II of the Companies Act, 2013.
Individual assets whose cost does not exceed Rs. 5,000 are fully
depreciated in the year of acquisition.
Depreciation on additions to assets during the year is being provided
on pro-rate basis from the date of acquisition/ installation.
Depreciation on assets sold, discarded or demolished during the year,
is being provided at their respective rates on pro-rate basis upto the
date on which such assets are sold, discarded or demolished.
Intangible assets are amortized on a straight line basis over their
estimated useful lives commencing from the day the asset is made
available for use.
f) Impairment of tangible and intangible assets:
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors.
Recoverable amount of intangible under development that is not yet
available for use is estimated at least at each reporting period / year
end even if there is no indication that the asset is impaired.
An impairment loss is recognized wherever the carrying amount of an
asset exceeds its recoverable amount. The recoverable amount is the
greater of the asset's net selling price and value in use. In assessing
value in use, the estimated future cash flows are discounted to their
present value using an appropriate discount factor that reflects
current market assessments of the time value of money and risks
specific to the asset.
When there is indication that an impairment loss recognised for an
asset in earlier accounting periods no longer exists or may have
decreased, such reversal of impairment loss is recognised in the
Statement of Profit and Loss, except in case of revalue assets.
g) Investments:
Investments which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties. Current investments are carried in
the financial statements at lower of cost and fair value, determined on
category of investment basis. Long- term investments presented in the
financial statements are carried at cost. However, provision for
diminution in value is made to recognize a decline, other than
temporary decline, in the value of investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
h) Inventory:
Unsold Certified Emission Reduction (CER) and Renewable Energy
Certificate (REC) are considered as Inventory and valued on the basis
of costs which are directly allocated to it, as per guidance note
issued by ICAI dated 11 February 2012. The cost is assigned to
inventories on First in First Out (FIFO) basis. This CERs and RECs are
valued at lower of cost or net realisable value.
i) Cash and cash equivalents:
Cash and cash equivalents in the cash flow statement comprises of cash
at bank, cash in hand and short term deposits with an original maturity
period of three months or less.
j) Cash flow statement:
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
k) Borrowing Cost:
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction
or development of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the year they occur.
l) Leases:
(i) Where the Company as a less or,
Leased assets under finance leases, such amounts are recognised as
receivables at an amount equal to the net investment in the lease and
the finance income is recognised based on a constant rate of return on
the outstanding net investment. Leased assets under operating lease,
lease income from such lease is recognised in the statement of profit
and loss account on straight line basis over the lease term unless
another systematic basis is more representative of the time pattern in
which benefit derived from the use of leases asset is diminished.
(ii) Where the Company is the lessee,
Leases, where the less or effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognised as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
m) Revenue Recognition:
Revenue recognition is generally postponed if the receipt can not be
estimated with reasonable certainty.
(a) Income from Electricity generated is accounted on the basis of
electricity wheeled into MSEB grid and jointly certified.
(b) Interest is accrued over the period on the amount of
loan/investment.
(c) Dividend is accrued in the year in which it is declared, whereby
right to receive is established.
(d) Profit/Loss on sale of investment is recognised on contract date.
(e) Income from Certified Emission Reduction (CERs) units and Renewable
Energy Certificates (RECs) is recognised in the year of its actual
sales.
n) Foreign currency transaction:
Foreign currency transactions and balances:
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are reported using the exchange rate
prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency
are reported using the exchange rate at the date of the transaction.
Non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rates at the date when the values were determined.
o) Retirement and other employee benefits:
(i) Provident fund
Eligible employees receive benefits from a provident fund, which is a
defined benefit plan. Both the employee and the Company make monthly
contributions to the provident fund plan equal to a specific percentage
of the covered employee's salary. The Company contributes a part of the
contributions to the "BF Utilities Limited Staff Provident Fund Trust".
The rate at which the annual interest is payable to the beneficiaries
by the trust is being administered by the government. The Company has
an obligation to make good the shortfall, if any, between the return
from the investments of the trust and the notified interest rate. The
guidance note on implementation of AS- 15 (revised 2005) "Employee
Benefits", states that benefits involving employer established
provident funds, which requires interest shortfalls to be provided, are
to be considered as defined benefit plans.
(ii) Gratuity
Payment for present liability of future payment of gratuity is being
made to approved gratuity fund, which fully cover the same under cash
accumulation policy of the Life Insurance Corporation of India. The
employee's gratuity is a defined benefit funded plan. The present value
of the obligation under such defined benefit plan is determined based
on the actuarial valuation using the Projected unit credit method as at
the date of the Balance Sheet and the shortfall in the fair value of
the Plan Assets is recognized as an obligation.
(iii) Superannuation
Retirement benefit in the form of superannuation plan is defined
contribution plan. Defined contribution to Life Insurance Corporation
of India for employees covered under Superannuation scheme are
accounted at the rate of 15% of such employee's basic salary.
(iv) Privilege Leave Benefits
Accumulated leave, which is expected to be utilized within the next
twelve months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
reporting date. Actuarial gains/losses are immediately taken to the
statement of profit and loss and are not deferred.
The Company presents the entire leave encashment liability as a current
liability in the balance sheet, to the extent it does not have an
unconditional right to defer its settlement for twelve months after the
reporting date. Where the Company has the unconditional legal and
contractual right to defer the settlement for a period beyond twelve
months, the same is presented as non-current liability.
p) Income taxes:
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the Company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
reporting period and reversal of timing differences of earlier
reporting periods. Deferred tax is measured based on the tax rates and
the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax assets to the
extent that it has become reasonably certain or virtually certain, as
the case may be that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes- down the carrying amount of a
deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realized. Any such write-down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the same taxable entity and the same taxation
authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. MAT credit available is recognized
as an asset only to the extent that there is convincing evidence that
the Company will pay normal income tax during the period, i.e., the
period for which MAT credit is allowed to be carried forward. In the
year in which the Company recognizes MAT credit as an asset in
accordance with the Guidance Note on Accounting for Credit Available in
respect of Minimum Alternative Tax under the Income-tax Act, 1961, the
said asset is created by way of credit to the statement of profit and
loss and shown as 'MAT Credit Entitlement.' The Company reviews the
'MAT credit entitlement' asset at each reporting date and writes down
the asset to the extent the Company does not have convincing evidence
that it will pay normal tax during the specified period.
q) Provisions:
A provision is recognized when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions
(excluding retirement benefits) are not discounted to its present value
and are determined based on the best estimate required to settle the
obligation at the reporting date. These estimates are reviewed at each
balance sheet date and adjusted to reflect the current best estimates.
r ) Earnings per share (EPS):
Basic earnings per share are calculated by dividing the net profit for
the year attributable to equity shareholders by weighted average number
of equity shares outstanding during the year. The weighted average
number of equity shares outstanding during the year is adjusted for
events such as bonus issue, bonus element in a rights issue, share
split, and reverse share split (consolidation of shares), if any,
occurred during the reporting period, that have changed the number of
equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit for the year attributable to the equity shareholders and the
weighted average number of equity shares outstanding during the year,
are adjusted for the effects of all dilutive potential equity shares.
s ) Contingent liabilities:
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
t ) Domestic transfer pricing:
The Company enters into 'domestic transactions' with specified parties
that are subject to the Transfer Pricing regulations under the Income
Tax Act, 1961 (the 'Regulations'). The pricing of such domestic
transactions will need to comply with the arm's length principle under
the Regulations. These Regulations, inter alia, also require the
maintenance of prescribed documents and information including
furnishing a report from an accountant which is to be filed with the
Income Tax authorities.
The Company has undertaken necessary steps to comply with the
Regulations. The Management is of the opinion that the domestic
transactions are at arm's length and hence the aforesaid legislation
will not have any impact on the financial statements, particularly on
the amount of tax expense and that of provision for taxation.
u) Segment reporting:
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment Inter- segment revenue is accounted on the
basis of transactions which are primarily determined based on market /
fair value factors.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under "unallocated revenue/ expenses/ assets/
liabilities".
Sep 30, 2014
Basis of Preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and the other relevant provisions
of the Companies Act, 1956 (which continue to be applicable in respect
of Section 133 of the Companies Act, 2013 in terms of General Circular
15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs).
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
Current-Non Current classification :
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Operating Cycle :
Based on nature of business and activities carried out by the Company,
time between acquisition of assets and their realisation in cash and
cash equivalent, the Company has ascertained its operating cycle as 12
months for the purpose of current / non-current classification of
assets and liabilities.
I System of Accounting :
i) The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except those with
significant uncertainties.
ii) Financial Statements are based on historical cost. These costs are
not adjusted to reflect the impact of the changing value in the
purchasing power of money.
iii) The preparation of Financial Statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses and disclosure of contingent assets
and liabilities. The estimates and assumptions used in accompanying
financial statements are based upon Management''s evaluations of the
relevant facts and circumstances as of the date of the financial
statements. Actual results may differ from estimates and assumptions
used in preparing the accompanying financial statements. Any revisions
to accounting estimates are recognized prospectively in current and
future periods.
II Fixed Assets and depreciation :
A. Fixed Assets are stated at their original cost of acquisition
including incidental expenses related to acquisition and installation
of the concerned assets. Fixed Assets are shown net of accumulated
depreciation (except free hold land).
B. Expenditure on New Projects and Expenditure during Construction etc.
:
In case of new projects or expansion at the existing units of the
Company, expenditure incurred including interest and financing costs of
specific borrowings, prior to commencement of commercial production is
being capitalised to the cost of assets.
C. Depreciation:
Tangible Assets:
Fixed Assets:
i Depreciation on Buildings, Plant & Machinery, Electrical
Installations, and Office Equipments is being provided on "Straight
Line Method" basis in accordance with the provisions of Section
205(2)(b) of the Companies Act, 1956, in the manner and at the rates
specified in Schedule XIV to the said Act.
ii Depreciation in respect of Furniture & Fittings and Vehicles is
being provided on "Written down value" basis in accordance with the
provisions of Section 205(2)(a) of the Companies Act, 1956 in the
manner and at the rates specified in Schedule XIV to the said Act.
iii Depreciation on additions to assets during the year is being
provided at their respective rates on pro-rata basis from the date of
acquisition/installation.
iv Depreciation on assets sold, discarded or demolished during the
year, is being provided at their respective rates on pro-rata basis up
to the date on which such assets are sold, discarded or demolished.
v Project under which assets are not ready for their intended use are
carried at cost comprising direct cost, related incidental expenses and
attributable or eligible interest.
Intangible Assets:
i) Acquired intangible assets
Intangible assets acquired separately are measured on the initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the assets to its working condition for
its intended use.
Gains or losses arising from disposal of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is disposed.
ii) Research and development cost
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is recognized as an intangible asset
when the Company can demonstrate :
- technical feasibility of completing the intangible asset so that it
will be available for use or sale;
- its intention to complete the asset and use or sell it;
- its ability to use or sell the asset;
- how the asset will generate probable future economic benefits;
- the availability of adequate resources to complete the development
and to use or sell the asset; and
- the ability to measure reliably the expenditure attributable to the
intangible asset during development.
Such capitalized expenditure is reflected as intangible under
development.
iii) Capital work-in-progress:
Projects under which assets are not ready for their intended use or
projects which are suspended during extended period in which active
development is interrupted and other capital work-in- progress are
carried at cost, comprising direct cost, related incidental expenses
and attributable /eligible interest.
III Impairment of Assets :
The Company tests for impairments at the close of the accounting
period, if and only if, there are indications that suggest a possible
reduction in the recoverable value of an asset. If the recoverable
value amount of an Asset, i.e. the net realisable value or the economic
value in use of a cash generating unit, is lower than the carrying
amount of the Asset, the difference is provided for as impairment.
However, if subsequently, the position reverses and the recoverable
amount becomes higher than the carrying value, then the provision to
the extent of the difference is reversed, but not higher than the
amount provided for.
IV Investments :
i) Non-Current Investments : Investments are valued at cost of
acquisition. Trade and Other investments made by the Company are of a
long Term nature and hence diminution in the value of investments are
generally not considered to be of other than temporary nature. However
where, in the opinion of the management, considering the facts and
circumstances prevailing at the balance sheet date, diminution, if any,
is determined to be other than temporary, provision for the same is
made and investments are stated net of such provisions.
ii) Current Investment : Current Investments are stated at cost less
provision for diminution, as necessary, if any.
V Cash and cash equivalents (for purposes of Cash Flow Statement) :
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition).
VI Cash flow statement :
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
VII Revenue Recognition :
Revenue recognition is generally postponed if the receipt can not be
estimated with reasonable certainty.
a) Income from Electricity generated is accounted on the basis of
electricity wheeled into MSEB grid and jointly certified.
b) Interest is accrued over the period and the amount of
loan/investment.
c) Dividend is accrued in the year in which it is declared, whereby
right to receive is established.
d) Profit/Loss on sale of investment is recognised on contract date.
e) Income from Certified Emission Reduction units (CERs) and Renewable
Energy Certificates (RECs) is recognised in the year of its actual
sales.
VIII Borrowing Cost :
Interest on borrowings is recognised in the Statement of Profit & Loss
except interest incurred on borrowings specifically received for
projects are capitalized to the cost of asset until such time the asset
is ready to be put to use for intended purpose.
Borrowing Costs include foreign exchange differences on the long term
foreign currency loan to the extent they are attributable to interests
differential on the said loans.
IX Foreign Currency Transactions :
Foreign Currency transactions are recognised on the basis of foreign
exchange rate on the date of transaction.
Foreign Currency Conversions :
Current Assets and other liabilities in foreign currency and foreign
currency exposure in respect of foreign currency loans other than for
financing fixed assets outstanding at the close of the financial year
are valued at the contracted and/or appropriate exchange rates at the
close of the year. The loss or gain due to fluctuation of exchange
rates is charged to Statement of Profit and Loss.
X Employee Benefits :
i) Employee Benefit in the form of Provident Fund and Pension Scheme
whether in pursuance of law or otherwise which are defined
contributions are accounted on accrual basis and charged to Statement
of Profit & Loss.
ii) Gratuity :
Payment for present liability of future payment of gratuity is being
made to approved gratuity fund, which fully cover the same under cash
accumulation policy of the Life Insurance Corporation of India. The
employee''s gratuity is a defined benefit funded plan. The present value
of the obligation under such defined benefit plan is determined based
on the actuarial valuation using the Projected Unit Credit Method as at
the date of the Balance Sheet and the shortfall in the fair value of
the Plan Assets is recognized as an obligation.
iii) Superannuation :
Defined contribution to Life Insurance Corporation of India for
employees covered under Superannuation scheme are accounted at the rate
of 15% of such employee''s annual salary.
iv) Privilege Leave Benefits :
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarialvaluation using the projected unit credit method at the
reporting date. Actuarial gains/losses are immediately taken to the
Statement of Profit and Loss and are not deferred.The Company presents
the entire leave as a current liability in the Balance Sheet, since it
does not have an unconditional right to defer its settlement for twelve
months after the reporting date.
The Company presents the entire leave as a current liability in the
Balance Sheet, since it does not have an unconditional right to defer
its settlement for twelve months after the reporting date.
v) a. Defined contribution plansThe Company''s contribution to employee
state insurance scheme, provident fund and superannuation fund are
considered as defined contribution plans and are charged as an expense
as they fall due based on the amount of contribution required to be
made.
b. Defined benefit plansFor defined benefit plans in the form of
gratuity fund and post-employment medical benefits, the cost of
providing benefits is determined using the Projected Unit Credit
method, with actuarial valuations being carried out at each balance
sheet date. Actuarial gains and losses are recognised in the Statement
of Profit and Loss in the period in which they occur. Past service
cost is recognised immediately to the extent that the benefits are
already vested and otherwise is amortised on a straight-line basis over
the average period until the benefits become vested. The retirement
benefit obligation recognised in the Balance Sheet represents the
present value of the defined benefit obligation as adjusted for
unrecognised past service cost, as reduced by the fair value of scheme
assets. Any asset resulting from this calculation is limited to past
service cost, plus - . the present value of available refunds and
reductions in future contributions to the schemes.
XI Taxation :
Provision for taxation is made on the basis of taxable profits computed
on current year profit in accordance with Income Tax Act. Deferred Tax
resulting from timing differences is accounted for at the applicable
rate of tax to the extent the timing differences are expected to
crystallize, after ignoring deferred tax adjustments originating and
reversing during tax holiday period, in case of Deferred Tax
Liabilities with reasonable certainty and in case of Deferred tax
Assets with virtual certainty that there would be adequate future
taxable income against which Deferred Tax Asset can be realized.
XII Provisions :
Necessary Provisions are made for present obligations that arise out of
past events prior to the Balance Sheet date entailing future outflow of
economic resources. Such provisions reflect best estimates based on
available information.
XIII Inventories :
Unsold Certified Emission Reduction (CER) and Renewable Energy
Certificate (REC) are considered as Inventory and valued on the basis
of costs which are directly allocated to it, as per guidance note
issued by ICAI dated 11 February 2012. The cost is assigned to
inventories on First in First Out (FIFO) basis.
XIV Leases :
Where the Company is the lessee
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognised as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
XV Earning Per Share (EPS) :
Basic earnings per share are calculated by dividing the net profit for
the year attributable to equity shareholders by weighted average number
of equity shares outstanding during the year. The weighted average
number of equity shares outstanding during the year is adjusted for
events such as bonus issue, bonus element in a rights issue, share
split, and reverse share split (consolidation of shares), if any
occurred during the reporting period, that have changed the number of
equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit for the year attributable to the equity shareholders and the
weighted average number of equity shares outstanding during the year,
are adjusted for the effects of all dilutive potential equity shares.
XVI Contingent liabilities :
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrences or non
occurrences of one or more uncertain future events beyond the control
of the Group or a present obligation that is not recognised because it
is not probable that an outflow of resources will be required to settle
the obligation. A contingent liability also arises in extremely rare
cases where there is liability that can not be recognised because it
cannot be measured reliably. The Group does not recognise a contingent
liability but discloses its existence in the financial statements.
XVII Domestic Transfer Pricing :
The Company enters into "domestic transactions" with specified parties
that are subject to the Transfer Pricing regulations under the Income
Tax Act, 1961 (the ''Regulations''). The pricing of such domestic
transactions will need to comply with the arm''s length principle under
the Regulations. These Regulations, inter alia, also require the
maintenance of prescribed documents and information including
furnishing a report from an accountant which is to be filed with the
Income Tax authorities. The Company has undertaken necessary steps to
comply with the Regulations. The Management is of the opinion that the
domestic transactions are at arm''s length and hence the aforesaid
legislation will not have any impact on the financial statements,
particularly on the amount of tax expense and that of provision for
taxation.
Sep 30, 2013
Basis of Preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and the other relevant provisions
of the Companies Act, 1956.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
Current-Non Current classification: All assets and liabilities have been
classified as current or non-current as per the Company''s normal
operating cycle and other criteria set out in the Revised Schedule VI
to the Companies Act, 1956.
Operating Cycle: Based on nature of business and activities carried out
by the Company, time between acquisition of assets and their
realisation in cash and cash equivalent, the Company has ascertained
its operating cycle as 12 months for the purpose of current /
non-current classification of assets and liabilities.
I System of Accounting :
i) The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except those with
significant uncertainties.
ii) Financial Statements are based on historical cost. These costs are
not adjusted to reflect the impact of the changing value in the
purchasing power of money.
iii) The preparation of Financial Statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses and disclosure of contingent assets
and liabilities. The estimates and assumptions used in accompanying
financial statements are based upon Management''s evaluations of the
relevant facts and circumstances as of the date of the financial
statements. Actual results may differ from estimates and assumptions
used in preparing the accompanying financial statements. Any revisions
to accounting estimates are recognized prospectively in current and
future periods.
II Fixed Assets and depreciation :
A. Fixed Assets are stated at their original cost of acquisition
including incidental expenses related to acquisition and installation
of the concerned assets. Fixed Assets are shown net of accumulated
depreciation (except free hold land).
B. Expenditure on New Projects and Expenditure during Construction
etc. :
In case of new projects or expansion at the existing units of the
Company, expenditure incurred including interest and financing costs of
specific borrowings, prior to commencement of commercial production is
being capitalised to the cost of assets.
C. Depreciation:
Fixed Assets:
i Depreciation on Buildings, Plant & Machinery, Electrical
Installations, and Office Equipments is being provided on "Straight
Line Method" basis in accordance with the provisions of Section
205(2)(b) of the Companies Act, 1956, in the manner and at the rates
specified in Schedule XIV to the said Act.
ii Depreciation in respect of Furniture & Fittings and Vehicles is
being provided on "Written down value" basis in accordance with the
provisions of Section 205(2)(a) of the Companies Act, 1956 in the
manner and at the rates specified in Schedule XIV to the said Act.
iii Depreciation on additions to assets during the year is being
provided at their respective rates on pro-rata basis from the date of
acquisition/installation.
iv Depreciation on assets sold, discarded or demolished during the
year, is being provided at their respective rates on pro-rata basis up
to the date on which such assets are sold, discarded or demolished.
III Impairment of Assets :
The Company tests for impairments at the close of the accounting
period, if and only if, there are indications that suggest a possible
reduction in the recoverable value of an asset. If the recoverable
value amount of an Asset, i.e. the net realisable value or the economic
value in use of a cash generating unit, is lower than the carrying
amount of the Asset, the difference is provided for as impairment.
However, if subsequently, the position reverses and the recoverable
amount becomes higher than the carrying value, then the provision to
the extent of the difference is reversed, but not higher than the
amount provided for.
IV Investments:
i) Non-Current Investments : Investments are valued at cost of
acquisition. Trade and Strategic investments made by the Company are of
a long Term nature and hence diminution in the value of investments are
generally not considered to be of other than temporary nature. However
where, in the opinion of the management, considering the facts and
circumstances prevailing at the balance sheet date, diminution, if any,
is determined to be other than temporary, provision for the same is
made and investments are stated net of such provisions.
ii) Current Investment : Current Investments are stated at cost less
provision for diminution, as necessary, if any.
V Cash and cash equivalents (for purposes of Cash Flow Statement):
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition).
VI Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
VII Revenue Recognition : -
Revenue recognition is generally postponed if the receipt can not be
estimated with reasonable certainty.
a) Income from Electricity generated is accounted on the basis of
electricity wheeled into MSEB grid and jointly certified.
b) Interest is accrued over the period and the amount of
loan/investment.
c) Dividend is accrued in the year in which it is declared, whereby
right to receive is established.
d) Profit/Loss on sale of investment is recognised on contract date.
e) Income from Certified Emission Reduction units (CERs) and Renewable
Energy Certificates (RECs) is recognised in the year of its actual
sales.
VIII Borrowing Cost : - Interest on borrowings is recognised in the
Statement of Profit & Loss except interest incurred on borrowings
specifically received for projects are capitalized to the cost of asset
until such time the asset is ready to be put to use for intended
purpose.
Borrowing Costs include foreign exchange differences on the long term
foreign currency loan to the extent they are attributable to interests
differential on the said loans.
IX Foreign Currency Transactions : - Foreign Currency transactions are
recognised on the basis of foreign exchange rate on the date of
transaction.
Foreign Currency Conversions : - Current Assets and other liabilities
in foreign currency and foreign currency exposure in respect of foreign
currency loans other than for financing fixed assets outstanding at the
close of the financial year are valued at the contracted and/or
appropriate exchange rates at the close of the year. The loss or gain
due to fluctuation of exchange rates is charged to Statement of Profit
and Loss.
X Employee Benefits :
i) Employee Benefit in the form of Provident Fund and Pension Scheme
whether in pursuance of law or otherwise which are defined
contributions are accounted on accrual basis and charged to Statement
of Profit & Loss.
ii) Gratuity:
Payment for present liability of future payment of gratuity is being
made to approved gratuity fund, which fully cover the same under cash
accumulation policy of the Life Insurance Corporation of India. The
employee''s gratuity is a defined benefit funded plan. The present value
of the obligation under such defined benefit plan is determined based
on the actuarial valuation using the Projected Unit Credit Method as at
the date of the Balance Sheet and the shortfall in the fair value of
the Plan Assets is recognized as an obligation.
iii) Superannuation:
Defined contribution to Life Insurance Corporation of India for
employees covered under Superannuation scheme are accounted at the rate
of 15% of such employee''s annual salary.
iv) Privilege Leave Benefits:
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
reporting date. Actuarial gains/losses are immediately taken to the
Statement of Profit and Loss and are not deferred.
The Company presents the entire leave as a current liability in the
Balance Sheet, since it does not have an unconditional right to defer
its settlement for twelve months after the reporting date.
XI Taxation :
Provision for taxation is made on the basis of taxable profits computed
on current year profit in accordance with Income Tax Act. Deferred Tax
resulting from timing differences is accounted for at the applicable
rate of tax to the extent the timing differences are expected to
crystallize, after ignoring deferred tax adjustments originating and
reversing during tax holiday period, in case of Deferred Tax
Liabilities with reasonable certainty and in case of Deferred tax
Assets with virtual certainty that there would be adequate future
taxable income against which Deferred Tax Asset can be realized.
XII Provisions :
Necessary Provisions are made for present obligations that arise out of
past events prior to the Balance Sheet date entailing future outflow of
economic resources. Such provisions reflect best estimates based on
available information.
XIII Research & development Expenditure :
Research & development expenditure is charged to Revenue under the
natural head of account in the year in which it is incurred. However,
expenditure incurred at development phase, where it is reasonably
certain that outcome of research will be commercially exploited to
yield economic benefits to the Company, is considered as an intangible
asset.
XIV Inventories
Unsold Certified Emission Reduction (CER) and Renewable Energy
Certificate (REC) are considered as Inventory and valued on the basis
of costs which are directly allocated to it, as per guidance note
issued by ICAI dated 11 February 2012. The cost is assigned to
inventories on First in First Out (FIFO) basis.
XV Leases
Where the Company is the lessee Leases, where the lesser effectively
retains substantially all the risks and benefits of ownership of the
leased item, are classified as operating leases. Operating lease
payments are recognised as an expense in the statement of profit and
loss on a straight-line basis over the lease term.
XVI Earning Per Share (EPS)
Basic earnings per share are calculated by dividing the net profit for
the year attributable to equity shareholders by weighted average number
of equity shares outstanding during the year. The weighted average
number of equity shares outstanding during the year is adjusted for
events such as bonus issue, bonus element in a rights issue, share
split, and reverse share split (consolidation of shares), if any
occurred during the reporting period, that have changed the number of
equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit for the year attributable to the equity shareholders and the
weighted average number of equity shares outstanding during the year,
are adjusted for the effects of all dilutive potential equity shares.
Sep 30, 2012
I System of Accounting:
i) The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except those with
significant uncertainties.
ii) Financial Statements are based on historical cost. These costs are
not adjusted to reflect the impact of the changing value in the
purchasing power of money.
iii) The preparation of Financial Statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses and disclosure of contingent assets
and liabilities. The estimates and assumptions used in accompanying
financial statements are based upon Management''s evaluations of the
relevant facts and circumstances as of the date of the financial
statements. Actual results may differ from estimates and assumptions
used in preparing the accompanying financial statements. Any revisions
to accounting estimates are recognized prospectively in current and
future periods.
II Fixed Assets and depreciation:
A. Fixed Assets are stated at their original cost of acquisition
including incidental expenses related to acquisition and installation
of the concerned assets. Fixed Assets are shown net of accumulated
depreciation (except free hold land).
B. Expenditure on New Projects and Expenditure during Construction
etc. :
In case of new projects or expansion at the existing units of the
Company, expenditure incurred including interest and financing costs of
specific borrowings, prior to commencement of commercial production is
being capitalised to the cost of assets.
C. Depreciation:
Fixed Assets:
i Depreciation on Buildings, Plant & Machinery, Electrical
Installations, and Office Equipments is being provided on ''Straight
Line Method'' basis in accordance with the provisions of Section
205(2)(b) of the Companies Act, 1956, in the manner and at the rates
specified in Schedule XIV to the said Act.
ii Depreciation in respect of Furniture & Fittings, Vehicles is being
provided on ''Written down value'' basis in accordance with the
provisions of Section 205(2)(a) of the Companies Act, 1956 in the
manner and at the rates specified in Schedule XIV to the said Act.
iii Depreciation on additions to assets during the year is being
provided at their respective rates on pro-rata basis from the date of
acquisition/installation.
iv Depreciation on assets sold, discarded or demolished during the
year, is being provided at their respective rates on pro-rata basis up
to the date on which such assets are sold, discarded or demolished.
III Impairment of Assets :
The Company tests for impairments at the close of the accounting
period, if and only if, there are indications that suggest a possible
reduction in the recoverable value of an asset. If the recoverable
value amount of an Asset, i.e. the net realisable value or the economic
value in use of a cash generating unit, is lower than the carrying
amount of the Asset, the difference is provided for as impairment.
However, if subsequently, the position reverses and the recoverable
amount becomes higher than the carrying value, then the provision to
the extent of the difference is reversed, but not higher than the
amount provided for.
IV Investments:
i) Non-Current Investments : Investments are valued at cost of
acquisition. Trade and Strategic investments made by the Company are of
a long Term nature and hence diminution in the value of investments are
generally not considered to be of other than temporary nature. However
where, in the opinion of the management, considering the facts and
circumstances prevailing at the balance sheet date, diminution, if any,
is determined to be other than temporary, provision for the same is
made and investments are stated net of such provisions.
ii) Current Investment : Current Investments are stated at cost less
provision for diminution, as necessary, if any.
V Revenue Recognition : -
Revenue recognition is generally postponed if the receipt can not be
estimated with reasonable certainty.
a) Income from Electricity generated is accounted on the basis of
electricity wheeled into MSEB grid and jointly certified.
b) Interest is accrued over the period and the amount of
loan/investment.
c) Dividend is accrued in the year in which it is declared, whereby
right to receive is established.
d) Profit/Loss on sale of investment is recognised on contract date.
e) Income from Certified Emission Reduction units is accrued in the
year of generation of wind power if the receipt of and value of units
is reasonably certain.
f) Income from Renewable Energy Certificates is accrued in the year of
generation of power (See Note No. 36)
VI Borrowing Cost : - Interest on borrowings is recognised in the
Statement of Profit & Loss except interest incurred on borrowings
specifically received for projects are capitalized to the cost of asset
until such time the asset is ready to be put to use for intended
purpose.
Borrowing Costs include foreign exchange differences on the long term
foreign currency loan to the extent they are attributable to interests
differential on the said loans.
VII Foreign Currency Transactions : - Foreign Currency transactions are
recognised on the basis of foreign exchange rate on the date of
transaction.
Foreign Currency Conversions : - Current Assets and other liabilities
in foreign currency and foreign currency exposure in respect of foreign
currency loans other than for financing fixed assets outstanding at the
close of the financial year are valued at the contracted and/or
appropriate exchange rates at the close of the year. The loss or gain
due to fluctuation of exchange rates is charged to Statement of Profit
and Loss.
VIII Employee Benefits :
i) Employee Benefit in the form of Provident Fund and Pension Scheme
whether in pursuance of law or otherwise which are defined
contributions are accounted on accrual basis and charged to Statement
of Profit & Loss.
ii) Gratuity:
Payment for present liability of future payment of gratuity is being
made to approved gratuity fund, which fully cover the same under cash
accumulation policy of the Life Insurance Corporation of India. The
employee''s gratuity is a defined benefit funded plan. The present value
of the obligation under such defined benefit plan is determined based
on the actuarial valuation using the Projected Unit Credit Method as at
the date of the Balance Sheet and the shortfall in the fair value of
the Plan Assets is recognized as an obligation.
iii) Superannuation:
Defined contribution to Life Insurance Corporation of India for
employees covered under Superannuation scheme are accounted at the rate
of 15% of such employee''s annual salary.
iv) Privilege Leave Benefits:
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
reporting date. Actuarial gains/losses are immediately takento the
Statement of Profit and Loss and are not deferred.
The Company presents the entire leave as a current liability in the
Balance Sheet, since it does not have an unconditional right to defer
its settlement for twelve months after the reporting date.
IX Taxation :
Provision for taxation is made on the basis of taxable profits computed
on current year profit in accordance with Income Tax Act. Deferred Tax
resulting from timing differences is accounted for at the applicable
rate of tax to the extent the timing differences are expected to
crystallize, after ignoring deferred tax adjustments originating and
reversing during tax holiday period, in case of Deferred Tax
Liabilities with reasonable certainty and in case of Deferred tax
Assets with virtual certainty that there would be adequate future
taxable income against which Deferred Tax Asset can be realized.
X Provisions:
Necessary Provisions are made for present obligations that arise out of
past events prior to the Balance Sheet date entailing future outflow of
economic resources. Such provisions reflect best estimates based on
available information.
XI Research & development Expenditure:
Research & development expenditure is charged to Revenue under the
natural head of account in the year in which it is incurred. However,
expenditure incurred at development phase, where it is reasonably
certain that outcome of research will be commercially exploited to
yield economic benefits to the Company, is considered as an intangible
asset.
Sep 30, 2010
1. System of Accounting:
- The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except those with
significant uncertainties.
- Financial Statements are based on historical cost. These costs are
not adjusted to reflect the impact of the changing value in the
purchasing power of money.
- The preparation of Financial Statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses and disclosure of contingent assets
and liabilities. The estimates and Assumptions used in accompanying
financial statements are based upon Managements evaluations of the
relevant facts and circumstances as of the date of the financial
statements. Actual results may differ from estimates and assumptions
used in preparing the accompanying financial statements. Any revisions
to accounting estimates are recognized prospectively in current and
future periods.
2. Fixed Assets and depreciation:
A. Fixed Assets are stated at their original cost of acquisition
including incidental expenses related to acquisition and installation
of the concerned assets. Fixed Assets are shown net of accumulated
depreciation (except free hold land).
B. Expenditure on New Projects and Expenditure during Construction
etc. :
In case of new projects or expansion at the existing units of the
Company, expenditure incurred including interest and financing costs of
specific borrowings, prior to commencement of commercial production is
being capitalised to the cost of assets.
C. Depreciation:
Fixed Assets:
i. Depreciation on Buildings, Plant & Machinery, Electrical
Installations, and Office Equipments is being provided on "Straight
Line Method" basis in accordance with the provisions of Section
205(2)(b) of the Companies Act, 1956, in the manner and at the rates
specified in Schedule XIV to the said Act.
ii. Depreciation in respect of Furniture & Fittings, Vehicles is being
provided on "Written down value" basis in accordance with the
provisions of Section 205(2)(a) of the Companies Act, 1956 in the
manner and at the rates specified in Schedule XIV to the said Act.
iii. Depreciation on additions to assets during the year is being
provided at their respective rates on pro-rata basis from the date of
acquisition/installation.
iv. Depreciation on assets sold, discarded or demolished during the
year, is being provided at their respective rates on pro-rata basis up
to the date on which such assets are sold, discarded or demolished.
3. Impairment of Assets :
The management, assesses for any impairment of assets or cash
generating units, in indicators, external or internal, suggests
possibilities of reduction in net realizable value of assets or value
in use of cash generating units below its carrying costs. Impairments,
if any, will be recognized in the Profit and Loss Account.
4. Investments:
Investments are valued at cost of acquisition.
i) Long Term: Long Term Investments are stated at cost. Diminution in
the value of long term investments are generally not considered to be
of a permanent nature. However where, in the opinion of the management,
considering the facts and circumstances prevailing at the balance sheet
date, diminution, if any, is determined to be of a permanent nature,
provision for the same is made and investments are stated net of such
provisions.
ii) Short Term : Short Term Investments are stated at cost less
provision for diminution if any.
5. Revenue Recognition : -
Revenue recognition is generally postponed if the receipt can not be
estimated with reasonable certainty.
a) Income from Electricity generated is accounted on the basis of
electricity wheeled into MSEB grid and jointly certified.
b) Interest is accrued over the period and the amount of
loan/investment.
c) Dividend is accrued in the year in which it is declared, whereby
right to receive is established.
d) Profit/Loss on sale of investment is recognised on contract date.
e) Income from Certified Emission Reduction units in accrued in the
year of generation of wind power if the receipt of and value of units
is reasonably certain.
6. Borrowing Cost : - Interest on borrowings is recognised in the
profit & Loss account except interest incurred on borrowings
specifically received for projects are capitalized to the cost of asset
until such time the asset is ready to be put to use for intended
purpose.
7. Foreign Currency Conversions : - Current Assets and other
liabilities in foreign currency and foreign currency exposure in
respect of foreign currency loans other than for financing fixed assets
outstanding at the close of the financial year are valued at the
contracted and/or appropriate exchange rates at the close of the year.
The loss or gain due to fluctuation of exchange rates is charged to
Profit and Loss Account.
8. Share issue & Deferred Revenue expenses are written off in five
years.
9. Preliminary Expenses are written off in five years.
10. Employee Benefits :
- Employee Benefit in the form of Provident Fund and Pension Scheme
whether in pursuance of law or otherwise which are defined
contributions are accounted on accrual basis and charged to Profit &
Loss account.
- Gratuity:
Payment for present liability of future payment of gratuity is being
made to approved gratuity fund, which fully cover the same under cash
accumulation policy of the Life Insurance Corporation of India. The
employees gratuity is a defined benefit funded plan. The present value
of the obligation under such defined benefit plan is determined based
on the actuarial valuation using the Projected Unit Credit Method as at
the date of the Balance Sheet and the shortfall in the fair value of
the Plan Assets is recognized as an obligation.
- Superannuation:
Defined contribution to Life Insurance Corporation of India for
employees covered under Superannuation scheme are accounted at the rate
of 15% of such employees annual salary.
- Privilege Leave Benefits:
Privilege Leave benefits or compensated absences is considered as long
term unfunded benefits and is recognized on the basis of an actuarial
valuation using the Projected Unit Credit Method determined by an
appointed Actuary.
11. Taxation :
Provision for taxation is made on the basis of taxable profits computed
in accordance with the Previous Year as per Income Tax Act. Deferred
Tax resulting from timing difference between Book Profits & Tax Profits
is accounted for at the applicable rate of tax to the extent the timing
differences are expected to crystallize, after ignoring deferred tax
adjustments originating and reversing during tax holiday period, in
case of Deferred Tax Liabilities with reasonable certainty and in case
of Deferred tax Assets with virtual certainty that there would be
adequate future taxable income against which Deferred Tax Asset can be
realized.
12. Provisions:
Necessary Provisions are made for present obligations that arise out of
past events prior to the Balance Sheet date entailing future outflow of
economic resources. Such provisions reflect best estimates based on
available information.
Sep 30, 2009
1. System of Accounting:
- The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except those with
significant uncertainties.
- Financial Statements are based on historical cost. These costs are
not adjusted to reflect the impact of the changing value in the
purchasing power of money.
- Estimates and Assumptions used in preparation of the Financial
Statements are based upon Managements evaluations of the relevant
facts and circumstances as of the date of the Financial Statements,
which may differ from the actual results at a subsequent date.
2. Fixed Assets and depreciation:
A. Fixed Assets are stated at their original cost of acquisition
including incidental expenses related to acquisition and installation
of the concerned assets. Fixed Assets are shown net of accumulated
depreciation (except free hold land).
B. Expenditure on New Projects and Expenditure during Construction
etc. :
In case of new projects or expansion at the existing units of the
Company, expenditure incurred including interest and financing costs of
specific borrowings, prior to commencement of commercial production is
being capitalised to the cost of assets.
C. Depreciation:
Fixed Assets:
i. Depreciation on Buildings, Plant & Machinery, Electrical
Installations, and Office Equipments is being provided on "Straight
Line Method" basis in accordance with the provisions of Section
205(2)(b) of the Companies Act, 1956, in the manner and at the rates
specified in Schedule XIV to the said Act.
ii. Depreciation in respect of Furniture & Fittings, Vehicles is being
provided on "Written down value" basis in accordance with the
provisions of Section 205(2)(a) of the Companies Act, 1956 in the
manner and at the rates specified in Schedule XIV to the said Act.
iii. Depreciation on additions to assets during the year is being
provided at their respective rates on pro-rata basis from the date of
acquisition/installation.
iv. Depreciation on assets sold, discarded or demolished during the
year, is being provided at their respective rates on pro-rata basis up
to the date on which such assets are sold, discarded or demolished.
3. Impairment of Assets :
The management, assesses for any impairment of assets or cash
generating units, in indicators, external or internal, suggests
possibilities of reduction in net realizable value of assets or value
in use of cash generating units below its carrying costs. Impairments,
if any, will be recognized in the Profit and Loss Account.
4. Investments:
Investments are valued at cost of acquisition..
i) Long Term: Long Term Investments are stated at cost. Diminution in
the value of long term investments are generally not considered to be
of a permanent nature. However where, in the opinion of the management,
considering the facts and circumstances prevailing at the balance sheet
date, diminution, if any, is determined to be of a permanent nature,
provision for the same is made and investments are stated net of such
provisions.
ii) Short Term : Short Term Investments are stated at cost less
provision for diminution if any.
5. Revenue Recognition : -
Revenue recognition is generally postponed if the receipt can not be
estimated with reasonable certainty.
a) Income from Electricity generated is accounted on the basis of
electricity wheeled into MSEB grid and jointly certified.
b) Interest is accrued over the period and the amount of
loan/investment.
c) Dividend is accrued in the year in which it is declared, whereby
right to receive is established.
d) Profit/Loss on sale of investment is recognised on contract date.
e) Income from Certified Emission Reduction units in accrued in the
year of generation of wind power if the receipt of and value of units
is reasonably certain.
6. Borrowing Cost: - Interest on borrowings are recognised in the
profit & Loss account except interest incurred on borrowings
specifically received for projects are capitalized to the cost of asset
until such time the asset is ready to be put to use for intended
purpose.
7. Share issue & Deferred Revenue expenses are written off in five
years.
8. Preliminary Expenses are written off in five years.
9. Employee Benefits :
- Employee Benefit in the form of Provident Fund and Pension Scheme
whether in pursuance of law or otherwise which are defined
contributions are accounted on accrual basis and charged to Profit &
Loss account.
- Gratuity:
Payment for present liability of future payment of gratuity is being
made to approved gratuity fund, which fully cover the same under cash
accumulation policy of the Life Insurance Corporation of India. The
employees gratuity is a defined benefit funded plan. The present value
of the obligation under such defined benefit plan is determined based
on the actuarial valuation using the Projected Unit Credit Method as at
the date of the Balance Sheet and the shortfall in the fair value of
the Plan Assets is recognized as an obligation.
- Superannuation:
Defined contribution to Life Insurance Corporation of India for
employees covered under Superannuation scheme are accounted at the rate
of 1 5% of such employees annual salary.
- Privilege Leave Benefits:
Privilege Leave benefits or compensated absences is considered as long
term unfunded benefits and is recognized on the basis of an actuarial
valuation using the Projected Unit Credit Method determined by an
appointed Actuary.
10. Taxation :
Provision for taxation is made on the basis of taxable profits computed
in accordance with the Previous Year as per Income Tax Act. Deferred
Tax resulting from timing difference between Book Profits & Tax Profits
is accounted for at the applicable rate of tax to the extent the timing
differences are expected to crystallize, after ignoring deferred tax
adjustments originating and reversing during tax holiday period, in
case of Deferred Tax Liabilities with reasonable certainty and in case
of Deferred tax Assets with virtual certainty that there would be
adequate future taxable income against which Deferred Tax Asset can be
realized.
11. Provisions:
Necessary Provisions are made for present obligations that arise out of
past events prior to the Balance Sheet date entailing future outflow of
economic resources. Such provisions reflect best estimates based on
available information.