NOTE NO. 1 : SIGNIFICANT ACCOUNTING POLICIES 1. BASIS OF ACCOUNTING The financial statements are brpared under the historical cost convention in accordance with the generally accepted accounting principles in India. The applicable mandatory Accounting Standards as described under section 133 of the Companies Act, 2013 (Act) read with Rule 7 of the Companies (Accounts) Rule, 2014 have been followed in brparation of these financial statement, except in so far as the said provisions are inconsistent with the provision of the Electricity Act,2003. 2. USE OF ESTIMATES The brsentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known / materialized. 3. FIXED ASSETS a. Tangible Assets are stated at cost, less accumulated debrciation and impairment loss, if any. Costs include all expenses incurred to bring the assets to its brsent location and condition. The cost may undergo changes, where applicable, subsequent to its acquisition/construction on account of exchange rate variations agreed under Capital Contracts. b. Intangible Assets are recognized if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses, if any. c. Mines Development Expenditure under Fixed Assets comprises of initial expenditure for lignite mines and expenditure for removal of overburden. Such expenditure is amortised over quantities of lignite actually extracted. Relevant stripping ratio is also considered while determining amortization of expenditure for removal of overburden. d. Works under erection/installation /execution (including such work pertaining to a new project) are shown as Capital Work in Progress. e. In the case of assets put to use, where final settlement of bills with contractors is yet to be effected, capitalization is done on provisional basis subject to necessary adjustment in the year of final settlement. 4. DEbrCIATION a. Debrciation on all fixed assets (except those listed below) is provided on straight line method as per rates and methodology notified by the CERC Tariff Regulation, 2014. b. Computer software is amortized on straight-line basis over a period of five years. c. Leasehold land is amortized over the period of lease on straight-line basis. d. Capital Spares are debrciated over the useful life of such spares. 5. INVESTMENTS Long term Investments are shown at cost. However, when there is decline, other than temporary in the value of a long term investment, the carrying amount is reduced to recognize the decline. Current Investments are stated at lower of cost and net realizable value. 6. INVENTORIES Inventories are valued at lower of cost or net realizable value as under: inventories :Cost Formula a. Raw Materials - Fuel (other than Lignite) Weighted Average Cost b. Lignite Absorption costing. Cost Includes Extraction Cost, Mining overheads including amortized cost as per 3(c) above. c. Stores and Spares Weighted Average Cost 7. FOREIGN CURRENCY TRANSACTIONS Transactions in foreign currency are accounted for at the exchange rate brvailing on the date of transactions. Monetary items denominated in foreign currency as at the balance sheet date are converted at the exchange rates brvailing on that date. Exchange differences are recognized in the profit and loss account. 8. TAXATION a. Provision for Current Tax is made on the basis of estimated tax payable for the year as per the applicable provisions of the Income Tax Act, 1961 and Wealth Tax Act, 1957. b. Deferred tax is recognized subject to consideration of prudence, on timing differences (including tax holiday period) that originate in one period and are capable of reversal in one or more subsequent periods between taxable income and accounting income. Deferred tax assets and liabilities are measured using the rates and tax laws that have been enacted or substantively enacted by the balance sheet date. c. MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT credit entitlement. d. Advance taxes and provisions for current income taxes are brsented in the Balance Sheet after off-setting advance tax paid and income tax provision and company intends to settle the asset and liability on a net basis. 9. EMPLOYEE BENEFITS a. Post-employment benefits i) Defined Contribution plan Company's contribution paid/payable for the year to defined contribution retirement benefit schemes are charged to Profit and Loss Account. ii) Defined Benefit plan Company's liabilities towards defined benefit schemes are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognised in the Profit and Loss account in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise it is amortised on straight-line basis over the remaining average period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet rebrsents the brsent value of the defined benefit obligation. b. Short-term employee benefits Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders services. These benefits include incentives. c. Long term employee benefits Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as an actuarially determined liability at brsent value of the defined benefit obligation at the balance sheet date. 10. revenue recognition a. Revenue is recognized when no significant uncertainty as to the measurability or ultimate collection exists. b. Interest on investment is booked on a time proportion basis taking into account the amounts invested and the rate of interest. c. Dividend income is recognised when the right to receive payment is established. d. Claims lodged with insurance company in respect of risk insured are accounted on admittance basis. e. Delayed payment charges under Power Purchase Agreements are recognised, on grounds of prudence, as and when recovered. f. Other income is recognised on accrual basis except when realization of such income is uncertain. g. Unscheduled Interchange (UI) charges receivable/payable is accounted as and when notified by State Load Dispatch Center (SLDC). 11. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements. 12. IMPAIRMENT Of ASSETS An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Profit & Loss Account in the year in which an asset is identified as impaired The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount in subsequent period. 13. BORROWING COST Borrowing cost including interest and other financial charges which are directly attributable to the acquisition or construction of qualifying assets is capitalised as part of the cost of that asset up to the period the project is commissioned or asset is ready for use. Other borrowing costs are recognised as expenses in the period in which they incurred. NOTE NO. 2 : NOTES TO THE FINANCIAL STATEMENTS 1. Debrciation on certain power plants' assets which was hitherto charged on Straight Line Method at the rates specified in CERC's Tariff Regulation 2009, is now charged over the balance useful life as specified by CERC (Terms and Conditions of Tariff) Regulations, 2014. As a result for the year 2014-15, the debrciation charged is lower by Rs. 3,285.07 Lacs and the Profit is higher by the same amount. 2. Due to a technical snag in the Stator Winding of the Generator, Unit -1 (125MW) of Surat Lignite Power Plant (SLPP) at Village Nani Naroli, Taluka Mangrol, Dist.: Surat, tripped on 29.1 1.2014. The costs of replacement and other related expenditure was Rs. 1,850.74 lacs which has been shown as an exceptional item. The unit became operational on 03/04/2015. As a result of the above accidental outage, sales revenue and profit were further impacted by Rs. 2,227.03 Lacs since the normative availability of SLPP station I could not be achieved and fixed cost remained under recovered to that extent as per PPA. The Company is in process of lodging insurance claim with the insurer for material damage and loss arising on business interruption. 3. Ministry of Coal, New Delhi, Guideline No. 55011-01-2009-CPAM Dated 7th January 2013, required opening of Tripartite Escrow Account(s) with Banks for estimated Mines Closure Expenditure. During the year Rs. 1,659.25 Lacs have been deposited (P Y Rs. Nil) in these accounts and an amount of Rs. 1284.56 Lacs has been considered as Mines Closure Expenses for the FY 2014-15 (P Y Rs. 1302.03 Lacs) in lignite extraction expenses. 4 The Company has only one reportable business segment namely ‘Power Generation’ under AS 17. 5. Based on the information available with the company, the balance due to Micro and Small Enterprises as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" is Rs. 94.53 Lacs (Previous Year Rs. 62.50 lacs). Payment made to suppliers beyond the due date during the year was 7 Ml (P.Y. Rs. Nil). No interest during the year has been paid to Micro and Small Enterprises on delayed payments. Further, interest accrued and remaining unpaid at the year end 7 nil (P.Y. 7 Nil). 6. The value of realizations of Current Assets, Loans and Advances in the ordinary course of business will not be less than the value at which they are stated in the Balance Sheet. 7. Confirmation of balances called from the sundry debtors and creditors are yet to be received from some parties. Debit / credit balances of such parties, so far as these have not been subsequently realized or discharged, are subject to confirmation / reconciliation. Confirmations of balances to the extent received have been reconciled. 8. During the year, one-fifth of Share issue expenses amounting to Rs. 255.27 Lacs (Previous Year Rs. 255.27 Lacs) have been amortised on a prorata basis. 9. Ministry of Corporate Affairs vide general circular no. 2/2011 dated 8th February, 2011, has granted the general exemption from compliance with section 212 of the Companies Act,1956, subject to fulfillment of certain conditions. The company, having satisfied with the conditions of the circular, is entitled for the exemptions. Necessary information regarding subsidiary has been included in the consolidated financial statements. 10. The company has reclassified the brvious year figures as and when required for better brsentation. As per our report of even date attached For VCA & Associates Chartered Accountants FRN: 114414W Ashok Thakkar Partner Membership No. 48169 Sonal Mishra Managing Director L. Chuaungo Chairman S. P. Desai CGM & CFO A. C. Shah Company Secretary Place : Vadodara. Date : 13th June, 2015. |