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Notes to Accounts of Swelect Energy Systems Ltd.

Mar 31, 2018

Notes:

(i). The Company (Operator) has entered into the following Power Purchase Agreements (PPA) with counter parties (Grantor). The Company has assessed the same as an arrangement which would need to be accounted under the principles of Appendix A of Ind AS 11 as the following conditions are met:

The Grantor controls or regulates which services the Operator must provide to the Infrastructure (Solar Power Plant), to whom it must provide, and at what price and the controls the Grantor will exercise through ownership, beneficial entitlement or other significant residual interest in the Infrastructure at the end of the term of the arrangement. Infrastructure within the scope of Appendix A of Ind AS 11 is not recognized as Property, Plant and Equipment of the Operator because the contractual service arrangement does not convey the right to control the use of the Infrastructure to the Operator.

Consideration for the construction services received or receivable by the Operator is recognized at its fair value. The consideration may be rights to:

(a) a financial asset, or

(b) an Intangible asset.

The Company recognizes a financial asset to the extent that it has an unconditional contractual right to receive cash or another financial asset from the Grantor for the construction services; the Grantor has little, if any, discretion to avoid payment, usually because the agreement is enforceable by law, even if payment is contingent on the operator ensuring that the Infrastructure meets specified quality or efficiency requirements. The tenure of the PPA represents the significant useful life of the Infrastructure. Consequently, the Company has an intangible right to receive cash through the tenure of the PPA and the same has been recognized as an Intangible asset. The Intangible asset is amortized over the agreement period.

Also Refer Note 22 and Note 25.

(ii). Intangible asset with a carrying amount of Rs. 860.30 lakhs (as at 31 March 2017: Nil) has been pledged to secure borrowings of the Company (refer Note 16). The Company is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.

(iii). Intangible asset with a carrying amount of Rs. 5,318.91 lakhs (as at 31 March 2017: Rs. 5,552.11 lakhs) has been pledged in favour of the Grantor against the grant received from Grantor.

Note:

In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss towards expected risk of delays and default in collection.

Trade Receivables are unsecured and are derived from revenue earned from sale of Solar Photovoltaic Panels, Solar Power Generating Systems and accessories and other services such as installation, maintenance and sale of power. Trade receivables are non-interest bearing and are generally on terms of 60 days. No interest is charged on the balance regardless the age of the balance. The Company uses judgments in making certain assumptions and selects inputs to determine the impairment of these trade receivables. This is based on the Company''s historical experience towards potential billing adjustments, delays and defaults at the end of the reporting period.

a. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of the liquidation of the Company, the holder of equity share will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be proportionate to the number of equity shares held by the shareholders.

As per the records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

(i) Securities Premium Reserve - Where the Company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on those shares shall be transferred to âSecurities Premium Reserveâ. The Company may issue fully paid-up bonus shares to its members out of the Securities Premium Reserve and the Company can use this reserve for buy-back of shares.

(ii) General Reserve - General Reserve is created out of the profits earned by the Company by way of transfer from surplus in the Statement of Profit and Loss. The Company can use this reserve for payment of dividend and issue fully paid-up and not paid-up bonus shares.

Proposed Dividend of Rs. 4/- per share on Equity shares are subject to the approval at the Annual General Meeting and are not recognized as a liability (including DDT thereon) as at 31 March 2018.

As at 31 March 2018, the Company has total eligible deferred tax asset of Rs. 4,449.35 lakhs (including on account of business loss, unabsorbed depreciation and MAT Credit entitlement) as per the revised Income Tax Returns filed/Income Tax workings. In this regard, based on estimated tax workings and the accounting policy followed by the Company for recognition of deferred tax assets on such losses/unabsorbed depreciate and MAT Credit, the Company has recognized deferred tax asset to the extent of Rs.1,508.11 lakhs towards carried forward tax losses and unabsorbed depreciation and unused tax credits to the extent of deferred tax liabilities.

Note:

During the current year, the Company is required to pay tax as per the provisions of Minimum Alternate tax under the provisions of Section 115JB of the Income Tax Act, 1961. Accordingly, the effective rate of tax has been considered as 21.34%.

Income tax asset of Rs. 53.08 lakhs as at 31 March 2018 (As at 31 March 2017 - Nil) represents the tax deducted at source/ advance tax, net of provision for income tax.

1 Related party transactions Names of Related parties

Subsidiaries Swelect Energy Systems Pte. Limited., Singapore

SWELECT Inc , USA SWELECT Energy Systems LLC , USA Swelect Solar Energy Private Limited Amex Alloys Private Limited Noel Media & Advertising Private Limited Swelect Green Energy Solutions Private Limited K J Solar Systems Private Limited Swelect Power Systems Private Limited Key Management Personnel (KMP) Mr. R. Chellappan - Managing Director

Mr. A.Balan - Joint Managing Director

Mr. V.C.Raghunath - Whole Time Director

Mrs. V.C.Mirunalini - Whole Time Director (w.e.f 28 June 2017)

Mr. V.M.Sivasubramaniam - Independent Director (up to 26 April 2018)

Mr. N.Natarajan - Independent Director

Mr. G.S.Samuel - Independent Director

Mr. S.Annadurai - Independent Director (w.e.f. 28 June 2017)

Mrs. Jayashree Nachiappan - Non Executive Director Mr. P.Jagan - Chief Financial Officer Mr. R. Sathishkumar - Company Secretary Relatives of Key Management Personnel Mrs. Gunasundari Chellappan

Ms. Aarthi Balan Ms. Preetha Balan Mrs. Vasantha Balan

Mr. K. V. Nachiappan (KMP w.e.f 20 April 2018)

Mr. K. N. Rishii Nandhan Enterprises owned or significantly influenced Arken Solutions Private Limited by Key Management Personnel or their Swelect Technologies Private Limited relatives Swelect Electronics Private Limited

Entity in which the Company has Control SWEES Emp loyees Welfare Trust

Terms and conditions of transactions with Related parties :

The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the yearend are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2017: Nil). This assessment is undertaken at the end each financial year through examining the financial position of the related parties and the market in which the related parties operate.

* Rs. 3.03 lakhs deposited under dispute. (31 March 2017 - Rs.3.03 lakhs )

** Rs. 3.33 lakhs deposited under dispute. (31 March 2017 - Rs. 24.69 lakhs)

# Rs. 140.76 lakhs deposited under dispute. (31 March 2017 - Rs. 140.76 lakhs)

## Rs. 65.68 lakhs deposited under dispute. (31 March 2017 - Rs. 64.81 lakhs)

Management Assessment:

The amount shown under Contingent Liabilities and disputed claims represent the best possible estimates arrived at on the basis of available information. Further, various Government authorities raise issues/clarifications in the normal course of business and the Company has provided its responses to the same and no formal demands/claims has been made by the authorities in respect of the same other than those pending before various judicial/regulatory forums as disclosed above. The uncertainties and possible reimbursement in respect of the above are dependent on the outcome of the various legal proceedings which have been initiated by the Company or the Claimants, as the case may be and therefore cannot be predicted accurately. The Company has reviewed all the proceedings and has adequately provided for where provisions are required and disclosed contingent liabilities wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material adverse effect on the financial statements.

(b) Commitments:

i) The estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 1,345.63 (31 March 2017: Nil)

(ii) Commitments relating to lease agreements, please Refer Note 33

(iii) Investments given as security for loans availed by the Subsidiaries of the Company:

Fair value hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are

(a) recognized and measured at fair value and (b) measured at amortized cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard.

(b) Financial assets and liabilities measured at amortized cost

The Company has not disclosed fair values of financial instruments such as trade receivables, cash and cash equivalents, other bank balances, security deposits, loans and advances to related parties, lease rental receivables, interest accrued on fixed deposits, certain advances to employees, trade payables and employee benefits payables (that are short term in nature), because their carrying amounts are reasonable approximations of their fair values.

The Company has not offset financial assets and financial liabilities as at 31 March 2018 and 31 March 2017. The Company''s borrowings are secured by Fixed Deposits / Mutual Funds, the details of which are more fully described in Note 16.

2. Significant accounting judgments, estimates and assumptions

The preparation of the Company''s financial statements requires Management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, accompanying disclosures, and disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Judgments

In the process of applying the Company''s accounting policies, Management has made the following judgments, which have the most significant effect on the amounts recognized in the Standalone Ind AS financial statements:

Service concession arrangements

in relation to the underlying ownership of the assets, terms of the power distribution arrangements entered with the Grantor, ability to determine prices, value of construction service, assessment of right to guaranteed cash etc.

Operating lease commitments - Company as lessor

The Company has entered into commercial property leases on its Investment Property portfolio. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the commercial property and the fair value of the asset, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases.

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. The Company based its assumptions and estimates on parameters available when the 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.

Taxes

Significant Management judgment is required to determine the amount of deferred tax assets (including MAT credit) that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Allowance for uncollectible trade receivables

Trade receivables do not carry interest and are stated at their nominal values as reduced by appropriate allowances for estimated irrecoverable amounts. Estimated irrecoverable amounts are based on the ageing of the receivable balances and historical experiences. Individual trade receivables are written off when Management deems them not be collectible. The Company has evaluated the receivable balances and has made allowances for the estimated irrecoverable amounts and no further allowance/write-off is expected on the receivables by the Company.

Warranties

Provision for warranties involves a significant amount of estimation. The provision is based on the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The best estimate is determined based on the Company''s past experience of warranty claims and future expectations. These estimates are revised periodically.

Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Impairment of non-financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or Cash Generating Units (CGU) fair value less cost of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

Defined benefit plans

The cost of the defined benefit gratuity plan and other post-employment compensated absences and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Further details about defined benefit obligations are given in Note 32.

3.Financial Risk Management Objectives & Policies

The Company''s principal financial liabilities comprise of short tenured borrowings, trade and other payables. Most of these liabilities relate to the Company''s working capital cycle. The Company has trade and other receivables, loans and advances that arise directly from its operations.

The Company is accordingly exposed to market risk, credit risk and liquidity risk.

The Company''s senior Management oversee these risks. The senior professionals working to manage the financial risks for the Company are accountable to the Board of Directors and the Audit Committee. This process provides assurance that the Company''s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with Company''s policies and overall risk appetite. All foreign currency hedging activities for risk management purposes are carried out by a team that have the appropriate skills, experience and supervision. In addition, independent views from bankers and currency market experts are obtained periodically to validate risk mitigation decisions. It is the Company''s policy that no trading in derivatives for speculative purposes shall be undertaken.

The Audit Committee reviews and agree policies for managing each of these risks which are summarized below:

(a) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises currency rate risk and interest rate risk. Financial instruments affected by market risk include loans and borrowings, deposits and advances.

The Company''s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rate movement.

(ii) Foreign Currency Risk

The Company manages its foreign currency risk by way of a periodical assessment for hedging appropriate percentage of its foreign currency exposure, as per its established risk management policy duly considering the nature of the foreign currency receivable/payables, the fluctuation in the foreign currencies etc.

Foreign Currency Sensitivity

The Company does not have outstanding derivatives as at 31 March 2018 and 31 March 2017 and all of its foreign currency exposure is unhedged. The following table demonstrates the sensitivity in the USD, Euro and other currencies to the functional currency of the Company, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities including foreign currency derivatives.

(b) Credit Risk

Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities, primarily trade receivables and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

(i) Trade and other receivables

Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and controls relating to customer credit risk management. Trade receivables are non-interest bearing and are generally on credit terms in line with respective industry norms. Outstanding customer receivables are regularly monitored. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.

Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses based on historical trends and other factors. Given that the macroeconomic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue. Further, Management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historical payment behavior and extensive analysis of customer credit risk. The impairment loss at the reporting dates related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances, mainly due to economic circumstances.

In addition, an impairment analysis is performed at each reporting date on an individual basis for all the major individual customers. The maximum exposure to credit risk as at the reporting date is the carrying value of each class of financial assets that are not secured by security deposits. The ageing analysis of trade receivables as of the reporting date is as follows:

The requirement for impairment is analyzed at each reporting date and provision is based on the Expected Credit Loss Method by following a provision matrix which results in provision percentages in the range of 10% to 100% based on the age bucket of receivables ranging from 1. 5 years to 5 years and more.

Lease rent receivable

The Company''s leasing arrangements represent the buildings and land let out to various customers which have been classified as Operating Lease. The creditworthiness of the customer is evaluated prior to sanctioning credit facilities. Appropriate procedures for follow-up and recovery are in place to monitor credit risk. The Company does not expect any losses from nonperformance by these customers.

Cash and bank balances

The Company holds cash and cash equivalents with credit worthy banks and financial institutions as at the reporting date. The credit worthiness of such banks and financial institutions are evaluated by the Management on an ongoing basis and is considered to be good.

Other financial assets including investments

The Company does not expect any losses from non-performance by the counter-parties.

(ii) Financial instruments and cash deposits

Credit risk from balances with banks is managed by the Company''s treasury team in accordance with the policy approved by the Board. Investments of surplus funds are made temporarily with approved counterparties, mainly mutual funds, who meet the minimum threshold requirements under the counterparty risk assessment process.

(c) Liquidity Risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company''s objective is to, at all times maintain optimum levels of liquidity to meet it cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including loans, debt, and overdraft from both domestic and international banks at an optimized cost.

The table below summarize the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments:

4.Capital Management

Capital includes equity attributable to the equity holders of the Company and net debt. Primary objective of Company''s capital management is to ensure that it maintains an optimum financing structure and healthy returns in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments, in light of the changes in economic conditions or business requirements. The Company monitors capital using a gearing ratio which is net debt divided by total capital plus net debt. Net debt is calculated as loans and borrowings less cash and cash equivalents.

5. a) Standards issued but not yet effective

Ind AS 115 - âRevenue from Contracts with Customersâ:

On 28 March 2018, the Ministry of Corporate Affairs (MCA), notified Ind AS 115, Revenue from Contracts with Customers, as part of the Companies (Indian Accounting Standards) Amendment Rules, 2018. The new standard is based on IFRS 15, Revenue from Contracts with Customers. The standard is effective for the accounting periods commencing on or after 1 April 2018.

Ind AS 115 replaces Ind AS 11 Construction contracts and Ind AS 18 Revenue. The core principle of Ind AS 115 is that an entity recognizes revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is delivered in a five-step model framework:

- Identify the contract(s) with a customer - assess whether the contract is within the scope of Ind AS 115. ''Customer'' has now been defined.

- Identify the performance obligations in the contract - determine whether the goods and services in a contract are distinct.

- Determine the transaction price - transaction price will include fixed, variable and non-cash considerations.

- Allocate the transaction price to the performance obligations in the contract - allocation based on a stand-alone selling price basis using acceptable methods.

- Recognize revenue when (or as) the entity satisfies a performance obligation - i.e. recognize revenue at a point in time or over a period of time based on performance obligations.

The Company is evaluating the requirements of the standards, and the transition effects on the financial statements are being evaluated.

b) Standards yet to be notified:

Ind AS 116 - âLeasesâ:

On 18 July 2017, the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) issued an Exposure Draft (ED) of Ind AS 116, Leases. Ind AS 116 is largely converged with IFRS 16. When notified, Ind AS 116 will replace Ind AS 17 Leases.

Ind AS 116 sets out a comprehensive model for identification of lease arrangements and their treatment in the financial statements of the lessor and lessee. Ind AS 116 applies a control model for the identification of leases, distinguishing between leases and service contracts on the basis of whether there is an identified asset controlled by the customer. The Company is evaluating the requirement of the standard and the effect on the financial statements upon notification is being evaluated.

6. Previous year figures which have been audited by previous auditors have been regrouped/reclassified, wherever necessary. The following reclassifications have been made to the prior year''s financial statements to enhance comparability with the current year''s financial statements.

7. The Ind AS financial statements were approved by the Board of Directors on 25 May 2018.

Mar 31, 2017

Description of valuation techniques used and key inputs to valuation on investment properties:

As at 31 March 2017 and 31 March 2016, the fair value of the property is Rs. 19,913 lakhs and Rs. 21,141 lakhs respectively. The valuation is based on fair value assessment. A valuation model in accordance with that recommended by the International Valuation Standards Committee has been applied.

The Company has no restrictions on the realisability of its investment properties and has no contractual obligations to purchase, construct or develop investment properties or has any plans for major repairs, maintenance and enhancements. Fair Value Hierarchy disclosures for investment properties have been provided in Note 44.

Under the Discounted cash flow method, fair value is estimated using assumptions regarding the fair market value of the property. This method involves the projection of a series of cash flows on a real property interest. To this projected cash flow series, a market-derived discount rate is applied to establish the present value of the income stream associated with the asset. The exit yield is normally separately determined and differs from the discount rate.

The duration of the cash flows and the specific timing of inflows and outflows are determined by events such as rent reviews, lease renewal and related re-letting, redevelopment, or refurbishment. The appropriate duration is typically driven by market behaviour that is a characteristic of the class of real property. Periodic cash flow is typically estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance cost, agent and commission costs and other operating and management expenses. The series of periodic net operating income, along with an estimate of the terminal value anticipated at the end of the projection period, is then discounted.

Significant increases (decreases) in estimated rental value and rent growth per annum in isolation would result in a significantly higher (lower) fair value of the properties. Significant increases (decreases) in long-term vacancy rate and discount rate (and exit yield) in isolation would result in a significantly lower (higher) fair value.

Generally, a change in the assumption made for the estimated rental value is accompanied by:

i. A directionally similar change in the rent growth per annum and discount rate (and exit yield)

ii. An opposite change in the long term vacancy rate.

Certification process refers to cost incurred to obtain IEC 61215 certification from TUV Germany and UL Certification from Intertek, USA. TUV, Germany certifications are valid till 2021.

For Intangible assets as on 1 April 2015 i.e. the date of transition to Ind AS, the company has used Indian GAAP carrying value as deemed cost.

* The Company (operator) has entered into a 25 year PPA with TANGEDCO (Grantor), until December 2042. The Company has assessed the PPA as an arrangement which would need to be accounted under the principles of Appendix A of Ind-AS 11 as the following conditions are met:

The grantor (TANGEDCO) controls or regulates what services the operator (Company) must provide with the infrastructure (Power plant), to whom it must provide them, and at what price; and the grantor controls through ownership, beneficial entitlement or otherwise significant residual interest in the infrastructure at the end of the term of the arrangement.

Infrastructure within the scope of Appendix A of Ind-AS 11 is not recognized as property, plant and equipment of the operator because the contractual service arrangement does not convey the right to control the use of the infrastructure to the operator.

Consideration for the construction services received or receivable by the operator is recognized at its fair value. The consideration may be rights to:

(a) a financial asset, or

(b) an intangible asset.

The Company recognizes a financial asset to the extent that it has an unconditional contractual right to receive cash or another financial asset from the grantor for the construction services; the grantor has little, if any, discretion to avoid payment, usually because the agreement is enforceable by law, even if payment is contingent on the operator ensuring that the infrastructure meets specified quality or efficiency requirements.

The PPA is for a tenure of 25 years, which represents the significant useful life of the infrastructure (Power Plant). Consequently, the Company has an Intangible right to receive cash through the tenure of the PPA and the same has been recognized as an intangible asset. The Intangible asset is amortized over a period of 25 years.

Note:

*Investments marked have been pledged as collateral securities with banks for availment of term loans for the Company.(Refer Note 16). ** Investment marked have been pledged partly as collateral security with a bank for availment of term loan for one of the Subsidiaries of the Company (Refer Note 16).

No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.

For terms and conditions relating to related party receivables, refer Note 36.

Trade receivables are non-interest bearing and are generally on terms of 30 - 90 days.

Note:

* The balance on deposit accounts bears an interest rate of 7.5% and have been pledged as collateral securities with banks for availing Bank guarantees for the Company.

** Pursuant to the amalgamation of HHV Solar Technologies Limited (a wholly owned subsidiary) with the Company (Refer Note 43), the existing Authorized Share Capital of the Company has been altered as Rs.47,00,00,000/- comprising 4,70,00,000 Equity Shares of Rs.10/- each ,vide Postal Ballot resolution dated 29 March 2017.

a. Terms/rights attached to equity shares

During the year ended 31 March 2017, the amount of per share dividend proposed by the board of directors (in their meeting held on May 25, 2017) as distributions to equity shareholders for final dividend was Rs. 4/- (Refer to note 15 for further details).

In the event of the liquidation of the Company, the holder of equity share will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be proportionate to the number of equity shares held by the shareholders.

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

1 Other Equity

Securities Premium Reserve - Where the Company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on those shares shall be transferred to âSecurities Premium Reserveâ. The Company may issue fully paid-up bonus shares to its members out of the securities premium reserve and the Company can use this reserve for buy-back of shares.

General Reserve - General Reserve is created out of the profits earned by the Company by way of transfer from surplus in the statement of profit and loss. The Company can use this reserve for payment of dividend and issue of fully paid-up and not paid-up bonus shares.

*Note:

There is no overdue amount payable to Micro, Small and Medium Enterprises as defined under âThe Micro Small and Medium Enterprises Development Act, 2006â. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the year.

2 Defined Contribution Plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The Scheme is funded with an Insurance Company in the form of a qualifying insurance policy.

The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

The average duration of the defined benefit plan obligation at the end of the reporting period is 17.28 years (31 March 2016: 18.25 years).

Terms and conditions of transactions with related parties

The sales to related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances received for any related party receivables or payables. For the year ended March 31, 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2016, 2015 : Rs Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

3 Contingent liabilities

Future cash outflows in respect of matters considered disputed are determinable only on receipt of judgments / decisions pending at various forums/authorities. The management does not expect these claims to succeed and accordingly, no provision for the contingent liability has been recognized in the financial statements.

The Company''s pending litigations comprise of proceedings pending with tax authorities. The Company has reviewed all the proceedings and has adequately provided for where provisions are required and disclosed contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material adverse effect on the financial statements.

4 Capital and other commitments

a) The estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. Nil (31 March 2016: Rs. Nil).

b) Commitments relating to lease arrangements, please refer to note 35.

5 Exceptional Items

Exceptional items represents the effect of transfer as a going concern on slump exchange basis, the 12 MW solar power undertaking at Vellakoil to M/s Swelect Green Energy Solutions Private Limited, a wholly owned subsidiary of the Company for an aggregate consideration of Rs.6,300 lakhs, settled by issue of optionally convertible debentures of the subsidiary and disclosed as non-current investment in the statement of standalone assets and liabilities. The carrying value of net assets transferred is Rs.6,249 lakhs and the profit recognized of Rs.51.67 lakhs has been disclosed as an exceptional item for the year ended 31 March 2016.

Further, the exceptional items also includes an exceptional item amount of Rs.30 lakhs recovered against cost of land written off during the year ended 31 March 2015 of Rs.203.12 lakhs (net off Rs.27.31 lakhs) on account of defective title and for which the company is pursuing a legal claim against certain individuals.

6 Disclosure related to Specified Bank Note ( SBN )

Note below mentioned on the details of the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016.

7 Business combinations under common control Merger with HHV

The Board of Directors of the Company at its meeting held on 16 December 2015 approved a Scheme of Arrangement (âthe Schemeâ) enabling the merger of one of its subsidiary, namely HHV Solar Technologies Limited (âHHVâ) with the Company, with effect from 1 April 2015 (âAppointed Dateâ). The Scheme of Arrangement has been approved by SEBI, the shareholders and creditors of the Company and approved by the Madras High Court vide order dated 18 October, 2016. Accordingly, the effect of the above scheme has been given to the standalone results with effect from 1 April, 2015 under the requirement of ''IND AS 103 Business Combination''.

The Company acquired HHV to consolidate and obtain synergies and lead as an integrated vertical solar provider. HHV was primarily engaged in the manufacturing and supply of off-grid solar photovoltaic modules based on crystalline silicon technology (c-Si).

Accordingly, the accounting treatment has been given as under:

Assets acquired and liabilities assumed:

* During July 2015 the Company had acquired the remaining preference share capital amounting to Rs.400 lakhs for consideration of Rs. 448.33 lakhs. The difference of Rs. 48.33 Lakhs has been adjusted against the Reserves and Surplus for the year ended March 31, 2016. Refer Statement of Changes in Equity.

8 Fair Value Hierarchy

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

9. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to the short term maturities of these instruments.

10. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

There have been no transfers between Level 1 and Level 2 during the period.

11. Significant accounting judgments, estimates and assumptions

The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, accompanying disclosures, and disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Judgments

In the process of applying the Company''s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the standalone financial statements:

Service concession arrangements

Management has assessed applicability of Appendix A of Ind AS 11: Service Concession Arrangements to power distribution arrangements entered into by the Company. In assessing the applicability, management has exercised significant judgment in relation to the underlying ownership of the assets, terms of the power distribution arrangements entered with the grantor, ability to determine prices, fair value of construction service, assessment of right to guaranteed cash etc. Based on detailed evaluation, management has determined that this arrangement meet the criteria for recognition as service concession arrangements.

Operating lease commitments - Company as lessor

The Company has entered into commercial property leases on its investment property portfolio. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the commercial property and the fair value of the asset, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases.

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 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.

Taxes

Significant management judgment is required to determine the amount of deferred tax assets (including MAT credit) that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Allowance for uncollectible trade receivables

Trade receivables do not carry interest and are stated at their nominal values as reduced by appropriate allowances for estimated irrecoverable amounts. Estimated irrecoverable amounts are based on the aging of the receivable balances and historical experiences. Individual trade receivables are written off when management deems them not be collectible. Hence no provision is required under the Expected credit loss model.

Warranties

Provision for warranties involves a significant amount of estimation. The provision is based on the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The best estimate is determined based on the Company''s past experience of warranty claims (normally over four years) and future expectations. These estimates are revised periodically.

Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Impairment of non-financial assets

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

Defined benefit plans (gratuity benefits)

The cost of the defined benefit gratuity plan and other post-employment leave encashment benefit and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

Further details about defined benefit obligations are given in Note 33.

12. Financial Risk Management Objectives & Policies

The Company''s principal financial liabilities comprise of short tenured borrowings, trade and other payables and financial guarantee contracts. Most of these liabilities relate to financing Company''s working capital cycle. The Company has trade and other receivables, loans and advances that arise directly from its operations. The Company also enters into hedging transactions to cover foreign exchange exposure risk as considered necessary.

The Company is accordingly exposed to market risk, credit risk and liquidity risk.

The Company''s senior management oversees management of these risks. The senior professionals working to manage the financial risks for the Company are accountable to the Board of Directors and the Audit Committee. This process provides assurance that the Company''s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with Company''s policies and overall risk appetite. All foreign currency hedging activities for risk management purposes are carried out a team that have the appropriate skills, experience and supervision. In addition, independent views from bankers and currency market experts are obtained periodically to validate risk mitigation decisions. It is the Company''s policy that no trading in derivatives for speculative purposes shall be undertaken.

The Audit Committee reviews and agree policies for managing each of these risks which are summarized below:

Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise currency rate risk and interest rate risk. Financial instruments affected by market risk include loans and borrowings, deposits, advances and derivative financial instruments.

The Company''s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rate movement.

The Company considers derivative financial instruments such as foreign exchange forward contracts to manage its exposures to foreign exchange fluctuations.

Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and in foreign currency, primarily US Dollars. The Company has foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk. The Company may use forward contracts or foreign exchange options towards hedging risk resulting from changes and fluctuations in foreign currency exchange rate. These foreign exchange contracts, carried at fair value, may have varying maturities varying depending upon the primary host contract requirement and risk management strategy of the company.

The Company manages its foreign currency risk by hedging appropriate percentage of its foreign currency exposure, as per its established risk management policy.

Foreign Currency Sensitivity

The following table demonstrates the sensitivity in the USD, Euro and other currencies to the functional currency of the Company, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities including foreign currency derivatives.

Credit Risk

13. Trade receivables

Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and controls relating to customer credit risk management. Trade receivables are non-interest bearing and are generally on credit term in line with respective industry norms. Outstanding customer receivables are regularly monitored. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.

14. Financial instruments and cash deposits

Credit risk from balances with banks is managed by Company''s treasury in accordance with the Board approved policy. Investments of surplus funds, temporarily, are made only with approved counterparties, mainly mutual funds, who meet the minimum threshold requirements under the counterparty risk assessment process.

Liquidity Risk

The table below summaries the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments:

15. Capital Management

16. First-time adoption of Ind AS

These financial statements, for the year ended 31 March 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP) (as amended). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31 March 2017, together with the comparative period data as at and for the year ended 31 March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at 1 April 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2015 and the financial statements as at and for the year ended March 31, 2016.

Exemptions Applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

a) Ind AS 103 Business Combinations has not been applied to acquisitions of subsidiaries, which are considered businesses under Ind AS that occurred before 1 April 2015. Use of this exemption means that the Indian GAAP carrying amounts of assets and liabilities, that are required to be recognized under Ind AS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with respective Ind AS. The Company recognizes all assets acquired and liabilities assumed in a past business combination, except (i) certain financial assets and liabilities that were derecognized and that fall under the derecognition exception, and (ii) assets (including goodwill) and liabilities that were not recognized in the acquirer''s consolidated balance sheet under its previous GAAP and that would not qualify for recognition under Ind AS in the individual balance sheet of the acquiree. Assets and liabilities that do not qualify for recognition under Ind AS are excluded from the opening Ind AS balance sheet. The Company did not recognize or exclude any previously recognized amounts as a result of Ind AS recognition requirements.

b) Since there is no change in the functional currency, the Company has elected to continue with the carrying value for all of its Property, plant and Equipment, Intangible assets and Investment property as recognized in its Indian GAAP financials as deemed cost at the transition date.

Estimates

The estimates at 1 April 2015 and at 31 March 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from fair value through profit and loss - equity instruments in Non group companies and Impairment of financial assets based on expected credit loss model where application of Indian GAAP did not require estimation.

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1 April 2015 (i.e. the date of transition to Ind-AS) and as of 31 March 2016.

A Investment Property

Investment properties are reclassified from Property Plant and Equipment - Buildings as shown in previous Indian GAAP and presented separately.

B Trade Receivables

The Company identifies receivables which shall be recovered beyond a period of twelve months as of the reporting date and has discounted the same to its present value over the estimated tenure of the retention period. The impact of discounting has been adjusted to the retained earnings on transition date and has been recognized as finance income in the statement of profit and loss for the year ended March 31, 2016 on account of unwinding.

C Proposed dividend

Under Indian GAAP, proposed dividend including dividend distribution tax (DDT), are recognized as liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognized as a liability in the period in which it is declared by the Company, usually when approved by shareholders in a general meeting, or paid.

D Defined benefit obligation

Both under Indian GAAP and Ind AS, the Company recognized costs related to its post-employment benefit plan on actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, remeasurements (comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability) are recognized in balance sheet through other comprehensive income.

E Investments

Under IGAAP, investments in liquid mutual funds were carried at cost or net realizable value, whichever is lesser. Under Ind AS, such investments are measured at fair value through profit or loss.

F Loans

The Company has fair valued its security deposits and employee loans as at the transition date.

G Deferred Tax

The various transitional adjustments lead to temporary differences, which the Company has to account for. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.

H Service Concession Arrangement

Management has determined the applicability of Appendix A of Ind AS 11: Service Concession Arrangements to power distribution arrangements entered into by the Company. The accounting for the power purchase arrangements in accordance with Appendix A of Ind AS 11 has impacted Capital work in progress and intangible assets as of April 1, 2015 amounting to Rs. 1,507.67 Lakhs, Revenue from operations and Cost of goods consumed by Rs. 5,476.55 lakhs and Rs. 5,156.29 lakhs respectively for the year ended March 31, 2016, property plant and equipment and Intangible assets as at March 31, 2016 amounting to Rs. 6,467.59 lakhs and Rs. 4,366.17 lakhs respectively and Financial asset amounting to Rs. 143.01 lakhs.

I Excise duty

Excise duty on account of sale of goods have been included in revenue as it is on own account because it is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not.

17. Standards issued but not yet effective

The standard issued, but not yet effective up to the date of issuance of the Company financial statements is disclosed below. The Company intends to adopt this standard when it becomes effective.

Ind AS 115 Revenue from Contracts with Customers

Ind AS 115 was issued in February 2015 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115 revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under Ind AS. This standard will come into force from accounting period commencing on or after April 1, 2018. The Company will adopt the new standard on the required effective date. During the current year, the Company performed a preliminary assessment of Ind AS 115, which is subject to changes arising from a more detailed ongoing analysis.

18. Previous year figures have been regrouped/reclassified, wherever necessary, to conform to the current year''s classification.

The accompanying notes are an integral part of the financial statements.

As per our report of even date

Mar 31, 2016

When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate.

Where the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related asset.

b. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March 2016, the amount of per share dividend recognized as distributions to equity shareholders for interim dividend was Rs.3/- (31 March 2015 Rs.Nil) and proposed dividend was Rs.1/- (31 March 2015: Rs. 2.50/-).

1. Employee benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an Insurance Company in the form of a qualifying insurance policy.

The following table summarizes the components of net benefit expense recognized in the Statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity plan.

2. Segment information

A. Primary segment information (By Business segments)

The Company''s operations represents revenue from Solar power projects, solar and wind power generation , contract manufacturing services, installation and maintenance services, sale of solar PV inverters and energy efficient lighting systems. Accordingly, revenues based on class of products comprise the primary basis of segmental information set out in the financial statements.

B. Secondary segment information (By Geographical segments)

The following table shows the geographical distribution of the Company''s segment revenues and additions to tangible and intangible assets for the year ended 31 March 2016 and year ended 31 March 2015. All tangible and intangible assets are located only in India except trade receivable and investment.

3. Capital and other commitments

a) The estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.Nil (31 March 2015: Rs.413,059,895).

b) Commitments relating to lease arrangements, please refer to note 28.

4. Exceptional Items

"Exceptional items represents the effect of transfer as a going concern on slump exchange basis, the 12 MW solar power undertaking at Vellakoil to M/s Swelect Green Energy Solutions Private Limited, a wholly owned subsidiary of the Company for an aggregate consideration of Rs.6,300 lakhs, settled by issue of compulsory convertible debentures of the subsidiary and disclosed as non-current investment in the statement of standalone assets and liabilities. The carrying value of net assets transferred is Rs.6,249 lakhs and the profit recognized of Rs.51.67 lakhs has been disclosed as an exceptional item for the year ended 31 March 2016.

5. The Board of Directors of the Company at its meeting held on 16 December 2015 approved a Scheme of Arrangement ("the Scheme") enabling the merger of one of its subsidiary, namely HHV Solar Technologies Limited (âHHVâ) with the Company, with effect from 1 April 2015 (âAppointed Dateâ). The Scheme of Arrangement has been approved by the respective shareholders of subsidiary and the creditors of both the Companies. Pending approval of the scheme of amalgamation by the Hon''ble High Court of Madras and such other statutory / regulatory authority, the scheme has not been given effect to in the standalone financial results. The consolidated financial results appropriately incorporate the results of HHV.

6. Previous year figures have been regrouped/reclassified, wherever necessary, to conform to the current year''s classification.

Mar 31, 2015

1. Increase in capital expenditure include payments for items in capital work-in-progress and purchase of fixed assets. Adjustments for increase / decrease in current liabilities relating to acquisition of fixed assets have been made to the extent identified.

2. Fixed deposits with banks with maturity period of more than three months amounting to Rs.1,272,169,271 (Previous year Rs. 1,293,066,836) are not included under Cash and Cash equivalents. These fixed deposits include deposits amounting to Rs.486,529,343 (Previous year Rs. 480,055,421) retained in Escrow account pursuant to the transfer of uninterruptible power supply systems business.

3. The accompanying notes are an integral part of the financial statement.

SWELECT ENERGY SYSTEMS LIMITED

Notes to financial statements for the year ended 31 March 2015

(All amounts are in Indian Rupees, unless otherwise stated)

1. Nature of operations

SWELECT ENERGY SYSTEMS LIMITED ('the Company') was incorporated as a Public Limited Company on September 12, 1994 and was formerly known as NUMERIC POWER SYSTEMS LIMITED. The Company is engaged in the business of manufacturing and trading of, Solar power projects, solar and wind power generation, contract manufacturing services, installation and maintenance services, sale of Solar Photovoltaic inverters and energy efficient lighting systems.

b. Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March 2015, the amount of per share dividend recognised as distributions to equity shareholders for interim dividend was Rs. Nil (31 March 2014 Rs.Nil/-) and proposed dividend was Rs.2.50 31 March 2014: Rs. 9/-).

In the event of the liquidation of the Company, the holder of equity share will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be proportionate to the number of equity shares held by the As per records of the Company, including its register of shareholders / members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

The overdraft facility from the Bank is secured against the Fixed Deposits of the Company and it is repayable on demand.

Term loans from Bank I amounting to Rs. 598,000,000 (Previous year Rs. 578,500,000) are repayable in 16 installments of Rs. 29,406,250 (Previous year Rs. 29,406,250 of 16 installments each) each per quarter starting from June 2015 onwards and ends on March 2019, 16 installments of Rs. 4,343,750 (Previous year Nil) each per quarter starting from June 2016 and ends on March 2020 and 8 installments of Rs. 6,750,000 each per quarter (Previous year - 16 installments of Rs. 6,750,000 each per quarter) starting from May 2015 till May 2017 and 1 installment of Rs.4,000,000 (Previous year - Nil) payable on May 2017. These loans are secured by a pledge on the investments in mutual funds of the Company.

Term loans from Bank II amounting to Rs. 437,754,810 (Previous year Rs. 173,583,000) are for a period of three years with bullet repayment terms. These loans are secured by investments in mutual funds of the Company.

Note:

There is no overdue amount payable to Micro, Small and Medium Enterprises as defined under "The Micro Small and Medium Enterprises Development Act, 2006". Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the year.

* Deposits to the extent of Rs.734,251,097 (Previous year Rs 50,000,000) have been given as collateral to the banks to facilitate the availment of working capital, packing credit, letter of credit and term loans for the Company and Subsidiaries.

Note :

Current bank balance include deposits amounting to Rs. 486,529,343 (net) (Previous Year: Rs.480,055,420), disclosed under Note 15.2 Other Assets) retained in the Escrow account pursuant to the transfer of uninterruptible power supply systems business, which would mature on May 29, 2015.

Note:

'Investments marked have been pledged as collateral securities with banks for availment of term loans. (Refer Note 6).

2 Employee benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an Insurance Company in the form of a qualifying insurance policy.

The following table summarises the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for the gratuity plan.

The fund is administered by Life Insurance Corporation of India ("LIC"). The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the year over which the obligations is to be settled.

The estimates of future salary increases and rate of attrition considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

A. Primary segment information (By Business segments)

The Company's operations represents revenue from Solar power projects, solar and wind power generation, contract manufacturing services, installation and maintenance services, sale of solar PV inverters and energy efficient lighting systems. Accordingly, revenues based on class of products comprise the primary basis of segmental information set out in the financial statements.

Business (Primary) segments of the Company are:

a) Contract manufacturing - UPS Systems

b) Solar Energy Systems / Services

c) Others

The following table shows the geographical distribution of the Company's segment revenues and additions to tangible and intangible assets for the year ended 31 March 2015 and year ended 31 March 2014. All tangible and intangible assets are located only in India except trade receivable and investment.

3 Information in respect of Joint Venture in terms of Accounting Standard 27 -

Financial Reporting of Interests in Joint Ventures

Name of the Joint Venture: Swelect Infrastructure Services Private Limited

Nature of business : Providing infrastructure services.

Proportion of ownership : NIL (Previous year - 50%) interest

Date of incorporation : 02 April 2004

Country of incorporation : India

Summary of assets and liabilities:

(Details given below represent proportionate amount of the Company's share in Joint Venture)

The Joint Venture has been wound up during the current year and hence the entire amount of investment has been written off

4 Derivative instruments and foreign currency exposures

The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

5 Capital and other commitments

a) The estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.413,059,895 (31 March 2014: Rs.48,662,043).

b) Commitments relating to lease arrangements, please refer to note 28.

6 Exceptional Item

Exceptional item represents cost of land written off amounting to Rs.20,311,785 (net of recovery) on account of defective title and for which the company is persuing a legal claim against certain individuals.

7 The Company acquired 51% of the equity share capital of HHV Solar Technologies Limited on August 01, 2014, hence HHV Solar Technologies Limited has become 100% subsidiary of the Company, with effect from August 01,2014.

8 Previous year figures have been regrouped / reclassified, whereever necessary, to conform to the current year's classification.

Mar 31, 2014

1. Nature of operations

SWELECT ENERGY SYSTEMS LIMITED (''the Company'') was incorporated as a Public Limited Company on 12 September 1994 and was formerly known as NUMERIC POWER SYSTEMS LIMITED. The Company is engaged in the business of manufacturing and trading of Solar power projects, solar and wind power generation, contract manufacturing services, installation and maintenance services, sale of Solar Photovoltaic inverters and energy efficient lighting systems.

On 29 May 2012, the Company had consummated the sale of its Uninterruptible Power Supply Systems (UPS) Business to Novateur Electrical & Digital Systems Private Limited, a group company of Legrand S.A, pursuant to the Business Transfer Agreement dated 9 February 2012 (refer to note 27 for further details).

2 Discontinued operations - Sale of Uninterruptible power supply systems (UPS)

On 29 May 2012 the Company had consummated sale of its UPS Business to Novateur Electrical & Digital Systems Private Limited, a group company of Legrand S.A, pursuant to the Business Transfer Agreement dated 9 February 2012. The UPS business undertaking comprising of operations in India, Singapore and its investment in Srilanka was transferred as a going concern on a slump sale basis for an aggregate consideration of Rs. 811.13 Crores (including, an amount of Rs. 19.46 Crores for the Singapore operations). The net assets transferred pursuant to the slump sale of its UPS Business, being operations in India and investment in Srilanka is Rs. 176.56 Crores and the profit recognised pursuant to the slump sale is Rs. 615.12 Crores and disclosed as an exceptional item in the statement of profit & loss.

The Company''s continuing operations represent revenues from Solar power project, solar and wind power generation, contract manufacturing services, installation and maintenance services and sale of energy efficient lighting systems.

Discontinuance of UPS division falls within the meaning of Accounting Standard 24 - Discontinuing Operations. The following table summarises the revenues, expenses, loss and cash flows from ordinary activities attributable to the discontinued operations and assets/liabilities transferred pursuant to the slump sale of UPS Business comprising the Company''s operations in India and investment in Srilanka.

3 Employee benefit plans

The Company has a Defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an Insurance Company in the form of a qualifying insurance policy.

The following table summarises the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for the gratuity plan.

4 Segment information

A. Primary segment information (By Business segments)

The Company''s continuing operations represents revenue from Solar power projects, solar and wind power generation, contract manufacturing services, installation and maintenance services, sale of solar PV inverters and energy efficient lighting systems. During the previous year, the Company had discontinued its operations relating to Uninterruptible power supply systems (UPS) (Also refer note 27).

Business (Primary) segments of the Company are:

Continuing operations

a) Contract manufacturing - UPS System

b) Solar Energy Systems / Services

c) Others

Discontinued operations

a) Uninterruptible power supply systems

5 Information in respect of Joint Venture in terms of Accounting Standard 27 -

Financial Reporting of Interests in Joint Ventures''

Name of the Joint Venture:

Swelect Infrastructure Services Private Limited

(Formerly known as Numeric Infrastructure Services Private Limited'')

Nature of business Providing infrastructure services.

Proportion of ownership interest: 50 % (Previous year - 50%)

Date of incorporation: 2 April 2004

Country of incorporation: India

Summary of assets and liabilities:

(Details given below represent proportionate amount of the Company''s share in joint venture)

6 Contingent liabilities

31 March 2014 31 March 2013

Claims against the Company not acknowledged as debts

a) Excise / cenvat related matters 2,630,000 2,630,000

b) Sales tax related matters 17,382,361 17,382,361

c) Income tax related matters 14,575,600 -

34,587,961 20,012,361

7 Capital and other commitments

a) At 31 March 2014, the estimated amount of contracts remaining to be executed on captial account and not provided for is Rs. 48,662,043 (31 March 2013: Rs. Nil)

b) Commitments relating to lease arrangements, please refer to note 29.

8 Previous year fgures have been regrouped/reclassified, wherever necessary, to conform to the current year''s classifcation.

Mar 31, 2013

1. Nature of operations

SWELECT ENERGY SYSTEMS LIMITED (''the Company'') was incorporated as a public limited Company on September 12, 1994 and was formerly known as NUMERIC POWER SYSTEMS LIMITED. The Company is engaged in the manufacturing and trading of Uninterruptible Power Supply Systems (UPS), Solar roof top power projects, solar and wind power generation, contract manufacturing services, installation and maintenance services, sale of Solar PV inverters and energy efficient lighting systems.

On May 29, 2012 the Company had consummated the sale of its UPS Business to Novateur Electrical & Digital Systems Private Limited, a group company of Legrand S.A, pursuant to the Business Transfer Agreement dated February 9, 2012 (refer to note 27 for further details).

2 Discontinued operations - Sale of Uninterruptible power supply systems (UPS)

On May 29, 2012 the Company had consummated sale of its UPS Business to Novateur Electrical & Digital Systems Private Limited, a group company of Legrand S.A, pursuant to the Business Transfer Agreement dated February 9, 2012. The UPS business undertaking comprising of operations in India, Singapore and its investment in Srilanka was transferred as a going concern on a slump sale basis for an aggregate consideration of Rs. 811.13 Crores (including, an amount of Rs. 19.46 Crores for the Singapore operations). The net assets transferred pursuant to the slump sale of its UPS Business, being operations in India and investment in Srilanka is Rs. 176.56 Crores and the profit recognised pursuant to the slump sale is Rs. 615.12 Crores and disclosed as an exceptional item in the statement of profit & loss.

The Company''s continuing operations represent revenues from Solar and wind power generation, contract manufacturing services, installation and maintenance services and sale of energy efficient lighting systems.

Discontinuance of UPS division falls within the meaning of Accounting Standard 24 - Discontinuing Operations. The following table summarises the revenues, expenses, profits and cash flows from ordinary activities attributable to the discontinued operations and assets/liabilities transferred pursuant to the slump sale of UPS Business comprising the Company''s operations in India and investment in Srilanka.

3 Employee benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an Insurance Company in the form of a qualifying insurance policy.

The following tables summaries the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for the gratuity plan.

4 Segment information

A. Primary segment information (By Business segments)

The Company''s continuing operations represents revenue from Solar roof top power projects, solar and wind power generation, contract manufacturing services, installation and maintenance services, sale of solar PV inverters and energy efficient lighting systems. During the year the Company has discontinued its operations relating to Uninterruptible power supply systems (UPS) (Also refer note 27).

Business (Primary) segments of the Company are:

Continuing operations

a) Contract manufacturing - UPS Systems

b) Solar Energy Systems / Services

c) Others

5. Contingent liabilities

31 March 2013 31 March 2012

Claims against the Company not acknowledged as debts

a) Excise / cenvat related matters 2,630,000 2,630,000

b) Sales tax related matters 11,344,380 11,936,446

13,974,380 14,566,446

Contingent liabilities are not probable and hence not provided for.

6. Capital and other commitments

a) At 31 March, 2013, the estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. Nil (31 March 2012: Rs 19,453,447).

b) Commitments relating to lease arrangements, please refer to note 29.

7. Previous year figures have been regrouped/reclassified, where necessary, to conform to the current year''s classification.

Mar 31, 2012

1. Nature of Operations

SWELECT ENERGY SYSTEMS LIMITED ('the Company') was incorporated as a public limited company on September 12, 1994 and was formerly known as NUMERIC POWER SYSTEMS LIMITED. The Company is engaged in the manufacture, sale and trading of Uninterrupted Power Supply ('UPS') systems and accessories and has its manufacturing facilities in Pondicherry, Chennai, Salem and Himachal Pradesh. The Company provides maintenance and other after sale services in respect of UPS systems through a network of branches situated across the country. The Company's operating activities/investments also include Solar and Wind Power generation, installation and maintenance services, energy efficient lighting services, and manufacture of iron and aluminium alloy foundry castings.

Pursuant to the consummation of transfer of the UPS business on May 29, 2012, as more fully discussed in Note 26 of financial statements, the name of the Company has been changed to SWELECT ENERGY SYSTEMS LIMITED.

a. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March 2012, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 3 (31 March 2011: Rs.3).

In the event of the liquidation of the Company, the holder of equity share will be entitled to receive remaining assets of the Company, after distribution of all preference amounts. The distribution will be proportionate to the number of equity shares held by the shareholders.

Note

There is no overdue amount payable to Micro, Small and Medium Enterprises as defined under The Micro Small and Medium enterprises Development Act, 2006. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the year.

2. Discontinuing operation

During the year, the Company had entered into a Business Transfer Agreement dated February 9, 2012 to sell its UPS business undertaking. The UPS business undertaking comprising of the operations in India, Singapore and its investment in Srilanka is being transferred as a going concern on a slump sale basis for an aggregate consideration of Rs. 837.08 Crores including, an amount of USD 4.5 Million for the Singapore operations. The shareholders of the Company approved the transaction by way of postal ballot on March 16, 2012 and the Company has, upon fulfillment of the various conditions precedent, transferred the UPS business undertaking subsequent to the year end, on May 29, 2012.

As this transaction would qualify as an initial disclosure event, within the meaning of Accounting Standard 24 Discontinuing operations, the profit attributable to the discontinuing operation net of related income tax expense has been disclosed seperately in the statement of profit and loss. The following table summarizes the revenues, profits, assets, liabilities and cash flows attributable to the discontinuing operations

3. Employee benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

Long term compensated absences are provided for based on actuarial valuation as per projected unit credit method made at the end of each financial year.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the gratuity plan.

4. Segment information

A. Primary segment information (By Business segments)

The Company's operations predominantly relates to the manufacture and trading in UPS systems and accordingly this is the only primary reportable segment.

5. Contingent Liabilities not provided for _

31 March 2012 31 March 2011

Claims against the Company not acknowledged as debts

a) Excise / CENVAT related matters 26,30,000 26,30,000

b) Sales tax related matters 1,19,36,446 10,00,000

1,45,66,446 36,30,000

6. Derivative instruments and Foreign currency exposures

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations on payable balance.

7. Capital and other commitments

a) At 31st March, 2012, the estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 1,94,53,447 (31st March 2011: Rs 47,44,827)

b) Commitments relating to lease arrangements, please refer to note 28

8. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, became applicable to the Company, for preparation and presentation of its financial statements. The Company has presented its financial statements in accordance with the requirements of revised Schedule VI and has hence reclassified and regrouped the previous year figures to conform to current year's classification.

Mar 31, 2011

1. There is no overdue amount payable to Micro, Small and Medium Enterprises as defined under The Micro Small and Medium enterprises Development Act, 2006. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the year.

2. Investments:

4A. Investment in Amex alloys private limited:

- The Company had entered into a Share Purchase Agreement on December 05, 2010, with the majority shareholders of M/s. Amex Alloys Private Limited ('AAPL') for acquisition of Equity Shares up to 92% and takeover of the Management Control and the acquisition has been completed on 31st January 2011.

- The Company has made investments aggregating to Rs.3,75,00,000/- in 10% Cumulative redeemable preference shares of Amex Alloys Private Limited.

4B. Investment in Numeric Power Systems Proprietary Limited, South Africa ('NPSPL'):

During the year the management of the Company had applied for deregistration of NPSPL on March 29, 2011. Consequent to the above the NPSPL discontinued its operations and the loss incurred on account of such disposition of the investment aggregating to Rs.5,50,547 has been included and disclosed separately in Schedule 16 - Manufacturing and Other Expenses.

The lease term ranges between 1 and 6 years. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

Note:- As the liabilities for gratuity and leave encashment are provided on an actuarial basis for the Company as a whole, the amounts pertaining to the directors are not included above.

3 Employee benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

Long term compensated absences are provided for based on actuarial valuation as per projected unit credit method made at the end of each financial year.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the gratuity plan.

The fund is administered by Life Insurance Corporation of India ("LIC"). The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the year over which the obligation is to be settled.

The estimates of future salary increases and rate of attrition considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

4 Segment information

A. Primary segment information (By Business segments)

The Company's operations predominantly relates to the manufacture and trading in UPS systems and accordingly this is the only primary reportable segment.

B. Secondary segment information (By Geographical segments)

The following table shows the geographical distribution of the Company's segment revenues and additions to tangible and intangible assets for the year ended March 31, 2011 and year ended March 31, 2010.

- Installed capacity is subject to changes in product mix utilization of manufacturing facilities.

- It is not practicable to furnish quantitative information in view of the large number of items which differ in size and nature, each being less than 10% in value of the total.

- It is not practicable to furnish quantitative information in view of the large number of items which differ in size and nature, each being less than 10% in value of the total.

- It is not practicable to furnish quantitative information in view of the large number of items which differ in size and nature, each being less than 10% in value of the total.

Note: The figures shown are balancing figures, ascertained on the basis of opening stock, purchases and closing stock and, therefore, include adjustments of excesses and shortages ascertained on physical count.

5 Derivative instruments and Foreign currency exposures

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations on payable balance.

The following are the outstanding Forward Exchange Contracts entered into by the Company as at March 31, 2011.

6 Previous year figures have been reclassified/regrouped wherever necessary to conform to current years' presentation.

Notes:

1. Increase in capital expenditure include payments for items in capital work in progress and purchase of fixed assets. Adjustments for increase / decrease in current liabilities relating to acquisition of fixed assets have been made to the extent identified.

2. The accompanying notes are an integral part of this statement.

3. Fixed deposits with banks with maturity period of more than three months including interest accrued thereon amounting to Rs.4,74,36,599/- (previous year Rs.1,15,91,740/-) are not included under Cash and Cash equivalents.

4. Unpaid dividend aggregating to Rs.8,37,015/- (previous year Rs.9,29,685/-) are not included under Cash and Cash equivalents

Mar 31, 2010

1 Contingent Liabilities not provided for

Claims against the Company not acknowledged as debts

a) Excise / CENVAT related matters 26,30,000 2,00,000

b) Sales tax related matters 10,00,000 10,00,000

2 Segment information

A. Primary segment information (By Business segments)

The Companys operations predominantly relates to the manufacture and trading in UPS systems and accordingly this is the only primary reportable segment.

3 Information in respect of Joint Venture in terms of Accounting Standard 27 - Financial Reporting of Interests in Joint Venture

Name of the Joint Venture: Numeric infrastructure services private Lmt Nature of business Providing infrastruture services Proportion of Ownership Interest: 50% Date of incorporation: April 2, 2004 Country of Incorporation: India

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