Mar 31, 2023
Significant accounting policies and notes to the standalone financial statements for the year ended 31 March 20231. Corporate Information Nature of Operations
RattanIndia Power Limited (''RPL'' or ''the Company'') is a public company domiciled and incorporated under the provisions of the Companies Act applicable in India. The registered office of the Company is situated at A-49, Ground Floor, Road No. 4, Mahipalpur, New Dellhi-110037.
The shares of the Company are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) of India. The Company is principally engaged in the business of dealing in power generation, distribution, trading and transmission and other ancillary and incidental activities.
The Company has installed capacity of five units of 270 MW each at Amravati, Maharashtra to augment the power supply in the state of Maharashtra. The Company sells the power generated from 1350 MW power project under long term Power Purchase Agreement with Maharashtra State Electricity Distribution Company Limited (MSEDCL)
The standalone financial statements for the year ended 31 March 2023 were approved by the Board of Directors on 04 May 2023.
2. General information and statement of compliance with Ind AS
a. The standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards as notified under section 133 of the Companies Act 2013 ("Act") read with the Companies (Indian Accounting Standards) Rules 2015 (by Ministry of Corporate Affairs ("MCA")), as amended, and other relevant provisions of the Act and guidelines issued by the Securities and Exchange Board of India (SEBI). The Company has uniformly applied the accounting policies during the periods presented.
b. Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is also the Company''s functional currency. All amounts have been rounded-off to the nearest lakhs, unless otherwise indicated.
3. Summary of significant accounting policies
a) Basis of preparation
The standalone financial statements have been prepared using the significant accounting policies and measurement basis as summarised below. These were used throughout all periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS.
The standalone financial statements have been prepared on going concern basis under the historical cost basis except for the following -
⢠Certain financial assets and liabilities which are measured at fair value;
⢠Defined benefit plans - liability of which is recognised as per actuarial valuation; and
⢠Share based payments which are measured at fair value of the options
b) Current and non-current classification
The Company presents assets and liabilities in the balance sheet based on current / non-current classification.
An asset is classified as current when it satisfies any of the following criteria:
⢠it is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating cycle. -it is held primarily for the purpose of being traded;
⢠it is expected to be realized within 12 months after the reporting date; or
⢠it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
A liability is classified as current when it satisfies any of the following criteria:
⢠it is expected to be settled in the Company''s normal operating cycle;
⢠it is held primarily for the purpose of being traded;
⢠it is due to be settled within 12 months after the reporting date; or
⢠the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current assets/liabilities include current portion of noncurrent financial assets/liabilities respectively. All other assets/ liabilities are classified as non-current. Deferred tax assets and liabilities (if any) are classified as noncurrent assets and liabilities.
Based on the nature of the operations and the time between the acquisition of assets for processing and their realization in cash or cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/ non-current classification of assets and liabilities.
Revenue arises from the supply of power. Revenue is recognised when it is probable that the economic benefits will flow to the Company and it can be reliably measured. Revenue is measured at the fair value of the consideration received/ receivable net of rebates and taxes. The Company applies the revenue recognition criteria to each separately identifiable component of the sales transaction as set out below.
Revenue from operation of Power plant
Revenue from operation of plant is recognised on transfer of significant risks and rewards of ownership to the buyer which is when delivered, and measured on an accrual basis based on the rates in accordance with the provisions of the Power Purchase Agreements (PPAs) entered into by the Company with the procurer/s of power. Claims for delayed payment charges and other claims are accounted by the Company on accrual basis in accordance with the provisions of the PPAs only when it is reasonable to expect ultimate collection. Goods and service tax is not applicable on generation and sale of power. Revenue also excludes taxes or other amounts collected from customers.
Refer policy on leased assets for accounting policy of customer contracts that contain a lease.
Interest Income
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Dividend income
Dividend income is recognised at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.
Borrowing costs include interest and amortisation of ancillary costs incurred to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction/ development of the qualifying asset up to the date of capitalisation of such asset are added to the cost of the assets. Any income earned on the temporary deployment/ investment of those borrowings is deducted from the borrowing costs so incurred. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use.
e) Property, plant and equipment
Recognition and initial measurement
Property plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. 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. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Any expenditure directly/ indirectly related and attributable to the construction of power projects and incidental to setting up power project facilities, incurred prior to the Commercial Operation Date (COD) of the Power Project, are accumulated under "Capital work-in-progress", to be capitalised on completion of construction of the respective power projects and facilities/ COD.
Items of stores and spares that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life.
Subsequent measurement (depreciation and useful lives)
Depreciation on property, plant and equipment is provided on the straight-line method, computed on the basis of useful lives prescribed in Schedule II to the Companies Act, 2013. Land is not subject to depreciation.
Property plant and equipment acquired and put to use for the purpose of the Project are capitalised and depreciation thereon is included in capital work-in-progress till the Project is ready for its intended use.
The residual values, useful lives and method of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-recognition
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 de-recognition 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.
Recognition and initial measurement
Intangible assets with finite useful lives are carried at cost less accumulated amortisation and impairment losses, if any. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the tax authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.
Subsequent measurement (amortisation)
The intangible assets are amortised over a period in the range of three to five years on a straight-line basis, commencing from the date the asset is available to the Company for its use. The amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern.
Derecognition of intangible assets
An intangible asset is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the consolidated statement of profit and loss when the asset is derecognised.
Determining whether an arrangement contains a lease
The Company has certain long term arrangements for sale of power. Such arrangements are evaluated to consider whether it contains a lease. It is considered to contain a lease if based on the substance of the arrangement:
(i) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset); and
(ii) the arrangement conveys a right to use the asset.
An arrangement is considered to contain a lease if facts and circumstances indicate that it is remote that one or more parties other than the purchaser will take more than an insignificant amount of the output or other utility that will be produced or generated by the asset during the term of the arrangement, and the price that the purchaser will pay for
the output is neither contractually fixed per unit of output nor equal to the current market price per unit of output as of the time of delivery of the output.
The Company''s lease asset classes primarily consist of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
⢠the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Company,
⢠the Company has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract the Company has the right to direct the use of the identified asset throughout the period of use.
The Company assess whether it has the right to direct ''how and for what purpose'' the asset is used throughout the period of use.
At lease commencement date, the Company recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Company, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).
The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Company''s incremental borrowing rate.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
The Company has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
Determining the lease term of contracts with renewal and termination options where Company is lessee - The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination.
Classification of leases - The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset''s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
The Company as a lessor Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
Finance leases
Leases which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item are classified and accounted for as finance lease. Lease rental receipts are apportioned between the finance income and capital repayment based on the implicit rate of return. Contingent rents are recognised as revenue in the period in which they are earned.
Operating leases
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognized on straightline basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
Such lease is classified as operating lease, and as such the revenue is recognized on straight line basis. Considering that the capacity charges per unit is higher in the initial years, there is a negative charge to Statement of Profit and loss account of straightlining.
h) Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/ external factors, that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment loss is reversed if the asset''s or cash-generating unit''s recoverable amount exceeds its carrying amount.
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, unless the financial instrument is designated to be measured at fair value through profit or loss (FVPL) or fair value through other comprehensive income (FVOCI).
Subsequent measurement
Financial assets at amortised cost - the financial assets are measured at the amortised cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠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.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. All other debt instruments are measured at FVOCI or FVTPL based on Company''s business model. All investments in mutual funds in scope of Ind-AS 109 are measured at FVTPL.
De-recognition of financial assets
A financial asset is primarily de-recognised 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.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Financial liabilities subsequent measurement
Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method. These liabilities include borrowings and deposits.
De-recognition of financial liabilities
A financial liability is de-recognised 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.
A derivative contract is recognised as an asset or a liability on the commitment date. Outstanding derivative contracts as at reporting date are fair valued and recognised as financial asset/ financial liability, with the resultant gain/ (loss) being recognised in 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.
j) Investments in subsidiaries
The Company has accounted for its investments in subsidiaries at cost in its standalone financial statements in accordance with Ind AS- 27, Standalone Financial Statements.
Profit/ loss on sale of investments is recognised on the date of the transaction of sale and is computed with reference to the original cost of the investment sold.
k) 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 for financial assets.
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 Company expects to receive. When estimating the cash flows, the Company considers -
⢠All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables
The Company applies approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of receivables.
Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, life time impairment loss is provided, otherwise provides for 12 month expected credit losses.
Inventories are valued at the lower of cost derived on weighted average basis and the net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of consumption, including octroi and other levies, transit insurance and receiving charges.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated necessary costs to make the sale.
Tax expense recognised in statement of profit and loss comprises the sum of deferred tax and current tax not recognised in Other Comprehensive Income ("OCI") or directly in equity.
Current Tax
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable income tax laws of India. Taxable profit differs from ''profit before tax'' as reported in the standalone statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognised amounts and where it intends either to settle on a net basis, or to realise the asset and liability simultaneously.
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amount of assets and liabilities in the financial statements and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Cash and cash equivalents comprise Cash on hand, demand deposits with banks/ corporations and short-term highly liquid investments (original maturity less than 3 months) that are readily convertible into known amount of cash and are subject to an insignificant risk of change in value.
o) Foreign currency translations
In preparing the financial statements of the Company, transactions in currencies other than the entity''s functional currency are recognised at the rate of exchange prevailing at the date of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in profit and loss in the period in which they arise.
p) Post-employment, long-term and short-term employee benefits
Defined contribution plans
The Company makes contribution to the statutory provident fund in accordance with the Employees Provident Fund and Miscellaneous Provision Act, 1952 which is a defined contribution plan and contribution paid or payable is recognised as an expense in the period in which the services are rendered.
Defined benefit plans
Gratuity is in the nature of a defined benefit plan. The liability recognised in the standalone financial statements in respect of gratuity is the present value of the defined benefit obligation at the reporting date together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is calculated at or near the reporting date by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are credited or charged to the statement of OCI in the year in which such gains or losses are determined.
Other employee benefits
Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to statement of profit and loss in the year in which such gains or losses are determined.
Short-term employee benefits
Expense in respect of other short term benefits is recognised on the basis of the amount paid or payable for the period during which services are rendered by the employee.
The Company has formulated Employee Stock Option Schemes (ESOS) and Employee Stock Purchase Schemes (ESOP) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and are in compliance with the said guidelines and SEBI (Share Based Employee Benefits) Regulation, 2014. The Schemes provide for grant of options to employees of the Company and its subsidiaries to acquire equity shares of the Company that vest in a graded manner and that are to be exercised within a specified period.
Employee stock Purchase plan (ESOP)
The fair value of options granted under Employee Stock Option Plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in statement of profit and loss, with a corresponding adjustment to equity.
r) Provisions, contingent assets and contingent liabilities
Provisions are recognized only when there is a present obligation, as a result of past events, and when a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values, where the time value of money is material.
Contingent liability is disclosed for:
⢠Possible obligations which will be confirmed only by future events not wholly within the control of the Company, or
⢠Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognised. However, when inflow of economic benefit is probable, related asset is disclosed.
s) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
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.
t) Significant management judgement in applying accounting policies and estimation uncertainty
The preparation of the Company''s standalone 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, and the disclosure of contingent liabilities. The estimates and assumptions are based on historical experience
and other factors that are considered to be relevant. The estimates and underlying assumptions are reviewed on an ongoing basis and any revisions thereto are recognized in the period of revision and future periods if the revision affects both the current and future periods. Uncertainties 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.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the standalone financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Classification of leases - The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset''s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
Defined benefit plans
The cost of the defined benefit gratuity plan, post-retirement medical benefits and other defined benefit plan and the present value of the obligation of defined benefit plans 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, expected rate of return on assets, 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, the management considers the interest rates of government bonds where remaining maturity of such bond correspond to expected term of defined benefit obligation. The mortality rate is based on mortality rates from Indian Assures Lives Mortality 2012-14. 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 the defined benefit plans are given in note 37.
Fair value measurements - Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
Provisions - At each balance sheet date on the basis of the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions. However the actual future outcome may be different from this judgement.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset.
Impairment of property, plant and equipment
Determining whether property, plant and equipment are impaired requires an estimation of the value in use of the relevant cash generating units. The value in use calculation is based on a Discounted Cash Flow model over the estimated useful life of the Power Plants. Further, the cash flow projections are based on estimates and assumptions relating to tariff, operational performance of the Plants, life extension plans, market prices of coal and other fuels, exchange variations, inflation, terminal value etc. which are considered reasonable by the Management
Impairment of Investments made / Loans given to subsidiaries
In case of investments made and Intercorporate Deposits ("ICD") given by the company to its subsidiaries, the
Management assesses whether there is any indication of impairment in the value of investment and ICDs. The carrying amount is compared with the present value of future net cash flow of the subsidiaries.
Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies, including estimates of temporary differences reversing on account of available benefits under the Income Tax Act, 1961.
Useful lives of depreciable/ amortisable assets
Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and equipment.
Income: Revenue from sale of power is recognised upon judgement by the management for recoverability of the claims based on the relevant contractual terms / provisional rates as provided by the regulator / governing tariff regulations, to the extent applicable. having regard to mechanism provided in applicable tariff regulations and the bilateral arrangement with the customers. which may be subject to adjustments in future years, on receipt of final orders of the respective Regulatory Authorities or final closure of the matter with the customers.
In certain cases, the Company has claimed compensation from the Discoms based on management''s interpretation of the regulatory orders and various technical parameters, which are subject to final verification and confirmation by the respective Discoms and hence, in these cases, the revenues have been recognised during various financial years / periods on a prudent basis with conservative parameters in the books in accordance with the terms of Power Purchase Agreement. The necessary true-up adjustments for revenue Claims (including delayed payment surcharge) are made in the books on final acknowledgement / regulatory orders / settlement of matters with respective Discoms or eventual recovery of the claims, whichever is earlier.
Classification of Trade Receivables: In view of pending litigations on regulatory matters, the classification of disputed / undisputed trade receivables is a matter of judgement based on facts and circumstances. The Company evaluates the fact pattern and circumstances, including ongoing discussions with the state-owned power distribution Companies (Discom), for each such regulatory matter pending to be adjudicated by the relevant authority. In cases, where discussions with Discom have not made reasonable progress and matters are subjudice, the related receivables are classified as disputed, even though the management is reasonably confident of recovering the dues in full, backed by the regulatory orders in favour of the Company. The management will continue to monitor the developments on regulatory matters.
u) Certain prior year amounts have been reclassified for consistency with the current year presentation. Such reclassification does not have any impact on the current year financial statements.
v) Recent accounting pronouncements:
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
a) Ind AS 1 - Presentation of Financial Statements - This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies and include corresponding amendments to Ind AS 107 and Ind AS 34. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023.
b) Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023.
c) Ind AS 12 - Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. Also there is corresponding amendment to Ind AS 101. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023.
The Company has evaluated the above amendments and the impact thereof is not expected to be material on these standalone financial statements.
Mar 31, 2018
1. Summary of significant accounting policies
a) Overall consideration
The standalone financial statements have been prepared using the significant accounting policies and measurement basis as summarised below. These were used throughout all periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS.
Basis of preparation
The standalone financial statements have been prepared on going concern basis under the historical cost basis except for the following -
- Certain financial assets and liabilities which are measured at fair value;
- Defined benefit plans - liability of which is recognised as per actuarial valuation; and
- Share based payments which are measured at fair value of the options
b) Revenue recognition
Revenue arises from the supply of power. Revenue is recognised when it is probable that the economic benefits will flow to the Company and it can be reliably measured. Revenue is measured at the fair value of the consideration received/ receivable net of rebates and taxes. The Company applies the revenue recognition criteria to each separately identifiable component of the sales transaction as set out below.
Revenue from operation of plant
Revenue from operation of plant is recognised on transfer of significant risks and rewards of ownership to the buyer which is when delivered, and measured on an accrual basis based on the rates in accordance with the provisions of the Power Purchase Agreements (PPAs) entered into by the Company with the procurer/s of power. Claims for delayed payment charges and other claims are accounted by the Company on accrual basis in accordance with the provisions of the PPAs only when it is reasonable to expect ultimate collection. Excise Duty is not applicable on generation and sale of power. Sales exclude Sales tax and Value Added Tax, where applicable.
Revenue from Power generated during trial runs is accounted on the basis of accruals and is reduced from the Preoperative expenses.
Refer policy on leased assets for accounting policy of customer contracts that contain a lease.
Service income
Revenue from Power Consultancy/ Advisory Services is recognised when services are rendered.
Interest Income
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Dividend income
Dividend income is recognised at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.
c) Borrowing costs
Borrowing costs include interest and amortisation of ancillary costs incurred to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction/ development of the qualifying asset up to the date of capitalisation of such asset are added to the cost of the assets. Any income earned on the temporary deployment/ investment of those borrowings is deducted from the borrowing costs so incurred. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use.
d) Property, plant and equipment
Recognition and initial measurement
Properties plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. 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. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Any expenditure directly/ indirectly related and attributable to the construction of power projects and incidental to setting up power project facilities, incurred prior to the Commercial Operation Date (COD) of the Power Project, are accumulated under âCapital work-in-progressâ, to be capitalised on completion of construction of the respective power projects/ COD.
Subsequent measurement (depreciation and useful lives)
Depreciation on property, plant and equipment is provided on the straight-line method, computed on the basis of useful lives prescribed in Schedule II to the Companies Act, 2013:
Properties plant and equipment acquired and put to use for the purpose of the Project are capitalised and depreciation thereon is included in capital work-in-progress till the Project is ready for its intended use.
The residual values, useful lives and method of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-recognition
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 de-recognition 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.
e) Intangible assets
Recognition and initial measurement
Intangible assets are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent measurement (amortisation)
The cost of capitalized software is amortized over a period in the range of three to five years from the date of its acquisition.
f) Leased assets
Determining whether an arrangement contains a lease
The Company has certain long term arrangements for sale of power. Such arrangements are evaluated to consider whether it contains a lease. It is considered to contain a lease if based on the substance of the arrangement:
(i) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset); and
(ii) the arrangement conveys a right to use the asset.
An arrangement is considered to contain a lease if facts and circumstances indicate that it is remote that one or more parties other than the purchaser will take more than an insignificant amount of the output or other utility that will be produced or generated by the asset during the term of the arrangement, and the price that the purchaser will pay for the output is neither contractually fixed per unit of output nor equal to the current market price per unit of output as of the time of delivery of the output.
Company as a lessee
Finance leases
Finance leases, which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments under such leases are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalised.
If there is no reasonable certainty that the Company will obtain the ownership by the end of lease term, capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Operating leases
Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rental are charged to statement of profit and loss on straightline basis except where scheduled increase in rent compensate the lessor for expected inflationary costs.
Company as a lessor
Finance leases
Leases which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item are classified and accounted for as finance lease. Lease rental receipts are apportioned between the finance income and capital repayment based on the implicit rate of return. Contingent rents are recognised as revenue in the period in which they are earned.
Operating leases
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognized on straightline basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
Such lease is classified as operating lease, and as such the revenue is recognized on straight line basis. Considering that the capacity charges per unit is higher in the initial years, there is a negative impact to P&L on account of straightlining.
g) Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/ external factors, that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment loss is reversed if the assetâs or cash-generating unitâs recoverable amount exceeds its carrying amount.
h) Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, unless the financial instrument is designated to be measured at fair value through profit or loss or fair value through other comprehensive income.
Financial assets
Subsequent measurement
i. Financial assets at amortised cost - the financial assets are measured at the amortised cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- 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.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. All other debt instruments are measured at Fair Value through other comprehensive income or Fair value through profit and loss based on Companyâs business model. All investments in mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL).
De-recognition of financial assets
A financial asset is primarily de-recognised 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.
Financial liabilities
Subsequent measurement
Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method. These liabilities include borrowings and deposits.
De-recognition of financial liabilities
A financial liability is de-recognised 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.
Derivative contracts
A derivative contract is recognised as an asset or a liability on the commitment date. Outstanding derivative contracts as at reporting date are fair valued and recognised as financial asset/ financial liability, with the resultant gain/ (loss) being recognised in 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) Investments in subsidiaries, joint ventures associates
The Company has accounted for its investments in subsidiaries and associates, joint ventures at cost in its standalone financial statements in accordance with Ind AS- 27, Standalone Financial Statements.
Profit/ loss on sale of investments is recognised on the date of the transaction of sale and is computed with reference to the original cost of the investment sold.
j) 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 for financial assets.
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 Company expects to receive. When estimating the cash flows, the Company considers -
- All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables
The Company applies approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of receivables.
Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, life time impairment loss is provided, otherwise provides for 12 month expected credit losses.
k) Inventories
Inventories are valued at the lower of cost derived on weighted average basis and the net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of consumption, including octroi and other levies, transit insurance and receiving charges.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated necessary costs to make the sale.
l) Income taxes
Tax expense recognised in statement of profit and loss comprises the sum of deferred tax and current tax not recognised in OCI or directly in equity.
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961 and in the overseas branches/ companies as per the respective tax laws. Current income tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss in OCI or equity depending upon the treatment of underlying item.
Deferred income taxes are calculated using the liability method. Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. 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 statement of profit and loss is recognised outside statement of profit and loss in OCI or equity depending upon the treatment of underlying item.
m) Cash and cash equivalents
Cash and cash equivalents comprise Cash on hand, demand deposits with banks/ corporations and short-term highly liquid investments (original maturity less than 3 months) that are readily convertible into known amount of cash and are subject to an insignificant risk of change in value.
n) Post-employment, long term and short term employee benefits
Defined contribution plans
The Company makes contribution to the statutory provident fund in accordance with the Employees Provident Fund and Miscellaneous Provision Act, 1952 which is a defined contribution plan and contribution paid or payable is recognised as an expense in the period in which the services are rendered.
Defined benefit plans
Gratuity is in the nature of a defined benefit plan. The liability recognised in the standalone financial statements in respect of gratuity is the present value of the defined benefit obligation at the reporting date together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is calculated at or near the reporting date by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are credited or charged to the statement of OCI in the year in which such gains or losses are determined.
Other employee benefits
Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to statement of profit and loss in the year in which such gains or losses are determined.
Short-term employee benefits
Expense in respect of other short term benefits is recognised on the basis of the amount paid or payable for the period during which services are rendered by the employee.
o) Share based payments
The Company has formulated Employee Stock Option Schemes (ESOS) and Employee Stock Purchase Schemes (ESOP) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and are in compliance with the said guidelines and SEBI (Share Based Employee Benefits) Regulation, 2014. The Schemes provide for grant of options to employees of the Company and its subsidiaries to acquire equity shares of the Company that vest in a graded manner and that are to be exercised within a specified period.
Employee stock Purchase plan (ESOP)
The fair value of options granted under Employee Stock Option Plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in statement of profit and loss, with a corresponding adjustment to equity.
p) Provisions, contingent assets and contingent liabilities
Provisions are recognized only when there is a present obligation, as a result of past events, and when a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values, where the time value of money is material.
Contingent liability is disclosed for:
- Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
- Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognised. However, when inflow of economic benefit is probable, related asset is disclosed.
q) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
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.
r) Significant management judgement in applying accounting policies and estimation uncertainty
The preparation of the Companyâs standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the related disclosures.
Significant management judgements
The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the standalone financial statements -
Determining whether an arrangement contains a lease - Whether an arrangement contains a lease depends on whether purchaser will take more than an insignificant amount of the output or other utility that will be produced or generated by the asset during the term of the arrangement.
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties under the relevant tax jurisdiction (see note 9).
Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Classification of leases - The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lesseeâs option to purchase and estimated certainty of exercise of such option, proportion of lease term to the assetâs economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
Recoverability of advances/ receivables - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.
Defined benefit obligation (DBO) - Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Fair value measurements - Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date.
Provisions - At each balance sheet date on the basis of the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions. However the actual future outcome may be different from this judgement.
Significant estimates
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be different.
Classification of leases - The classification of the leasing arrangement as a finance lease or operating lease requires several estimates like present value of unguaranteed residual value and present value of minimum lease payments.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the assetâs performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the Company.
Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Useful lives of depreciable/ amortisable assets
Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and equipment.
Mar 31, 2017
1. Corporate Information Nature of Operations
RattanIndia Power Limited (formerly known as India bulls Power Limited.) (the ''Parent Company'' or ''RPL'') along with its subsidiaries (together referred to as the ''Group'') is principally engaged in the business of dealing in power generation, distribution, trading and transmission and other ancillary and incidental activities.
The Parent Company is in process of setting up a Thermal Power Project at Amravati ("Amravati Project", "the Project") in the State of Maharashtra in two phases of 1,350 MW each, with an ultimate capacity of 2,700 MW. Upon COD of the Company''s Amravati Power Project - Unit-I (Phase-I) on 03 June 2013, Unit-II (Phase-I) on 28 March 2014, Unit-III (Phase-I) on 02 February 2015, Unit-IV (Phase-I) on 07 March 2015 and Unit-V (Phase-I) on 13 March 2015, the Plant & equipment and Building - plants of respective units were capitalized on respective CODs.
During the financial year 2014-15 pursuant to the announcements on restructuring of the promoters'' inter-se roles, there had been declassifications in respect of certain Promoters/ Promoter Company Entities/ Persons Acting in Concert with Promoters (PACs) of the Parent Company, as was intimated by the Parent Company to NSE and BSE (the Stock Exchanges) on 18 July 2014 and 28 October 2014 respectively.
Pursuant to an understanding arrived at between the erstwhile promoters of the India bulls group namely, Mr. Sameer Gehlaut, Mr. Saurabh Mittal and Mr. Rajiv Rattan, during the financial year 2014-2015, Mr. Sameer Gehlaut and Mr. Saurabh Mittal relinquished the ownership rights, management and control as also the supervision of the Power Business. Accordingly Mr. Sameer Gehlaut and Mr. Saurabh Mittal transferred their direct and indirect shareholding in power group entities to Mr. Rajiv Rattan and the entities owned and promoted by him pursuant to an inter-se transfer and subsequently resigned from their directorships and chairmanship/ vice chairmanship of the Power Business respectively. Thus the ownership, management and control of the Power Business and its supervision rights came to vest with Mr. Rajiv Rattan who also assumed the Chairmanship of the Power Business.
During the financial year 2014-15, in accordance with the provisions of Section 13 and other applicable provisions of the Companies Act, 2013, the members of the Parent Company through postal ballot declared on 16 October 2014, accorded their approval to change the name of the Parent Company from India bulls Power Limited. to RattanIndia Power Limited. The Company received fresh certificate of incorporation consequent upon change of name from the Registrar of Companies, Delhi dated 30 October 2014 in respect of the said change.
General information and statement of compliance with Ind AS
The consolidated financial statements of the Group have been prepared in accordance with the Indian Accounting Standards as notified under section 133 of the Companies Act 2013 read with the Companies [Indian Accounting Standards ("Ind AS")] Rules 2015 (by Ministry of Corporate Affairs (''MCA'')). The Group has uniformly applied the accounting policies during the periods presented.
For all periods up to and including the year ended 31 March 2016, the Group has prepared its consolidated financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP). These consolidated financial statements for the year ended 31 March 2017 are the first which the Group has prepared in accordance with Ind AS (see note 49 for explanation for transition to Ind AS). For the purpose of comparatives, consolidated financial statements for the year ended 31 March 2016 are also prepared under Ind AS.
The consolidated financial statements for the year ended 31 March 2017 were approved by the Board of Directors on 22 May 2017.
2. Recent accounting pronouncements
Standards issued but not yet effective
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendment to Ind AS 7, ''Statement of cash flows''. This amendment is in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of cash flows''. The amendment is applicable to the Group from 1 April 2017.
Amendments to Ind AS 7
The amendments to Ind AS 7 require the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement.
3. Summary of significant accounting policies
a) Overall consideration
The consolidated financial statements have been prepared using the significant accounting policies and measurement basis as summarized below. These were used throughout all periods presented in the financial statements, except where the Group has applied certain accounting policies and exemptions upon transition to Ind AS.
Basis of preparation
The consolidated financial statements have been prepared on going concern basis under the historical cost basis except for the following -
- Certain financial assets and liabilities which are measured at fair value;
- Defined benefit plans - liability of which is recognized as per actuarial valuation; and
- Share based payments which are measured at fair value of the options Principles of consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
The Group combines the financial statements of the Parent Company and its subsidiaries line by line adding together like items of assets, liabilities, equity, income and expenses. Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit and loss, consolidated statement of changes in equity and balance sheet respectively.
b) Revenue recognition
Revenue arises from the supply of power. Revenue is recognized when it is probable that the economic benefits will flow to the Group and it can be reliably measured. Revenue is measured at the fair value of the consideration received/ receivable net of rebates and taxes. The Group applies the revenue recognition criteria to each separately identifiable component of the sales transaction as set out below.
Revenue from operation and maintenance of power plant and transmission assets
Revenue from operation of plant is recognized on transfer of significant risks and rewards of ownership of the output of the plant to the buyer which is when delivered, and measured on an accrual basis based on the rates in accordance with the provisions of the Power Purchase Agreements (PPAs) entered into by the Group with the procurer/s of power. Claims for delayed payment charges and other claims are accounted by the Group on accrual basis in accordance with the provisions of the PPAs only when it is reasonable to expect ultimate collection. Sales exclude Sales tax and Value Added Tax, where applicable. Revenue from Power generated during trial runs is accounted on the basis of accruals and is reduced from the cost of the plant.
Refer policy on leased assets for accounting policy of customer contracts that contain a lease.
Service income
Revenue from Power Consultancy/ Advisory Services is recognized when services are rendered.
Interest income
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Dividend income
Dividend income is recognized at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.
c) Borrowing costs
Borrowing costs include interest and amortization of ancillary costs incurred to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction/ development of the qualifying asset up to the date of capitalization of such asset are added to the cost of the assets. Any income earned on the temporary deployment/ investment of those borrowings is deducted from the borrowing costs so incurred. Capitalizations of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use.
d) Property, plant and equipment
Recognition and initial measurement
Properties plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group. All other repair and maintenance costs are recognized in statement of profit and loss as incurred.
Any expenditure directly/ indirectly related and attributable to the construction of power projects and incidental to setting up power project facilities, incurred prior to the Commercial Operation Date (COD) of the Power Project, are accumulated under "Capital work-in-progress", to be capitalized on completion of construction of the respective power projects/ COD.
Subsequent measurement (depreciation and useful lives)
Depreciation on property, plant and equipment is provided on the straight-line method, computed on the basis of useful lives prescribed in Schedule II to the Companies Act, 2013:
Properties plant and equipment acquired and put to use for the purpose of the Project are capitalized and depreciation thereon is included in capital work-in-progress till the Project is ready for its intended use.
The residual values, useful lives and method of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-recognition
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition 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 derecognized .
Transition to Ind AS
On transition to Ind AS, the Group has elected to continue with the carrying value of all its property, plant and equipment recognized as at 1 April 2015 measured as per the provisions of Previous GAAP and use that carrying value as the deemed cost of property, plant and equipment.
e) Intangible assets
Recognition and initial measurement
Intangible assets are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent measurement (amortization)
The cost of capitalized software is amortized over a period in the range of three to five years from the date of its acquisition.
Transition to Ind AS
On transition to Ind AS, the Group has elected to continue with the carrying value of all its intangible assets recognized as at 1 April 2015 measured as per the provisions of Previous GAAP and use that carrying value as the deemed cost of intangible assets.
f) Leased assets
Determining whether an arrangement contains a lease
The Group has certain long term arrangements for sale of power. Such arrangements are evaluated to consider whether it contains a lease. It is considered to contain a lease if based on the substance of the arrangement:
(i) fulfillment of the arrangement is dependent on the use of a specific asset or assets (the asset); and
(ii) the arrangement conveys a right to use the asset.
An arrangement is considered to contain a lease if facts and circumstances indicate that it is remote that one or more parties other than the purchaser will take more than an insignificant amount of the output or other utility that will be produced or generated by the asset during the term of the arrangement, and the price that the purchaser will pay for the output is neither contractually fixed per unit of output nor equal to the current market price per unit of output as of the time of delivery of the output.
Group as a lessee
Finance leases
Finance leases, which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments under such leases are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.
If there is no reasonable certainty that the Group will obtain the ownership by the end of lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Operating leases
Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the less or are classified as operating leases. Lease rental are charged to statement of profit and loss on straight-line basis except where scheduled increase in rent compensates the less or for expected inflationary costs.
Group as a less or
Finance leases
Leases which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item are classified and accounted for as finance lease. Lease rental receipts are apportioned between the finance income and capital repayment based on the implicit rate of return. Contingent rents are recognized as revenue in the period in which they are earned.
Operating leases
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the Group with expected inflationary costs.
g) Impairment of non-financial assets
At each reporting date, the Group assesses whether there is any indication based on internal/ external factors, that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognized in the statement of profit and loss. All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An impairment loss is reversed if the asset''s or cash-generating unit''s recoverable amount exceeds its carrying amount.
h) Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, unless the financial instrument is designated to be measured at fair value through profit or loss or fair value through other comprehensive income.
Financial assets
Subsequent measurement
i. Financial assets at amortized cost - the financial assets are measured at the amortized cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- 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.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. All other debt instruments are measured at Fair Value through other comprehensive income or Fair value through profit and loss based on Group''s business model. All investment in mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL).
De-recognition of financial assets
A financial asset is primarily de-recognized when the rights to receive cash flows from the asset have expired or the Group has transferred its rights to receive cash flows from the asset.
Financial liabilities
Subsequent measurement
Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method. These liabilities include borrowings and deposits.
De-recognition of financial liabilities
A financial liability is de-recognized 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 recognized in the statement of profit and loss.
Derivative contracts
A derivative contract is recognized as an asset or a liability on the commitment date. Outstanding derivative contracts as at reporting date are fair valued and recognized as financial asset/ financial liability, with the resultant gain/ (loss) being recognized in 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 recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
i) Impairment of financial assets
In accordance with Ind-AS 109, the Group applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets carried at amortized cost.
ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive. When estimating the cash flows, the Group considers :
- All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. Trade receivables
The Group applies simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of receivables.
Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Group determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, life time impairment loss is provided otherwise provides for 12 month expected credit losses.
j) Inventories
Inventories are valued at the lower of cost derived on weighted average basis and the net realizable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of consumption, including octroi and other levies, transit insurance and receiving charges.
Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated necessary cost to make the sale.
k) Income taxes
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax not recognized in OCI or directly in equity.
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961 and in the overseas branches/ companies as per the respective tax laws. Current income tax relating to items recognized outside statement of profit and loss is recognized outside statement of profit and loss in OCI or equity depending upon the treatment of underlying item.
Deferred income taxes are calculated using the liability method. Deferred tax liabilities are generally recognized in full for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Group''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized 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 realized 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 recognized outside statement of profit and loss is recognized outside statement of profit and loss in OCI or equity depending upon the treatment of underlying item.
Deferred tax liabilities are not recognized for temporary differences between the carrying amount and tax bases of investments in subsidiaries where the Group is able to control the timing of reversal of temporary differences and it is probable that the differences will not be reversed in the foreseeable future.
l) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits with banks/ corporations and short-term highly liquid investments (original maturity less than 3 months) that are readily convertible into known amount of cash and are subject to an insignificant risk of change in value.
m) Post-employment, long term and short term employee benefits
Defined contribution plans
The Group makes contribution to the statutory provident fund in accordance with the Employees Provident Fund and Miscellaneous Provision Act, 1952 which is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which the services are rendered.
Defined benefit plans
Gratuity is post-employment benefit and is in the nature of a defined benefit plan. The liability recognized in the financial statements in respect of gratuity is the present value of the defined benefit obligation at the reporting date together with adjustments for unrecognized actuarial gains or losses and past service costs. The defined benefit obligation is calculated at or near the reporting date by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are credited or charged to the statement of OCI in the year in which such gains or losses are determined.
Other long-term employee benefits
Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognized on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to statement of profit and loss in the year in which such gains or losses are determined.
Short-term employee benefits
Expense in respect of other short term benefits is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.
n) Share based payments
The Company has formulated Employee Stock Option Schemes (ESOS) and Employee Stock Purchase Schemes (ESOP) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and are in compliance with the said guidelines and SEBI (Share Based Employee Benefits) Regulation, 2014. The Schemes provide for grant of options to employees of the Company and its subsidiaries to acquire equity shares of the Company that vest in a graded manner and that are to be exercised within a specified period.
Employee stock Purchase plan (ESOP)
The fair value of options granted under Employee Stock Option Plan is recognized as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in statement of profit and loss, with a corresponding adjustment to equity.
Transition to Ind AS
On transition to Ind AS, the Group has elected to not consider the charge related to employee stock options for which the vesting period is already over.
o) Provisions, contingent assets and contingent liabilities
Provisions are recognized only when there is a present obligation, as a result of past events, and when a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values, where the time value of money is material.
Contingent liability is disclosed for:
- Possible obligations which will be confirmed only by future events not wholly within the control of the Group or
- Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognized . However, when inflow of economic benefit is probable, related asset is disclosed.
p) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
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.
q) Significant management judgment in applying accounting policies and estimation uncertainty
The preparation of the Group''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the related disclosures.
Significant management judgments
The following are significant management judgments in applying the accounting policies of the Group that have the most significant effect on the financial statements:
Determining whether an arrangement contains a lease - Whether an arrangement contains a lease depends on whether purchaser will take more than an insignificant amount of the output or other utility that will be produced or generated by the asset during the term of the arrangement.
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized. In addition, significant judgment is required in assessing the impact of any legal or economic limits or uncertainties under the relevant tax jurisdiction (see note 8).
Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Classification of leases - The Group enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset''s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
Recoverability of advances/ receivables - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.
Defined benefit obligation (DBO) - Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Fair value measurements - Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
Provisions - At each balance sheet date on the basis of the management judgment, changes in facts and legal aspects, the Group assesses the requirement of provisions. However the actual future outcome may be different from this judgment.
Significant estimates
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be different.
Classification of leases -The classification of the leasing arrangement as a finance lease or operating lease requires several estimates like present value of unguaranteed residual value and present value of minimum lease payments.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow ("DCF") model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognized by the Group.
Taxes
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized , based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Useful lives of depreciable/ amortizable assets
Management reviews its estimate of the useful lives of depreciable/ amortizable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software and other plant and equipment.
(i) Coal - stores includes in transit Rs, 219.67 lakhs (31 March 2016 Rs, 2,380.81 lakhs and 1 April 2015 Rs, 2,786.40 lakhs).
(ii) Light diesel oil - stores includes in transit Rs, 3.20 Lakhs (31 March 2016 - Rs, 72.53 Lakhs and 1 April 2015 Rs, 193.31 Lakhs).
(iii) Stores and spares - includes in transit Rs, 108.66 lakhs (31 March 2016 Rs, 57.04 lakhs and 1 April 2015 Rs, 6.92 lakhs).
(iv) Other consumables - includes in transit Rs, 34.15 lakhs(31 March 2016 - Rs, 21.38 lakhs and 1 April 2015 - Rs, 168.79 Lakhs).
* These treasury shares are held by IPL - PPSL Scheme Trust.
b) Rights/ restrictions attached to equity shares
The Parent Company has only one class of equity shares with voting rights, having a par value of Rs,10 per share. Each shareholder of equity shares is entitled to one vote per share held. Each share is entitled to dividend, if declared, in Indian Rupees. The dividend, if any, proposed by Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting, except in the 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.
In terms of the Court approved Scheme of Arrangement (Scheme - 2012) which came into effect on 2 June 2012 (Effective Date), India bulls Infrastructure Development Limited (IIDL) was merged with the Parent Company as a going concern with effect from 1 April 2012, the Appointed Date under the Scheme - 2012, upon which the entire undertaking and the entire assets and liabilities of IIDL stand transferred to and vested in the Parent Company at their book values. Pursuant to the Scheme - 2012 as aforesaid, an aggregate of 415,407,007 Equity shares of face value Rs, 10 each in the Parent Company were issued and allotted in favour of the IIDL shareholders as on the Effective Date, thereby increasing the paid up capital of the Company to Rs, 264,272.99 lakhs divided into 2,642,729,953 Equity shares of face value Rs, 10 each. The shares so allotted constitute 15.72% of the paid up capital of the Parent Company as on 31 March 2013. Consequent to the issuance and allotment of equity shares to the shareholders of IIDL, RattanIndia Infrastructure Limited (formerly known as India bulls Infrastructure and Power Limited) (RIL) had ceased to be the ultimate holding company w.e.f. 20 June 2012.
Nature and purpose of other reserves Capital reserve
Capital reserve is created out of the capital profits. It is created out of forfeiture of share warrants. Capital reserve is not available for the distribution to the shareholders. (Refer note 46)
Securities premium reserve
Securities premium reserve represents premium received on issue of shares. The reserve is utilized in accordance with the provisions of the Companies Act.
Employee''s stock options reserve
The reserve account is used to recognize the grant date value of options issued to employees under Employee stock option plan. Foreign currency translation reserve
Exchange differences arising on translation of the foreign operations are recognized in other comprehensive income as described in accounting policy and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed-off.
(i) For Amravati Project
(a) Loans from Consortium of Banks & Financial Institutions aggregating to Rs, 576,083.99 lakhs (31 March 2016: Rs, 610,345.42 lakhs and 1 April 2015: Rs, 584,438.35 lakhs) are secured by way of first mortgage and charge on all immovable and movable assets, both present and future, of the Amravati Project Phase I. The aforesaid Phase I Loan Facility is further secured by the pledge of 1,181,173,342 (31 March 2016: 1,181,173,342 and 1 April 2015: 1,181,173,342) equity shares (40% of the total equity share capital) of the Company held by RattanIndia Infrastructure Limited ("RIL") (formerly known as India bulls Infrastructure and Power Limited) and RR Infralands Private Limited through execution of a Deed of Pledge amongst RIL and RR Infralands Private Limited (Pledgers), RPL and Vistra (ITCL) India Limited (Formerly known as IL&FS Trust Company Limited) (IDBI Trusteeship Services Limited up to 26 March 2015) with a condition that these pledged shares must constitute 60 % of the Project Equity Capital. Also, disbursements against cost overrun underwritten portion is secured by a pledge of Nil (31 March 2016: 39,707,724 and 1 April 2015: 39,707,724) equity shares of the Company held by RIL and Nil (31 March 2016: 219,050,000 and 1 April 2015: 219,050,000) equity shares held by India bulls Real Estate Limited in the Company and further, is secured by Nil (31 March 2016: 6,294,841 and 1 April 2015: 6,294,841) equity shares of RattanIndia Nasik Power Limited (Formerly known as India bulls Realtech Limited) in favor of Power Finance Corporation Limited (PFC) - the lead consortium lender. Additionally, the Company is required for negative lien on 11% equity shares of promoter''s holding in the Company with a condition that effective voting rights of the shares pledged and over which a negative lien is created (in aggregate does not fall below 51% of the Equity Share Capital).
(b) Loan from Other Bank aggregating to Rs, 13,750.00 lakhs (31 March 2016: Rs, 17,500.00 lakhs and 1 April 2015: Rs, 20,000.00 lakhs) is secured by way of hypothecation of movable fixed assets, both present and future, of the Amravati Project Phase II. The aforesaid Phase II Loan Facility is further secured by pledge of 30,000,000 (31 March 2016: 30,000,000 and
1 April 2015: Nil) equity shares of the Company held by RR Infralands Private Limited.
Financial assistance to meet the funding requirement for Capital Expenditure and Long Term Working Capital requirements from ICICI Bank aggregating to Rs, 9,700.00 lakhs (31 March 2016: Rs, Nil and 1 April 2015: Rs, Nil) is secured by way of pledge of 100,000,000 (31 March 2016: Nil and 1 April 2015: Nil) equity shares of the Company held by RR Infralands Private Limited.
(c) The Company had rescheduled its loans with Consortium of Banks and Financial Institutions for Phase I of the Project and revised its project cost to Rs, 749,333.00 lakhs from Rs, 663,152.00 lakhs (after exclusion of Rs, 25,648.00 lakhs allocated to Cost of transmission line from the sanctioned Project Cost of Rs, 688,800.00 lakhs) thereby resulting in net increase in the Project Cost by Rs, 86,181.00 lakhs for meeting Cost Overrun-I. Further, during the financial year 2014-15, the Company had received a sanction letter from PFC vide letter No. 03/19 /RIPL/GEN-TH/Vol XIV/S0901001 dated 10 March 2015 towards approval of Cost Overrun II for the Project with revised Project Cost to Rs, 855,592.00 lakhs from Rs, 749,333.00 lakhs thereby resulting in further increase in the Project Cost by Rs, 106,259.00 lakhs for meeting the Cost Overrun-II and underwriting the additional term loan for the Project with extension of COD and corresponding shift in date of repayment of term loan in 60 structured quarterly installments and other terms stated therein. Accordingly, the Company executed the Cost Overrun Underwriting Facility Agreement dated 28 March 2015 wherein PFC was agreeable to underwrite entire debt component of cost overrun of Rs, 73,368.00 lakhs which is 69.05% of the total cost overrun of Rs, 106,259.00 lakhs. During the previous year 2015-16, the Company received sanction letters from all lenders of the consortium of Phase I approving the Cost - Overrun II.
Consequent to the Company''s proposal to consortium of lenders for flexible structuring as per RBI Circular No. RBI/2014-15/126 DBOD.No.BP.BC.24/21.04.132/2014-15 dated 15 July 2014 and RBI/2014-15/354 DBR.No.BP. BC.53/21.04.132/2014-15 dated 15 December 2014 on ''Flexible Structuring of Long Term Project Loans to Infrastructure and Core Industries'' as amended from time to time, of its Phase I Loans during the previous year, the Company entered into Master Facility and Flexible Structuring Framework Agreement dated 28 January 2016 with all consortium lenders of Phase I except Life Insurance Corporation, Rural Electrification Corporation and UCO Bank. Deed of Accession has been entered into by the Company with UCO Bank and Life Insurance Corporation on 14 March 2016 and 22 March 2016 respectively. Company has received sanction letter dated 25 February 2016 from Rural Electrification Corporation for flexible structuring of its Phase I Loans.
(f) The above mentioned loans from consortium of banks and financial institutions carry floating rates of Interest ranging from 12.90% p.a. to 15.00% p.a. (31 March 2016: 13.05 % p.a. to 16.00% p.a. and 1 April 2015: 13.25 % p.a. to 16.00% p.a.) and the term loan from other bank carries a floating rate of interest of 11.45% p.a. to 16% p.a. (31 March 2016: floating rate of interest 15.00% p.a. and 1 April 2015: floating rate of interest 15.00% p.a.).
(g) There were certain defaults in payment of interest and repayment of loans during the year. Repayment of loans due and outstanding aggregating to Rs, 4,138.10 lakhs and Interest due and outstanding aggregating to Rs, 5,678.08 lakhs as at 31 March 2017 are on account of major back downs faced by the Project from July 2016 resulting in lower sale of power. These out standings would be serviced on realization of funds from MSEDCL. Having regard to the rescheduling of the terms of repayment of loans pursuant to the flexible structuring of the Phase I loans as per Master Facility and Flexible Structuring Framework Agreement dated 28 January 2016 and Deed of Accession entered into with and Sanction letter issued by the consortium lenders, the defaults in financial year 2015-16 towards repayment of loans are considered as being made good during the same year. The defaults in respect of payment of interest in financial year 2015-16 has also been made good during the same year by the Company and accordingly, there were no continuing defaults in repayment of loans as at 31 March 2016. Interest due and outstanding aggregating to Rs, 5,940.54 lakhs as at 31 March 2015 was paid during the financial year 2015-16.
(h) Monthly installment of Rs,13.66 lakhs till 31 August 2103 and Rs,2.82 lakhs till 30 April 2110 in respect of lease lands (refer note 38).
(ii) For Nashik Project
(a) Loans from Consortium of Banks and Financial Institutions aggregating to Rs, 658,057.11 Lakhs (31 March 2016: Rs, 580,806.94 Lakhs and 1 April 2015 : Rs, 461,855.93 Lakhs) are secured by way of first mortgage and charge on all immovable and movable assets, both present and future, of the Nashik Project Phase I. The aforesaid Phase I Loans are further secured by pledge of 20,864,880 (31 March 2016 : 12,804,174 and 1 April 2015 : 11,190,426) equity shares of the Company (77% of the Equity Share Capital of the Company and 31 March 2016 : 51% of the Equity Share Capital of the Company) and the Cost-Overrun 2 of the Phase I Loans are secured by pledge of 5,574,105 (31 March 2016 the Cost-Overrun 1 of the Phase I Loans are secured by pledge of 5,348,945 and 1 April 2015 : Nil) equity shares of the Company through execution of a Pledge Agreement with RattanIndia Power Limited (Formerly known as India bulls Power Limited.) (RPL), the Holding Company. Also, the Bank Guarantee facility availed by the Company are secured by pledge of 658,261 (31 March 2016 : 658,261 and 1 April 2015 : 658,261) equity shares of the Company in favor of Axis Bank Limited. Further, NIL (31 March 2016 : 6,294,841 and 1 April 2015: 6,294,841) and Nil (31 March 2016 : NIL and 1 April 2015: 1,705,000) equity shares of the Company are pledged in favor of Power Finance Corporation Limited against the term loan facility (cost overrun underwritten portion) of RPL and term loan facility of Amravati Power Transmission Company Limited, fellow subsidiary respectively. Loans from other bank aggregating to NIL (31 March 2016: Rs, 21,152.66 Lakhs and 1 April 2015 : Rs, 22,000.00 Lakhs ) is secured by way of first mortgage and charge on all immovable and movable assets, of the Nashik Project Phase II.
(b) During the 1 April 2015, the Company had rescheduled its Phase I loans with the Consortium of banks and financial institutions and revised its Project Cost to Rs, 784,898.00 Lakhs from Rs, 655,552.00 Lakhs (after exclusion of Rs, 23,348.00 Lakhs allocated to the Cost of transmission system from the earlier sanctioned Project Cost of Rs, 678,900.00 Lakhs) thereby resulting in net increase in the Project Cost by Rs, 129,346.00 Lakhs for meeting the Cost Overrun-I. During 2015-16, the Company has revised its Project Cost to Rs, 981,833.00 Lakhs from Rs, 784,898.00 Lakhs thereby resulting increase in the Project Cost by Rs, 196,935.00 Lakhs for meeting the Cost Overrun-II. The Company has received a sanction letter from Power Finance Corporation Limited (''the Lead Consortium Lender'') vide letter no. 03/19/GEN-TH/IRL/ I1501005,06/Vol XI. dated 15 February 2016, according to which, PFC has sanctioned additional loans, underwriting entire COR-II debt, extension of repayment dates and other terms stated therein subject to conditions mentioned in the said letter. The Company has also received sanction letter from all the lenders of consortium of banks and financial institutions approving Cost Overrun-II, extension of repayment period and the extension of COD.
(e) The above mentioned loans from Consortium of Banks and Financial Institutions carry floating rates of Interest ranging from 12.85% p.a. to 15.40% p.a. (31 March 2016: 12.90% p.a. to 15.15% p.a. and 1 April 2015: 13.25% p.a. to 14.90% p.a.) and the term loan from other bank carries a floating rates of interest ranging from 14.10% p.a. (31 March 2016: 14.10% p.a. to 14.75% p.a. and 1 April 2015: 13.75% p.a. to 14.75% p.a.).
(f) There were certain delay in disbursement/ adjustment of interest by the project lenders (Phase I and II Loans) and repayment of loans (Phase II Loans) during the year, however they said defaults in payment of interest and repayment of loans were made good during the year. Interest due aggregating to Rs, 6,776.79 lakhs and Rs, 3,719.94 lakhs in respect of Phase I and II Loans remained outstanding and unpaid as at 31 March 2017 and 31 March 2016 respectively. Principal repayment in respect of Phase II Loans amounting to NIL remained outstanding and unpaid as at 31 March 2017 and Rs, 523.81 lakhs remained outstanding and unpaid as at 31 March 2016. Having regard to the rescheduling of the loans in respect of 31 March 2016 as mentioned above, there were no continuing defaults in payment of interest as at 1 April 2015 and no loan were due for repayment during the year ended 1 April 2015.
(iii) For Amravati Transmission Line Project
Common Rupee Term Loan from Power Finance Corporation Limited and Rural Electrification Corporation Limited is secured by way of mortgage and charge on all immovable properties relating to project, both present and future and is repayable to Power Finance Corporation Limited in 48 equal quarterly installments of Rs, 287.67 lakhs each commencing from 15 October 2014 and ending on 15 October 2027 and to Rural Electrification Corporation Limited of Rs, 143.81 lakhs each commencing from 31 December 2014 and ending on 31 December 2027.
Consequent upon acceptance of APTCL''s proposal for sanctioning increase in estimated project cost and cost overrun, balance amount of loan of Rs, 18,440.88 lakhs (31 March 2016: Rs, 20,169.71 lakhs and 1 April 2015: Rs, 18,669.77 lakhs) is repayable to Power Finance Corporation Limited in 43 equal quarterly installments of Rs, 288.15 lakhs each commencing from 15 April 2017 and ending on 15 October 2027 and to Rural Electrification Corporation Limited in 42 equal quarterly installments of Rs, 144.05 lakhs each commencing from 30 June 2017 and ending 31 December 2027.
Loans and advances from related parties is payable at the option of the Company at any time before expiration of the agreement.
(i) The facilities are secured by hypothecation charges on all movables & immovable assets, present and future, of the project under implementation by way of first charge ranking pari passu.
(ii) Short term loan facility from financial institution - Power Finance Corporation Limited is secured by Pari passu charge over the Parent Company''s movables assets relating to the Project (current & fixed) including movable plant, machinery, equipments, machinery spares, tools, accessories, furniture, fixtures, vehicles and all other movable assets, both present and future, the stock of raw materials, semi-finished and finished goods, consumable goods relating to the project site, intangible assets, book debts, operating cash flow, revenue & receivables of the Parent Company relating to the project and all current assets, commissions and any revenue of any nature, Trust and Retention account, letter of credit, other reserves and any other bank accounts in relation to the project and on all rights, titles, interest, benefits, claims and demands relating to the project.
(iii) There were no continuing defaults in repayments of loans and interest as at 31 March 2017. The Short term loan facility amounting to Rs, 8,896.00 lakhs was due for repayment on 21 February 2016 and remained outstanding as at 31 March 2016 and paid in June 2016 and July 2016.
(iv) There were no continuing defaults in payment of interest and repayment of Cash Credit facility, Inter Corporate Deposits from related parties and other and interest thereon as at 31 March 2017, 31 March 2016 and 1 April 2015
Mar 31, 2016
1 Corporate Information
Rattan India Power Limited (Formerly known as India bulls Power Limited.) ("the Company", "RPL") was incorporated on October 08, 2007 as a wholly owned subsidiary of India bulls Real Estate Limited ("IBREL") with an authorized capital of Rs, 500,000 divided into 50,000 equity shares of face value Rs, 10 each. During the financial year 2009-10, the authorized capital was increased to Rs, 50,000,000,000 (Rs, Five Thousand Crores) divided into 5,000,000,000 (Five Hundred Crores) equity shares of face value Rs, 10 each. The main business activities of the Company included inter alia, dealing in power generation, distribution, trading and transmission and other ancillary and incidental activities. The Company is in process of setting up a Thermal Power Project at Amravati ("Amravati Project", "the Project") in the State of Maharashtra in two phases of 1,350 MW each, with an ultimate capacity of 2,700 MW. Upon COD of the Companyâs Amravati Power Project
- Unit-I (Phase-I) on June 03, 2013, Unit-II (Phase-I) on March 28, 2014, Unit-III (Phase-I) on February 02, 2015, Unit-IV (Phase-I) on March 07, 2015 and Unit-V (Phase-I) on March 13, 2015, the Plant and Equipment and Building - Plants of respective units were capitalized on respective CODs.
On February 12, 2008, the Company had entered into a Shareholder''s agreement ("Agreement") with IBREL, individual promoters of IBREL (Sameer Gehlaut, Rajiv Rattan and Saurabh K. Mittal), Investors (FIM Limited and LNM India Internet Ventures Limited) and the erstwhile India bulls Power Services Limited ("IPSL" or "Amalgamating Company"), a fellow subsidiary. The Company had also entered into a Share Subscription Agreement ("SSA") dated February 12, 2008, with IBREL, FIM Limited and LNM India Internet Ventures Limited. In terms of the Agreement and the SSA, the Company had issued and allotted 237,000,000 equity shares of face value of Rs, 10 each at a premium of Rs, 56.67 per share to the Investors on February 22, 2008.
In terms of the Agreement, IPSL was merged with the Company, with effect from the Appointed Date on April 1, 2008. Consequently, the Company applied for and received approval dated January 16, 2009, from the FIPB Unit, Department of Economic Affairs, Ministry of Finance, Government of India to engage in the business of generating, developing, transmitting, distributing and supplying all forms of electrical power (except atomic energy) and to act as an operating cum holding company.
In accordance with the provisions of Section 21 and other applicable provisions of the Companies Act, 1956, the Members of the Company at their Extraordinary General Meeting held on July 4, 2009, accorded their approval to change the name of the Company. The Company received fresh certificate of incorporation consequent upon change of name, from the Registrar of Companies, National Capital Territory of Delhi & Haryana, dated July 07, 2009 in respect of the said change. Accordingly, the name of the Company was changed to ''India bulls Power Limited.''
Pursuant to and in terms of the Court approved Scheme of Arrangement under Section 391 to 394 of the Companies Act, 1956, by and among India bulls Real Estate Limited, Rattan India Infrastructure Limited (formerly known as India bulls Infrastructure and Power Limited), India bulls Builders Limited, Rattan India Power Limited (formerly known as India bulls Power Limited.) (the Company), Poena Power Supply Limited and their respective shareholders and creditors (Scheme -2011), which had been approved by the Hon''ble High Court of Delhi vide its Order dated October 17, 2011 and came into effect on November 25, 2011, with effect from April 1, 2011 i.e. the Appointed Date.
In pursuance of the Scheme - 2011, with effect from the Appointed Date:
(a) The Power business undertaking of India bulls Real Estate Limited (IBREL) which included IBREL''s investment in the Company, stood demerged from IBREL and transferred to and vested in favour of Rattan India Infrastructure Limited (formerly known as India bulls Infrastructure and Power Limited) (RIL) which had the effect of making RIL the Promoter Group/ holding company of the Company.
(b) Poena Power Supply Limited (PPSL) a wholly owned subsidiary of the Company was merged with the Company as a going concern under the ''pooling of interests method'' as specified in Accounting Standard 14 on ''Accounting for Amalgamations'' as notified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, with the entire business, including all the assets and liabilities as recorded in the books of PPSL as on the Appointed Date (there were no fixed assets held by PPSL), being transferred to the Company at their book values as on the said date. Poena Power Supply Limited was, prior to its merger, engaged in the business, inter-alia, of power project management, design and management of facilities and services on site and off site, maintenance and operation of support services, project advisory/consultancy and other related services; which business continues after the merger.
The Company had on October 20, 2010 allotted 420,000,000 Share Warrants to certain Promoter Group entities which were partly paid and at the option of the warrant holders were convertible into equivalent number of Equity shares of the Company. Under the Court approved Scheme of Arrangement by and amongst India bulls Real Estate Limited,
Rattan India Infrastructure Limited (formerly known as India bulls Infrastructure and Power Limited), India bulls Builders Limited, the Company, Poena Power Supply Limited and their respective shareholders and creditors (Scheme - 2011), it had been stipulated that any of such Warrants remaining outstanding on the day of the Scheme - 2011 becoming effective, would stand converted into partly paid Equity shares of the Company. However, prior to the effectiveness of the Scheme - 2011 the warrant holding entities conveyed to the Company their unwillingness to exercise the warrants per se, so that as on the date of effectiveness of the Scheme - 2011, no warrants were outstanding. Consequently, an amount of Rs, 3,045,000,000 representing the upfront money paid on these warrants was forfeited by the Board of Directors of the Company and appropriated to the Capital Reserve.
In terms of the Court approved Scheme of Arrangement (Scheme - 2012) which came into effect on June 2, 2012 (Effective Date), India bulls Infrastructure Development Limited (IIDL) was merged with the Company as a going concern with effect from April 1, 2012, the Appointed Date under the Scheme - 2012, upon which the entire undertaking and the entire assets and liabilities of IIDL stand transferred to and vested in the Company at their book values. Pursuant to the Scheme
- 2012 as aforesaid, an aggregate of 41,54,07,007 Equity shares of face value Rs, 10 each in the Company were issued and allotted in favour of IIDL shareholders as on the Effective Date, thereby increasing the paid up capital of the Company to Rs, 26,427,299,530 divided into 264,27,29,953 Equity shares of face value Rs, 10 each. Consequent to issuance and allotment of equity shares to the shareholders of IIDL, Rattan India Infrastructure Limited (formerly known as India bulls Infrastructure and Power Limited) (RIL) has ceased to be the ultimate holding company w.e.f June 20, 2012. IIDL was, prior to its merger, engaged in the business, inter-alia, of the development of real estate projects, providing management advisory services and other related and ancillary activities.
During the financial year 2014-15 pursuant to the announcements on restructuring of the promoters'' inter-se roles, there have been declassifications in respect of certain Promoters / Promoter Group Entities / Persons Acting in Concert with Promoters (PACs) of the Company, as was intimated by the Company to NSE and BSE (the Stock Exchanges) on July 18, 2014 and October 28, 2014 respectively.
Pursuant to an understanding arrived at between the erstwhile promoters of the India bulls group namely, Mr. Sameer Gehlaut, Mr. Saurabh Mittal and Mr. Rajiv Rattan, during the financial year 2014-2015, Mr. Sameer Gehlaut and Mr. Saurabh Mittal relinquished the ownership rights, management and control as also the supervision of the Power Business. Accordingly Mr. Sameer Gehlaut and Mr. Saurabh Mittal transferred their direct and indirect shareholding in power group entities to Mr. Rajiv Rattan and the entities owned and promoted by him pursuant to an inter-se transfer and subsequently resigned from their directorships and chairmanship/ vice chairmanship of the Power Business respectively. Thus the ownership, management and control of the Power Business and its supervision rights came to vest with Mr. Rajiv Rattan who also assumed the Chairmanship of the Power Business.
During the financial year 2014-15 in accordance with the provisions of Section 13 and other applicable provisions of the Companies Act, 2013, the members of the Company through postal ballot declared on October 16, 2014, accorded their approval to change the name of the Company from India bulls Power Limited. to Rattan India Power Limited. The Company received fresh certificate of incorporation consequent upon change of name from the Registrar of Companies, Delhi dated October 30, 2014 in respect of the said change.
2 Significant Accounting Policies
2.01 Basis of Accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"). The financial statements have been prepared on an accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
2.02 Use of Estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known/ materialize.
2.03 Inventories
Inventories are valued at the lower of cost derived on weighted average basis and the net realizable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of consumption, including Octroi and other levies, transit insurance and receiving charges.
2.04 Cash and cash equivalents (for the purpose 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), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
2.05 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.
2.06 Depreciation/ Amortization
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
Intangible assets consisting of Software are amortized on a Straight Line basis over a period ranging from three to five years depending upon the useful life of the asset, from the date when the assets are available for use. The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization period is revised to reflect the changed pattern, if any.
Depreciation on additions/ deletions to fixed assets is provided on a pro-rata basis from/ up to the date the asset is put to use/ discarded. The acquisition value of Leasehold Land is amortized on a Straight Line basis over the period of the Lease.
2.07 Revenue Recognition
Revenue from supply of power is recognized on transfer of significant risks and rewards of ownership to the buyer which is when delivered, and measured on an accrual basis based on the rates in accordance with the provisions of the Power Purchase Agreements (PPAs) entered into by the Company with the procurer/s of power. Claims for delayed payment charges and other claims are accounted by the Company on accrual basis in accordance with the provisions of the PPAs only when it is reasonable to expect ultimate collection. Excise Duty is not applicable on generation and sale of power. Sales exclude Sales tax and Value Added Tax, where applicable.
Revenue from Power generated during trial runs is accounted on the basis of accruals and billings to State Transmission Utilities and is reduced from the Pre-operative expenses.
Revenue from Power Consultancy/ Advisory Services is recognized when services are rendered. Interest income from deposits and others is recognized on an accrual basis. Dividend income is recognized when the right to receive the dividend is established. Profit/ loss on sale of investments is recognized on the date of the transaction of sale and is computed with reference to the original cost of the investment sold.
2.08 Fixed Assets (Tangible/ Intangible)
Fixed assets are carried at cost less accumulated depreciation/ amortization and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on fixed assets after its purchase/ completion is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
Fixed assets acquired and put to use for the purpose of the Project are capitalized and depreciation thereon is included in Expenditure during construction pending capitalization till the Project is ready for its intended use.
Projects under which fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
Expenditure on development of intangible assets eligible for capitalization are carried as Intangible assets under development where such assets are not yet ready for their intended use.
2.09 Expenditure during construction pending capitalization
Any expenditure directly/ indirectly related and attributable to the construction of power projects and incidental to setting up power project facilities, incurred prior to the Commercial Operation Date (COD) of the Power Project, are accumulated under "Expenditure during construction pending capitalization", to be capitalized on completion of construction of the respective power projects/ COD.
2.10 Foreign currency transactions and translations Initial recognition
Transactions in foreign currencies entered into by the Company and net investment in non-integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.
Measurement at the balance sheet date
Foreign currency monetary items of the Company and its net investment in non-integral foreign operation outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.
Treatment of exchange differences
Exchange differences arising on settlement/ restatement of short-term foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss. The exchange differences on restatement/ settlement of loans to non-integral foreign operations that are considered as net investment in such operations are accumulated in the "Foreign Currency Translation Reserve" until disposal/ recovery of the net investment.
Accounting for forward contracts
Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortized over the period of the contracts if such contracts relate to monetary items as at the balance sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense in the period in which such cancellation or renewal is made.
2.11 Investments
Investments are classified as long term and current. Long-term investments are carried individually at cost less provision for diminution, if any, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments includes acquisition charges such as brokerage, fees and duties.
2.12 Employee Benefits
The Company''s contribution to Provident Fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense to the Statement of Profit and Loss/ Expenditure during construction pending capitalization, as applicable, based on the amount of contribution required to be made and when services are rendered by the employees. The Company has unfunded defined benefit plans namely leave encashment (long term compensated absences) and gratuity for eligible employees, the liabilities for which are determined on the basis of actuarial valuations, conducted by an independent actuary at the end of the financial year using the Projected Unit Credit Method. Actuarial gains/ losses comprise experience adjustments and the effects of change in actuarial assumptions, and are recognized in the Statement of Profit and Loss as income or expenses/ Expenditure during construction pending capitalization, as applicable.
2.13 Borrowing Costs
Borrowing costs include interest and amortization of ancillary costs incurred to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalization of such asset are added to the cost of the assets. Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. Any income earned on the temporary deployment/ investment of those borrowings is deducted from the borrowing costs so incurred.
2.14 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.
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".
2.15 Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rentals under operating leases are recognized on a straight-line basis over the lease term to the Statement of Profit and Loss/ Expenditure during construction pending capitalization, as applicable.
2.16 Taxes on Income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefits associated with it will flow to the Company.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses, only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability. Current and deferred tax relating to items directly recognized in reserves are recognized in reserves and not in the Statement of Profit and Loss.
2.17 Impairment of Assets
The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment if any indication of impairment exists. The following intangible assets are tested for impairment each financial year even if there is no indication that the asset is impaired: (a) an intangible asset that is not yet available for use; and (b) an intangible asset that is amortized over a period exceeding ten years from the date when the asset is available for use.
If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognized for such excess amount. The impairment loss is recognized as an expense in the Statement of Profit and Loss, unless the asset is carried at revalued amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.
The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.
When there is indication that an impairment loss recognized for an asset (other than a revalued 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, to the extent the amount was previously charged to the Statement of Profit and Loss. In case of revalued assets such reversal is not recognized.
2.18 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources 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 their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.
2.19 Share Issue Expenses
Share issue expenses are adjusted against the Securities Premium Account as permissible under Section 52 of the Companies Act, 2013, to the extent any balance available for utilization in the Securities Premium Account. Share issue expenses in excess of the balance in the Securities Premium Account is expensed in the Statement of Profit and Loss.
2.20 Employee share based payments
The Company had formulated Employee Stock Option Schemes (ESOS) and Employee Stock Purchase Schemes (ESOP) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and are in compliance with the said guidelines and SEBI (Share Based Employee Benefits) Regulation, 2014. The Schemes provide for grant of options to employees of the Company and its subsidiaries to acquire equity shares of the Company that vest in a graded manner and that are to be exercised within a specified period.
Deferred Employee Stock Compensation Costs for Stock Options are recognized in accordance with the Guidance Note on "Accounting for Employee Share Based Payments" issued by the Institute of Chartered Accountants of India, which establishes financial accounting and reporting principles for employee share based payment plans. The Company has elected to apply the Intrinsic Value method of accounting. Accordingly, employee stock compensation costs are measured as the difference between the intrinsic value of the company''s shares of stock options at the grant date and the exercise price to be paid by the option holders. The compensation expense is amortized over the vesting period of the options. The fair value of options for disclosure purpose, is measured on the basis of an independent valuation performed by an independent firm of Chartered Accountants in respect of stock options granted.
2.21 Operating cycle
Based on the nature of activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2015
2.01 Basis of Accounting and preparation of financial statements
The financial statements ofthe Company have been prepared in accordance
with the Generally Accepted Accounting Principles in India (Indian
GAAP) to comply with the Accounting Standards specified under Section
133 of the Companies Act, 2013, read with Rule 7 ofthe Companies
(Accounts) Rules, 2014 and the relevant provisions ofthe Companies Act,
2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as
applicable. The financial statements have been prepared on an accrual
basis under the historical cost convention. The accounting policies
adopted in the preparation of the financial statements are consistent
with those followed in the previous year.
2.02 Use of Estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation
ofthe financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known/ materialise.
2.03 Inventories
Inventories are valued at the lower of cost derived on weighted average
basis and the net realisable value after providing for obsolescence and
other losses, where considered necessary. Cost includes all charges in
bringing the goods to the point of consumption, including Octroi and
other levies, transit insurance and receiving charges.
2.04 Cash and cash equivalents (for the purpose 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), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
2.05 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.
2.06 Depreciation/ Amortisation
Depreciable amount for assets is the cost of an asset, or other amount
substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets has been provided on the
straight-line method as per the useful life prescribed in Schedule II
to the Companies Act, 2013 except in respect of the Project Plant and
Machinery where useful life of 25 years with salvage value of 5% is
considered, in whose case the life of the assets has been assessed
based on technical advice, taking into account the nature of the asset,
the estimated usage of the asset, the operating conditions of the
asset, past history of replacement, anticipated technological changes,
manufacturers warranties and maintenance support, etc.
Intangible assets consisting of Software are amortized on a Straight
Line basis over a period ranging from three to five years depending
upon the useful life of the asset, from the date when the assets are
available for use. The estimated useful life of the intangible assets
and the amortisation period are reviewed at the end of each financial
year and the amortisation period is revised to reflect the changed
pattern, if any.
Depreciation on additions/ deletions to fixed assets is provided on a
pro-rata basis from/ upto the date the asset is put to use/discarded.
The acquisition value of Leasehold Land is amortized on a Straight Line
basis over the period of the Lease.
2.07 Revenue Recognition
Revenue from supply of power is recognised on transfer of significant
risks and rewards of ownership to the buyer which is when delivered,
and measured on an accrual basis based on the rates in accordance with
the provisions of the Power Purchase Agreements (PPAs) entered into by
the Company with the procurer/s of power. Claims for delayed payment
charges and other claims are accounted by the Company on accrual basis
in accordance with the provisions of the PPAs only when it is
reasonable to expect ultimate collection. Excise Duty is not applicable
on generation and sale of power. Sales exclude Sales tax and Value
Added Tax, where applicable.
Revenue from Power generated during trial runs is accounted on the
basis of accruals and billings to State Transmission Utilities and is
reduced from the Pre-operative expenses.
Revenue from Power Consultancy/ Advisory Services is recognised when
services are rendered. Interest income from deposits and others is
recognised on an accrual basis. Dividend income is recognised when the
right to receive the dividend is established. Profit/ loss on sale of
investments is recognised on the date of the transaction of sale and is
computed with reference to the original cost of the investment sold.
2.08 Fixed Assets (Tangible/ Intangible)
Fixed assets are carried at cost less accumulated depreciation/
amortisation and impairment losses, if any. The cost of fixed assets
comprises its purchase price net of any trade discounts and rebates,
any import duties and other taxes (other than those subsequently
recoverable from the tax authorities), any directly attributable
expenditure on making the asset ready for its intended use, other
incidental expenses and interest on borrowings attributable to
acquisition of qualifying fixed assets up to the date the asset is
ready for its intended use. Machinery spares which can be used only in
connection with an item of fixed asset and whose use is expected to be
irregular are capitalised and depreciated over the useful life of the
principal item of the relevant assets. Subsequent expenditure on fixed
assets after its purchase/ completion is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
Fixed assets acquired and put to use for the purpose of the Project are
capitalised and depreciation thereon is included in Expenditure during
construction pending capitalisation till the Project is ready for its
intended use. Projects under which fixed assets are not yet ready for
their intended use are carried at cost, comprising direct cost, related
incidental expenses and attributable interest.
Expenditure on development of intangible assets eligible for
capitalisation are carried as Intangible assets under development where
such assets are not yet ready for their intended use.
2.09 Expenditure during construction pending capitalisation
Any expenditure directly/ indirectly related and attributable to the
construction of power projects and incidental to setting up power
project facilities, incurred prior to the Commercial Operation Date
(COD) of the Power Project, are accumulated under "Expenditure during
construction pending capitalisation", to be capitalised on completion
of construction of the respective power projects/ COD.
2.10 Foreign currency transactions and translations Initial recognition
Transactions in foreign currencies entered into by the Company and net
investment in non-integral foreign operations are accounted at the
exchange rates prevailing on the date of the transaction or at rates
that closely approximate the rate at the date of the transaction.
Measurement at the balance sheet date
Foreign currency monetary items of the Company and its net investment
in non-integral foreign operation outstanding at the balance sheet date
are restated at the year-end rates. Non-monetary items of the Company
are carried at historical cost.
Treatment of exchange differences
Exchange differences arising on settlement/ restatement of short-term
foreign currency monetary assets and liabilities of the Company are
recognised as income or expense in the Statement of Profit and Loss.
The exchange differences on restatement/ settlement of loans to
non-integral foreign operations that are considered as net investment
in such operations are accumulated in the "Foreign Currency Translation
Reserve" until disposal/ recovery ofthe net investment.
2.11 Investments
Investments are classified as long term and current. Long-term
investments are carried individually at cost less provision for
diminution, if any, other than temporary, in the value of such
investments. Current investments are carried individually, at the lower
of cost and fair value. Cost of investments includes acquisition
charges such as brokerage, fees and duties.
2.12 Employee Benefits
The Company's contribution to Provident Fund and employee state
insurance scheme are considered as defined contribution plans and are
charged as an expense to the Statement of Profit and Loss/ Expenditure
during construction pending capitalisation, as applicable, based on the
amount of contribution required to be made and when services are
rendered by the employees. The Company has unfunded defined benefit
plans namely leave encashment (long term compensated absences) and
gratuity for eligible employees, the liabilities for which are
determined on the basis of actuarial valuations, conducted by an
independent actuary at the end of the financial year using the
Projected Unit Credit Method. Actuarial gains/ losses comprise
experience adjustments and the effects of change in actuarial
assumptions, and are recognised in the Statement of Profit and Loss as
income or expenses/ Expenditure during construction pending
capitalisation, as applicable.
2.13 Borrowing Costs
Borrowing costs include interest and amortisation of ancillary costs
incurred to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development ofthe qualifying asset upto the date of
capitalisation of such asset are added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted. A
qualifying asset is one that necessarily takes a substantial period of
time to get ready for its intended use. Any income earned on the
temporary deployment/ investment of those borrowings is deducted from
the borrowing costs so incurred.
2.14 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".
2.15 Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
on a straight-line basis over the lease term to the Statement of Profit
and Loss/Expenditure during construction pending capitalisation, as
applicable.
2.16 Taxes on Income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is highly
probable that future economic benefits associated with it will flow to
the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carryforward losses only to the extent that
reasonable certainty exists that sufficient future taxable income will
be available against which these can be realised. However, if there are
unabsorbed depreciation and carry forward of losses and items relating
to capital losses, deferred tax assets are recognised only if there is
virtual certainty supported by convincing evidence that there will be
sufficient future taxable income available to realise the assets.
Deferred tax assets and liabilities are offset if such items relate to
taxes on income levied by the same governing tax laws and the Company
has a legally enforceable right for such set off. Deferred tax assets
are reviewed at each balance sheet date for their realisability.
Current and deferred tax relating to items directly recognised in
reserves are recognised in reserves and not in the Statement of Profit
and Loss.
2.17 Impairment of Assets
The carrying values of assets / cash generating units at each balance
sheet date are reviewed for impairment if any indication of impairment
exists. The following intangible assets are tested for impairment each
financial year even if there is no indication that the asset is
impaired: (a) an intangible asset that is not yet available for use;
and (b) an intangible asset that is amortised over a period exceeding
ten years from the date when the asset is available for use.
If the carrying amount of the assets exceed the estimated recoverable
amount, an impairment is recognised for such excess amount. The
impairment loss is recognised as an expense in the Statement of Profit
and Loss, unless the asset is carried at revalued amount, in which case
any impairment loss of the revalued asset is treated as a revaluation
decrease to the extent a revaluation reserve is available for that
asset.
The recoverable amount is the greater of the net selling price and
their value in use. Value in use is arrived at by discounting the
future cash flows to their present value based on an appropriate
discount factor.
When there is indication that an impairment loss recognised for an
asset (other than a revalued 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, to the extent the
amount was previously charged to the Statement of Profit and Loss. In
case of revalued assets such reversal is not recognised.
2.18 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
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 their present value and are determined
based on the best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
2.19 Share Issue Expenses
Share issue expenses are adjusted against the Securities Premium
Account as permissible under Section 52 of the Companies Act, 2013, to
the extent any balance available for utilisation in the Securities
Premium Account. Share issue expenses in excess of the balance in the
Securities Premium Account is expensed in the Statement of Profit and
Loss.
2.20 Employee share based payments
The Company had formulated Employee Stock Option Schemes (ESOS) and
Employee Stock Purchase Schemes (ESOP) in accordance with the SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999. The Schemes provide for grant of options to employees
of the Company and its subsidiaries to acquire equity shares of the
Company that vest in a graded manner and that are to be exercised
within a specified period.
Deferred Employee Stock Compensation Costs for Stock Options are
recognised in accordance with the Guidance Note on "Accounting for
Employee Share Based Payments" issued by the Institute of Chartered
Accountants of India, which establishes financial accounting and
reporting principles for employee share based payment plans. The
Company has elected to apply the Intrinsic Value method of accounting.
Accordingly, employee stock compensation costs are measured as the
difference between the intrinsic value of the company's shares of stock
options at the grant date and the exercise price to be paid by the
option holders. The compensation expense is amortised over the vesting
period of the options. The fair value of options for disclosure
purpose, is measured on the basis of an independent valuation performed
by an independent firm of Chartered Accountants in respect of stock
options granted.
2.21 Operating cycle
Based on the nature of activities of the Company and the normal time
between acquisition of assets and their realisation in cash or cash
equivalents, the Company has determined its operating cycle as 12
months for the purpose of classification of its assets and liabilities
as current and non-current.
Mar 31, 2014
01 Basis of Accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
Section 211 (3C) of the Companies Act, 1956 ("the 1956 Act") (which
continue to be applicable in respect of Section 133 of the Companies
Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated
13 September, 2013 of the Ministry of Corporate Affairs) and the
relevant provisions of the 1956 Act/ 2013 Act, as applicable. The
financial statements have been prepared on an accrual basis under the
historical cost convention. The accounting policies adopted in the
preparation of the financial statements are consistent with those
followed in the previous year.
02 Use of Estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known/ materialise.
03 Inventories
Inventories are valued at the lower of cost derived on weighted average
basis and the net realisable value after providing for obsolescence and
other losses, where considered necessary. Cost includes all charges in
bringing the goods to the point of consumption, including Octroi and
other levies, transit insurance and receiving charges.
04 Cash and cash equivalents (for the purpose 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), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
05 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.
06 Depreciation/ Amortisation
Depreciation in respect of assets used in the generation of power is
provided at the rates as well as methodology notified by the Central
Electricity Regulatory Commission (Terms and Conditions of Tariff)
Regulation 2009 (CERC) in terms of General circular no. 31/2011 dated
May 31 2011 issued by the Ministry of Corporate Affairs.
In respect of other assets, depreciation has been provided on the
straight-line method as per the rates prescribed in Schedule XIV to the
Companies Act, 1956.
Depreciation on additions/ deletions to fixed assets is provided on a
pro-rata basis from/ upto the date the asset is put to use/ discarded.
Individual assets costing less than '' 5,000 each are fully depreciated
in the year of capitalisation. The acquisition value of Leasehold Land
is amortized on a Straight Line basis over the period of the Lease.
Intangible assets consisting of Software are amortized on a Straight
Line basis over a period of four years from the date when the assets
are available for use. The estimated useful life of the intangible
assets and the amortisation period are reviewed at the end of each
financial year and the amortisation method is revised to reflect the
changed pattern.
07 Revenue Recognition
Revenue from supply of power is recognised when delivered, and measured
on an accural basis based on the rates in accordance with the
provisions of the Power Purchase Agreements (PPAs) entered into by the
Company with the procurer/s of power. Claims for delayed payment
charges and other claims are accounted by the Company on accural basis
in accordance with the provisions of the PPAs only when it is
reasonable to expect ultimate collection.
Revenue from Power generated during trial runs is accounted on the
basis of accruals and billings to State Transmission Utilities and is
reduced from the Pre-operative expenses.
Revenue from Power Consultancy/ Advisory Services is recognised when
services are rendered. Interest income from deposits and others is
recognised on an accrual basis. Dividend income is recognised when the
right to receive the dividend is established. Profit/ loss on sale of
investments is recognised on the date of the transaction of sale and is
computed with reference to the original cost of the investment sold.
08 Fixed Assets (Tangible/ Intangible)
Fixed assets are carried at cost less accumulated depreciation/
amortisation and impairment losses, if any. The cost of fixed assets
comprises its purchase price net of any trade discounts and rebates,
any import duties and other taxes (other than those subsequently
recoverable from the tax authorities), any directly attributable
expenditure on making the asset ready for its intended use, other
incidental expenses and interest on borrowings attributable to
acquisition of qualifying fixed assets up to the date the asset is
ready for its intended use. Machinery spares which can be used only in
connection with an item of fixed asset and whose use is expected to be
irregular are capitalised and depreciated over the useful life of the
principal item of the relevant assets. Subsequent expenditure on fixed
assets after its purchase/ completion is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
Fixed assets acquired and put to use for the purpose of the Project are
capitalised and depreciation thereon is included in Expenditure during
construction pending capitalisation till the Project is ready for its
intended use. Projects under which fixed assets are not yet ready for
their intended use are carried at cost, comprising direct cost, related
incidental expenses and attributable interest.
Expenditure on development of intangible assets eligible for
capitalisation are carried as Intangible assets under development where
such assets are not yet ready for their intended use.
09 Expenditure during construction pending capitalisation
Any expenditure directly/ indirectly related and attributable to the
construction of power projects and incidental to setting up power
project facilities, incurred prior to the Commercial Operation Date
(COD) of the Power Project, are accumulated under "Expenditure during
construction pending capitalisation", to be capitalised on completion
of construction of the respective power projects/ COD.
10 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and net
investment in non-integral foreign operations are accounted at the
exchange rates prevailing on the date of the transaction or at rates
that closely approximate the rate at the date of the transaction.
Measurement at the balance sheet date
Foreign currency monetary items of the Company and its net investment
in non-integral foreign operation outstanding at the balance sheet date
are restated at the year-end rates. Non-monetary items of the Company
are carried at historical cost.
Treatment of exchange differences
Exchange differences arising on settlement/ restatement of short-term
foreign currency monetary assets and liabilities of the Company are
recognised as income or expense in the Statement of Profit and Loss.
The exchange differences on restatement/ settlement of loans to
non-integral foreign operations that are considered as net investment
in such operations are accumulated in the "Foreign Currency Translation
Reserve" until disposal/ recovery of the net investment.
11 Investments
Investments are classified as long term and current. Long-term
investments are carried individually at cost less provision for
diminution, if any, other than temporary, in the value of such
investments. Current investments are carried individually, at the lower
of cost and fair value. Cost of investments includes acquisition
charges such as brokerage, fees and duties.
12 Employee Benefits
The Company''s contribution to Provident Fund and employee state
insurance scheme are considered as defined contribution plans and are
charged as an expense to the Statement of Profit and Loss/ Expenditure
during construction pending capitalisation, as applicable, based on the
amount of contribution required to be made and when services are
rendered by the employees. The Company has unfunded defined benefit
plans namely leave encashment (long term compensated absences) and
gratuity for eligible employees, the liabilities for which are
determined on the basis of actuarial valuations, conducted by an
independent actuary at the end of the financial year using the
Projected Unit Credit Method in accordance with Accounting Standard 15
(Revised 2005)
- ''Employee Benefits'', as notified under the Companies (Accounting
Standards) Rules, 2006, as amended. Actuarial gains/ losses comprise
experience adjustments and the effects of change in actuarial
assumptions, and are recognised in the Statement of Profit and Loss as
income or expenses/ Expenditure during construction pending
capitalisation, as applicable.
13 Borrowing Costs
Borrowing costs include interest and amortisation of ancillary costs
incurred to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset are added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted. A
qualifying asset is one that necessarily takes a substantial period of
time to get ready for its intended use. Any income earned on the
temporary deployment/ investment of those borrowings is deducted from
the borrowing costs so incurred.
14 Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
on a straight-line basis to the Statement of Profit and Loss/
Expenditure during construction pending capitalisation, as applicable.
15 Taxes on Income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is highly
probable that future economic benefits associated with it will flow to
the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses, deferred
tax assets are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date for their realisability.
16 Impairment of Assets
The carrying values of assets/ cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. 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 the case of revalued assets.
17 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
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 their present value and are determined
based on the best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
Liquidated Damages/ Penalty as per the Contracts entered into with
contractees are provided for at the end of the Contract or as agreed
upon.
18 Share Issue Expenses
Share issue expenses are adjusted against the Securities Premium
Account as permissible under Section 78(2) of the Companies Act, 1956,
to the extent of balance available and thereafter, the balance portion
is charged off in the Statement of Profit and Loss.
19 Employee share based payments
The Company has formulated Employee Stock Option Schemes (ESOS) and
Employee Stock Purchase Schemes (ESOP) in accordance with the SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999. The Schemes provide for grant of options to employees
of the Company and its subsidiaries to acquire equity shares of the
Company that vest in a graded manner and that are to be exercised
within a specified period.
Deferred Employee Stock Compensation Costs for Stock Options are
recognised in accordance with the Guidance Note on "Accounting for
Employee Share Based Payments" issued by the Institute of Chartered
Accountants of India, which establishes financial accounting and
reporting principles for employee share based payment plans. The
Company has elected to apply the Intrinsic Value method of accounting.
Accordingly, employee stock compensation costs are measured as the
difference between the intrinsic value of the company''s shares of stock
options at the grant date and the exercise price to be paid by the
option holders. The compensation expense is amortised over the vesting
period of the options. The fair value of options for disclosure
purpose, is measured on the basis of an independent valuation performed
by an independent firm of Chartered Accountants in respect of stock
options granted.
Mar 31, 2011
I. Basis of Consolidation and Preparation
The consolidated financial statements are prepared in accordance with
Accounting Standard 21 on "Consolidated Financial Statements" as
notified under the Companies (Accounting Standards) Rules, 2006, as
amended. Reference in these notes to Company, Holding Company,
Companies or Group shall mean to include Indiabulls Power Limited.
("IPL") or any of its subsidiaries, unless otherwise stated.
ii. Principles of Consolidation
The Consolidated Financial Statements comprise of the Financial
Statements of Indiabulls Power Limited. ("Parent Company") and its
subsidiaries ("Subsidiary Companies"). The Consolidated Financial
Statements are prepared according to uniform accounting policies, in
accordance with accounting principles generally accepted in India.
The Consolidated Financial Statements are combined on a line-by-line
basis by adding together the book values of like items of assets,
liabilities, income and expenses, after fully eliminating intra-group
balances and intra-group transactions resulting in unrealised profits
or losses in accordance with Accounting Standard 21 (Consolidated
Financial Statements as notified under the Companies (Accounting
Standards) Rules, 2006, as amended.
iii. Goodwill / Capital Reserve on Consolidation
Goodwill / Capital Reserve represents the difference between the
Company's share in the net worth of subsidiaries, and the cost of
acquisition at each point of time of making the investment in the
subsidiaries. For this purpose, the Company's share of net worth is
determined on the basis of the latest financial statements prior to the
acquisition after making necessary adjustments for material events
between the date of such financial statements and the date of
respective acquisition. Capital Reserve on consolidation is adjusted
against Goodwill. The Goodwill on Consolidation recorded in these
consolidated financial statements has not been amortised, but instead
evaluated for impairment whenever events or changes in circumstances
indicate that its carrying amount may be impaired.
vi. Basis of Accounting
The financial statements are prepared under the historical cost
convention on an accrual basis, in accordance with the generally
accepted accounting principles in India ("GAAP") and in compliance with
the applicable Accounting Standards as notified under the Companies
(Accounting Standards) Rules, 2006, as amended.
vii. Use of Estimates
The presentation of financial statements in conformity with GAAP
requires estimates and assumptions to be made that affect the reported
amount of assets and liabilities and disclosure of contingent
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting year. Differences
between the actual results and estimates are recognised in the
reporting year in which the results are known / materialized.
viii. Revenue Recognition
Income from Power Consultancy / Advisory Services is recognised on an
accrual basis. Interest income from deposits and others is recognised
on an accrual basis. Dividend income is recognised when the right to
receive the dividend is unconditionally established. Profit/loss on
sale of investments is recognised on the date of the transaction of
sale and is computed with reference to the original cost of the
investment sold.
ix. Fixed Assets
Tangible fixed assets are stated at cost, net of tax / duty credits
availed, less accumulated depreciation and impairment losses, if any.
Cost includes original cost of acquisition or installation, including
incidental expenses related to such acquisition.
Intangible assets are stated at cost, net of tax / duty credits availed
less accumulated amortisation and impairment losses, if any. Cost
includes original cost of acquisition and construction, including
incidental expenses related to such acquisition or construction.
x. Depreciation/Amortization
Depreciation on fixed assets is provided on the Straight-Line Method at
the rates and in the manner prescribed under Schedule XIV of the
Companies Act, 1956.
Depreciation on additions / deletions to fixed assets is provided on a
pro-rata basis from / upto the date the asset is put to use/discarded.
Individual assets costing less than Rs. 5,000 are fully depreciated in
the year of purchase. The acquisition value of Leasehold Land is
amortized over the period of the Lease.
The right-to-use leased asset (land) is amortised on a Straight-Line
basis over the lease term.
Intangible assets consisting of Software are amortized on a Straight
Line basis over a period of four years from the date when the assets
are available for use.
xi. Expenditure During Construction Pending Capitalisation
Any expenditure directly/indirectly related and attributable to the
construction of power projects and incidental to setting up power
project facilities, incurred prior to the date of commencement of
commercial operation of the power project, are accumulated under
"Expenditure During Construction Pending Capitalisation", to be
capitalised on completion of construction of the respective power
projects and on commencement of commercial operations.
xii. Impairment of Assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. The
recoverable amount is the higher of an asset's net selling price and
its value in use. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset
belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the Profit and Loss Account. If at
the Balance Sheet date there is an indication that a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount.
xiii. Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as a part of the
cost of such assets. Any income earned on the temporary deployment /
investment of those borrowings is deducted from the borrowing costs so
incurred. A qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use. All other borrowing
costs are charged to revenue.
xiv. Investments
Investments are classified as long term and current. Long term
investments are carried at cost less provision, if any, for diminution
other than temporary in the value of such investment. Current
investments are valued at lower of cost and fair value.
xv. Foreign Currency Transactions
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing at the time of occurrence of the transaction.
Monetary items denominated in foreign currency at the year end are
translated at year end rates. In respect of monetary items which are
covered by forward exchange contracts, premium / discount arising on
inception of the contract is amortized over the life of the contract.
Any exchange differences arising on settlement / translation are dealt
with in the Profit and Loss account.
Exchange differences arising on a monetary item that in substance forms
part of the company's net investment in a non-integral foreign
operation is accumulated in the Foreign Currency Translation Reserve
until disposal of the net investment, when it is recognised as an
income or expense in the Profit and Loss account.
Non-Monetary items carried in terms of historical cost denominated in
foreign currency are reported using the exchange rate at the date of
the transaction.
xvi. Employee Benefits
The Company's contribution to Provident Fund is charged to the Profit
and Loss account/Expenditure During Construction Pending
Capitalisation, as applicable. The Company has unfunded defined benefit
plans namely leave encashment (long term compensated absences) and
gratuity for eligible employees, the liabilities for which is
determined on the basis of actuarial valuations, conducted by an
independent actuary at the end of the financial year using the
Projected Unit Credit Method in accordance with Accounting Standard 15
(Revised 2005) - Employee Benefits, notified under the Companies
(Accounting Standards) Rules, 2006, as amended.
Superannuation (Pension & Medical coverage) payable to a Director on
retirement is actuarially valued at the end of the year using the
Projected Unit Credit Method. Actuarial gains and losses comprise
experience adjustments and the effects of change in actuarial
assumptions and are recognised in the Profit and Loss account as income
or expenses / Expenditure During Construction Pending Capitalisation,
as applicable.
xvii. Taxes on Income
Current tax is determined as the tax payable in respect of taxable
income for the reporting year and is computed in accordance with
relevant tax regulations.
Deferred tax resulting from timing differences between book and tax
profits is accounted for at the current rate of tax / substantively
enacted tax rates as on the Balance Sheet date, to the extent that the
timing differences are expected to crystallize.
Deferred Tax Assets are recognised where realisation is reasonably
certain whereas in case of carried forward losses or unabsorbed
depreciation, deferred tax assets are recognised only if there is a
virtual certainty of realisation supported by convincing evidence.
Deferred Tax Assets are reviewed for the appropriateness of their
respective carrying values at each Balance Sheet date.
xviii. Leases
In case of assets taken on operating lease, the lease rentals are
charged to the Profit and Loss account / Expenditure During
Construction Pending Capitalisation, as applicable, in accordance with
Accounting Standard 19 - Leases, as notified by the Companies
(Accounting Standards) Rules, 2006, as amended.
xix. Share Issue Expenses
Share issue expenses are adjusted against securities premium account to
the extent of balance available and thereafter, the balance portion is
charged off to the Profit and Loss account, as incurred.
xx. Deferred Employee Stock Compensation Costs
Deferred Employee Stock Compensation Costs for Stock Options are
recognised in accordance with the Guidance Note on "Accounting for
Employee Share Based Payments" issued by the Institute of Chartered
Accountants of India, which establishes financial accounting and
reporting principles for employee share based payment plans. The
Company has elected to apply the Intrinsic Value method of accounting.
Accordingly, employee stock compensation costs are measured as the
difference between the intrinsic value of the company's shares of stock
options at the grant date and the exercise price to be paid by the
option holders. The compensation expense is amortised over the vesting
period of the options. The fair value of options for disclosure
purpose, is measured on the basis of an independent valuation performed
by an independent firm of Chartered Accountants in respect of stock
options granted.
xxi. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of the
obligation can be made. Contingent liability is disclosed for (1)
Possible obligations which will be confirmed only by future events not
wholly within the control of the Company or (2) Present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot be made. Contingent
Assets are not recognised in the financial statements since this may
result in the recognition of income that may never be realised.
Mar 31, 2010
I. Basis of Consolidation and preparation
The consolidated fnancial statements are prepared in accordance with
Accounting Standard 21 (AS 21) on "Consolidated Financial Statements"
as notifed under the Companies (Accounting Standards) Rules, 2006, as
amended. Reference in these notes to Company, Holding Company,
Companies or Group shall mean to include Indiabulls Power Limited.
("IPL") or any of its subsidiaries, unless otherwise stated.
ii. Principles of Consolidation
The Consolidated Financial Statements comprise of the Financial
Statements of Indiabulls Power Limited. ("Parent Company") and its
subsidiaries ("Subsidiary Companies"). The Consolidated Financial
Statements are prepared according to uniform accounting policies, in
accordance with accounting principles generally accepted in India.
The Consolidated Financial Statements are combined on a line-by-line
basis by adding together the book values of like items of assets,
liabilities, income and expenses, after fully eliminating intra-group
balances and intra-group transactions resulting in unrealised profts
or losses in accordance with Accounting Standard 21 (AS 21)
Consolidated Financial Statements as notifed under the Companies
(Accounting Standards) Rules, 2006, as amended.
iii. Goodwill / Capital Reserve on Consolidation
Goodwill / Capital Reserve represents the difference between the
Companys share in the net worth of subsidiaries, and the cost of
acquisition at each point of time of making the investment in the
subsidiaries. For this purpose, the Companys share of net worth is
determined on the basis of the latest fnancial statements prior to the
acquisition after making necessary adjustments for material events
between the date of such fnancial statements and the date of respective
acquisition. Capital Reserve on consolidation is adjusted against
Goodwill. The Goodwill on Consolidation recorded in these consolidated
fnancial statements has not been amortised, but instead evaluated for
impairment whenever events or changes in circumstances indicate that
its carrying amount may be impaired.
v. Basis of Accounting
These fnancial statements are prepared under the historical cost
convention on an accrual basis, in accordance with the generally
accepted accounting principles in India ("GAAP") and in compliance with
the applicable accounting standards as notifed under the Companies
(Accounting Standards) Rules, 2006, as amended.
vi. use of estimates
The presentation of fnancial statements in conformity with GAAP
requires estimates and assumptions to be made that affect the reported
amount of assets and liabilities and disclosure of contingent
liabilities on the date of the fnancial statements and the reported
amount of revenues and expenses during the reporting year. Differences
between the actual results and estimates are recognised in the
reporting year in which the results are known / materialised.
vii. Revenue Recognition
Interest income from deposits and others is recognised on an accrual
basis. Dividend income is recognised when the right to receive the
dividend is unconditionally established. Proft/loss on sale of
investments is recognised on the date of the transaction of sale and is
computed with reference to the original cost of the investment sold.
viii. fixed Assets
Tangible fxed assets are stated at cost, net of tax / duty credits
availed, less accumulated depreciation and impairment losses, if any.
Cost includes original cost of acquisition or installation, including
incidental expenses related to such acquisition.
Intangible assets are stated at cost, net of tax / duty credits availed
less accumulated amortisation and impairment losses, if any. Cost
includes original cost of acquisition or construction, including
incidental expenses related to such acquisition or construction.
ix. depreciation/Amortisation
Depreciation on fxed assets is provided on the straight- line method at
the rates and in the manner prescribed under Schedule XIV of the
Companies Act, 1956.
Depreciation on additions / deletions to fxed assets is provided on
pro-rata basis from / upto the date the asset is put to use/discarded.
Individual assets costing less than Rs. 5,000 are fully depreciated in
the year of purchase.
Intangible assets consisting of Software are amortised on a straight
line basis over a period of four years from the date when the assets
are available for use.
x. expenditure during Construction pending Capitalisation
Any expenditure directly/indirectly related and attributable to
construction of power projects and incidental to setting up power
project facilities, incurred prior to the date of commencement of
commercial operation of the power project are accumulated under
Expenditure during construction pending allocation, to be capitalised
on completion of construction of the respective power projects and
commencement of commercial operations.
xi. impairment of Assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. The
recoverable amount is higher of, an assets net selling price and its
value in use. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset
belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the Proft and Loss Account. If at
the Balance Sheet date there is an indication that if a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is refected at the recoverable amount.
xii. Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of cost of
such asset. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
xiii. investments
Investments are classifed as long term and current investments. Long
term investments are stated at cost less any provision, if any, other
than temporary diminution in value of such investments. Current
investments are stated at lower of cost and fair value.
xiv. foreign Currency Transactions
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing at the time of occurrence of the transaction.
Monetary items denominated in foreign currency at the year end are
translated at year end rates. In respect of monetary items which are
covered by forward exchange contracts, premium / discount arising on
inception of the contract is amortised over the life of the contract.
Any exchange differences arising on settlement / translation are dealt
with in the proft and loss account.
Exchange differences arising on a monetary item that in substance forms
part of the companys net investment in a non-integral foreign
operation is accumulated in the foreign currency translation reserve
until disposal of the net investment, when it is recognised as an
income or expense in the proft and loss account.
xv. employee Benefts
The Companys contribution to Provident Fund is charged to the proft
and loss account / Expenditure During Construction Pending
Capitalisation, as applicable. The Company has unfunded defned beneft
plans namely leave encashment (compensated absences) and gratuity for
its employees, the liability for which is determined on the basis of
actuarial valuation, conducted, by an independent actuary at the end of
the year using the Projected Unit Credit Method in accordance with
Accounting Standard 15 (Revised 2005) Ã Employee Benefts, notifed under
the Companies (Accounting Standards) Rules, 2006, as amended.
Superannuation (Pension & Medical coverage) payable to certain
Directors on retirement is actuarially valued at the end of the year
using the Projected Unit Credit Method. Actuarial gains and losses
comprise experience adjustments and the effects of change in actuarial
assumptions and are recognised in Proft and Loss account as income or
expenses / recognised in Expenditure During Construction, pending
capitalisation, as applicable.
xvi. Taxes on income
Current tax is determined as the tax payable in respect of taxable
income for the reporting year and is computed in accordance with
relevant tax regulations.
Deferred tax resulting from timing differences between book and tax
profts is accounted for at the current rate of tax / substantively
enacted tax rates as on the Balance Sheet date, to the extent that the
timing differences are expected to crystallise.
Deferred Ta x Assets are recognised where realisation is reasonably
certain whereas in case of carried forward losses or unabsorbed
depreciation, deferred tax assets are recognised only if there is a
virtual certainty of realisation supported by convincing evidence.
Deferred Ta x Assets are reviewed for the appropriateness of their
respective carrying values at each balance sheet date.
xvii. fringe Benefts Tax
Fringe Benefts Tax has been calculated in accordance with the
provisions of the Income Tax Act, 1961 and the Guidance Note on Fringe
BeneftsTax issued by the Institute of Chartered Accountants of India.
Pursuant to the enactment of the Finance Act, 2009, Fringe Benefts tax
stands abolished w.e.f. April 01, 2009.
xviii. earnings per share
Basic earnings per share are computed using the weighted average number
of equity shares outstanding during the year. Diluted earnings per
share are computed using the weighted average number of equity and
dilutive potential equity shares outstanding during the year.
xix. Leases
In case of assets taken on operating lease, the lease rentals are
charged to the proft and loss account in accordance with Accounting
Standard 19 - Leases, as notifed by the Companies (Accounting
Standards) Rules, 2006, as amended. Site lease rent in respect of
assets under operating lease is
recognised under Expenditure During Construction, pending
capitalisation.
xx. provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Contingent liability is disclosed for (1)
Possible obligations which will be confrmed only by future events not
wholly within the control of the Company or (2) Present obligations
arising from past events where it is not probable that an outfow of
resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation can not be made. Contingent
Assets are not recognised in the fnancial statements since this may
result in the recognition of income that may never be realised.
xxi. preliminary expenses
Preliminary expenses are adjusted (net of tax) against securities
premium account to the extent of balance available and thereafter, the
balance portion is charged off to the proft and loss account, as
incurred.
xxii. Share issue expenses
Share issue expenses are adjusted against securities premium account to
the extent of balance available and thereafter, the balance portion is
charged off to the proft and loss account, as incurred.
xxiii. deferred employee Stock Compensation Costs
Deferred Employee Stock Compensation Costs are recognised in accordance
with the Guidance Note on "Accounting for Employee Share Based
Payments" issued by the Institute of Chartered Accountants of India,
which establishes fnancial accounting and reporting principles for
employee share based payment plans. The Company has elected to apply
the intrinsic value method of accounting. Accordingly, employee stock
compensation costs are measured by the difference between the estimated
intrinsic value of the companys shares on stock options on the grant date
and the exercise price to be paid by the option holders. The compensation
expense is amortised over the vesting period of the options. The fair
value of options is measured on the basis of an independent valuation
performed in respect of stock options granted.