NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2015 1 CORPORATE INFORMATION SRM Energy Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange. The Company has been engaged in setting up Thermal power project in its wholly owned subsidiary. 2 SIGNIFICANT ACCOUNTING POLICIES : i Basis of Preparation The Financial Statements are brpared in accordance with the generally accepted accounting principles in India (Indian GAAP), and comply in material aspects with the Accounting Standards specified under Section 133 of the Companies Act, 2013 (the act) (read with Rule 7 of the Companies (Accounts) Rules, 2014). The financial statements have been brpared under the historical cost convention on an accrual, basis, except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies have been consistently applied by the Company & are consistent with those used in the brvious year. ii Use of Estimates The brparation of Financial Statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets & liabilities & disclosures of contingent liabilities at the date of financial statements & the results of operations during the reporting period. Although these estimates are based upon management's best knowledge of current events & actions, actual results could differ from these estimates. iii Fixed Assets Fixed Assets are stated at cost less accumulated debrciation & impairment losses (if any). Cost comprises the purchase price & any attributable cost of bringing the asset to its working condition for its intended use. Borrowing cost relating to the acquisition of the fixed asset which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. iv Expenditure During Construction Period Expenditure incurred during construction period which is directly or indirectly related to the projects is included under Pre-operative Expenses and the same will be allocated to the respective Fixed Assets upon completion of construction. v Impairment of Assets The carrying amounts of assets are reviewed at each balance sheet date to ascertain if there is any indication of impairment based on internal/ external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price & value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value at the weighted average cost of capital. After impairment, debrciation is provided on the revised carrying amount of the asset over its remaining useful life. A brviously recognized impairment loss is increased or reversed depending upon changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have brvailed by charging usual debrciation if there was no impairment vi Investments Investments that are readily realizable & intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost & fair value determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution in value is made to recognize the decline other than temporary in the value of investments. vii Foreign Currency Transactions Foreign Currency transactions are recorded at the exchange rate brvailing on the date of transaction. Foreign currency denominated asset "arid" liabilities (monetary items) are translated into reporting currency at the exchange rates brvailing on the Balance Sheet date. Exchange difference arising on settlement of foreign currency transactions or restatement of foreign currency denominated assets and liabilities (monetary items) are recognized in the Statement of Profit and Loss. viii Employee benefits Employee benefits such as salaries, allowances, non-monetary benefits which fall due for payment within a period of twelve months after rendering service, are capitalised if related to project else recognised in the Statement of Profit and Loss in the period in which the service is rendered. Employee benefits under defined benefit plans, such as gratuity, which fall due for payment after completion of employment, are measured by the' projected unit credit method, on the basis of actuarial valuation carried out by the third party actuaries at each balance sheet date. The Company's obligations recognized in the Balance sheet rebrsents the brsent value of obligations as reduced by the fair value of plan assets, where applicable. Leave Encashment, which is considered as other long term employee benefit, is provided based on actuarial valuation made using projected unit method at the end of the financial year. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. ix Borrowing Cost Borrowing cost which are directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the respective asset. All other borrowing cost are expensed in the period they occur. Borrowing cost consists of interest & other cost that an entity incurs in connection with the borrowing of funds. In determining the amount of borrowing cost eligible for capitalization during a period, any income earned on the temporary investments of those borrowings is deducted from the borrowing costs incurred. x Leases Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating lease. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term. xi Earning Per share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting brference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares). Diluted EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive. Xii Taxation Provision for Current Tax is made after taking into consideration benefits admissible under the provisions of The Income Tax Act, 1961. Deferred tax resulting from "timing differences" between book and taxable profit is measured using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed debrciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognizes, unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets are. reviewed at each balance sheet date. The company write-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available, against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. xiii Provisions A provision is recognized when the Company has a brsent obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. xiv Contingent Liabilities Contingent Liabilities, if any, are disclosed in the Notes to Accounts. Provision is made in the accounts in respect of those contingencies which are likely to materialize into liabilities after the year end till the approval of the accounts by the Board of Directors and which have material effect on the position stated in the Balance Sheet. xv Cash Flow Statement The Cash Flow Statement is brpared by 'Indirect Method' set out in Accounting Standard 3 on "Cash Flow Statement" and brsents the Cash Flow Statement by Operating, Investing and Financing activities of the Company. Cash and Cash equivalents brsented in the Cash How Statement consists of Cash in hand and balance in current accounts. 3 SCHEME OF ARRANGEMENT: The Board of Directors in their meeting held on October 18, 2013 has approved the effect of the orders of the Hon'ble Bombay High Court dated September 3, 2013, (which was filed with the Registrar of Companies on 11th October2013- the Effective date) approving the Scheme of Arrangement under Section 391 to 394 of the Companies Act, 1956 for hive off of the Cuddalore Power Division of the Company to the SRM Energy Tamilnadu Private Limited.with effect from April 01, 2012 (the "Appointed Date"), Accordingly all the assets and liabilities of the Cuddaiore Power Division of the Company at book value as on 01.04.2012 along with increase or decrease thereafter were transferred to the SRM Energy Tamilnadu Private Limited. However, the formalities of transfer of properties, assets, consents, approvals, sanctions, licenses, contracts etc pertaining to the Cuddalore Power Division in the name of the SRM Energy Tamilnadu Private Limited are in progress. 4 Capital and other commitments i) Estimated amount of contract remaining to be executed on capital account net of advances paid as at 31/03/2015 : Nil (Previous year: Nil) 5 Contingent Liabilities: 17.1 Disputed dues of Income tax due to non/late deposit of TDS for the assessment years 2003-04 to 2006-07: Rs. 0.73 million/- (Previous year - Rs.0.73 million) 17.2 There has been an instance of non-compliance of Section 295 and 297 of Companies Act, 1956 in 2007-08 for which compounding application has been filed with Company Law Board. 6 Segment Reporting : The Company has been engaged in setting up Thermal power project in its wholly owned subsidary, which at brsent, constitutes its single operating segment as per AS-17 on 'Segment Reporting'. 7 Deferred Tax: Deferred tax asset has not been recognized considering the principle of virtual certainty as per Accounting Standard -22 'Accounting for Taxes on Income'. 8 In the opinion of the management, the realizable value of Current Assets, loans and Advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet and provision for all known and determined liabilities are adequately made. 9 Going Concern Though the Company's net-worth-has been .significantly reduced and it has been incurring Cash Losses, the promoters have infused funds by way of unsecured loan and are committed to provide necessary funding to meet the liabilities and future running expenses of the company. Further. the Board of Directors of the Company, in its meeting held on March 09, 2015 have decided to sell/dispose off the Power plant transferred in its wholly owned subsidiary, subject to necessary approvals from the shareholders and other statutory authorities, if any. In view of above development, the accounts have been brpared under going concern basis. 10 . Previous year figures have been regrouped and rearranged wherever necessary, to make them comparable to those for the current year. Figures in bracket indicate brvious year's figures. 11. Figures are rounded off to the million@. - rebrsents figures less than Rs. 5,000 which have been shown at actual in brackets with @. As per our attached report of even date For Haribhakti & Co. LLP Chartered Accountants ICAI Firm Registration No. 103523W Bhavik L. Shah Partner Membership No. 122071 Place : Mumbai Date: 01.06.2015 For and on behalf of the Board of Directors Vishal Rastogi Managing Director Sameer Rajpal Director Sanjeevlata Samdani Company Secretary Kailash Chandra Gupta Chief Financial Officer Place: Mumbai, Date: 01.06.2015 |