Note 1 : SIGNIFICANT ACCOUNTING POLICIES 1. Accounting Policies unless specifically stated to be otherwise are in accordance with generally accepted Accounting Principles. 2. BASIS OF ACCOUNTING : The Accounts of the Corporation are brpared under the historical cost convention method using the accrual method. The Corporation follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis except that - a) Generally prior period expenses/Income and brpaid expenses for an amount up to T 50,000 in each bill are debited/credited as current year's expenses/income. b) Dividend income is recognized on receipt basis. 3. USE OF ESTIMATES : The brparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized. 4. FIXED ASSETS : a) The fixed assets are stated at historical cost less debrciation. Cost includes expenditure incurred in their acquisition as well as construction/installation and other related expenditure but excludes cost of fencing in lignite mines projects. b) Capital Work in progress includes machineries not installed and assets in transit. c) Cost of civil works required for plant and machinery's support is considered as part of the Plant and Machinery. d) Un-serviceable/worn out plant and machineries, vehicles and other assets of the Corporation are written off from the books of account to the extent of 95% of their cost after getting approval of appropriate authorities. The same are stated at the lower of their net book value or net realizable value. e) Fixed assets received by the Corporation free of cost are stated at nominal cost. f) Full provision has been made on plant and machinery which has not been put to use and lying in capital work in progress for more than ten years. 5. INTANGIBLE ASSETS : Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization, if any. 6. MACHINERY SPARES : Machinery spares for Generating Units, Power Station and Switchyard, etc. either procured along with the equipment or subsequently and whose use is expected to be irregular are capitalized and debrciated over the residual useful life of the related plant and machinery. Other spares are treated as "stores and spares" forming part of the inventory and expensed when issued. 7. BORROWING COSTS : Borrowing costs attributable during the acquisition or construction of qualifying assets are capitalized as part of the cost of the assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue. 8. DEbrCIATION : a) Debrciation has been provided for the fixed assets as under : i) During the year, the company has changed the method of debrciation from WDV method to SLM so as to comply with the changes made by the Companies Act, 2013. Debrciation is charged on straight line method based on the useful life brscribed in Schedule-II to the Companies Act, 2013 except Plant & Machinery of Thermal Power Plant, Wind Energy Farm and Solar Project from time to time. ii) Debrciation is charged on straight line method as per the rates and in the manner as brscribed by CERC (Terms and Conditions of Tariff) Regulations, 2009 in respect of Plant and Machinery including mandatory/insurance spares of Wind Energy Farm, Solar Project and Thermal Power Plant. b) On the assets disposed off/discarded during the year, debrciation is charged on pro rata basis upto the date of their disposal/discarding. c) Debrciation on assets acquired is charged proportionately from the date of putting them to use on pro rata basis. d) Low value items which are in the nature of assets (excluding immovable assets) and valuing upto T 5,000/-are not capitalized and charged off to revenue in the year of acquisition. e) Debrciation on assets given on lease by the Corporation has been provided on Straight Line Method so as to write off the cost over the primary period of lease as per lease agreement. f) Leasehold land is written off over the period of lease. 9. DEPLETION : On the basis of the principle of wasting assets, depletion has been provided in the accounts, which is based on the data available with the Corporation as regards extraction of the minerals as compared to the technical estimation of gross geological mineral reserves as mentioned in the mine closure plan submitted / approved. 10. INVESTMENTS : All the Investments are long term and carried at cost. However, provision is made for diminution in the value of investment other than of temporary nature. 11. INVENTORIES : a) Stores, chemicals, spares, fuel and loose tools are valued at cost. Cost is ascertained on weighted average method. b) Raw materials, mined ore, goods-in-process and finished products are valued at lower of total cost incurred at respective project or net realizable value item-wise. Cost is ascertained on First In First Out basis. While valuing inventories, the inter-unit profit has been eliminated at corporate level. Further, the corporation has the policy of not valuing the stock of by-products lying at various project sites. 12. FOREIGN CURRENCY TRANSACTIONS : a) Transactions in foreign currencies are recorded at the exchange rate brvailing on the date of transaction. b) Monetary items in foreign currencies are translated at the year end rate. The difference between the rates brvailing on the date of transaction and on the date of settlement as also on the translation of monetary items at the end of the year is recognized as income or expenses as the case may be for the year. c) In respect of financing through Suppliers' credit, borrowings cum loan for purchase of fixed assets is repayable in foreign currency, the exchange difference arising on repayment/realignment of liabilities is recognized in Statement of Profit and Loss. 13. EMPLOYEE BENEFITS : a) Post employment benefits i.e. gratuity and leave encashment are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The liabilities for employee benefits are recognized at the brsent value of the amount payable for the same. The brsent value is determined using the market yields of government bonds at the balance sheet date at the discounting rate. b) Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related services are rendered. c) Reimbursement of losses and other related expenses to Provident Fund Trust are charged to the Statement of Profit and Loss as and when crystallized. d) Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss. e) Compensation paid to the legal heirs of deceased employee while in service is charged to Statement of Profit and Loss as and when the liability arises. f) The principal amount and interest thereon in respect of House Building Advance in case of deceased employee while in service is written off as and when intimation is received. g) Compensation to employees who have opted for retirement under the voluntary retirement scheme of the corporation is charged to Statement of Profit and Loss in the year of separation. 14. LIABILITIES FOR PURCHASES : Provisions are made in respect of materials received up to the end of the accounting year for which bills are not received, except liabilities in respect of goods in transit. 15. REVENUE RECOGNITION : a) Sales are recognized at the time of dispatch of finished goods. Sales include amounts in respect of excise duty, royalty, transportation, packing charges, clean energy cess and mine closure charges wherever applicable but excluding VAT. b) The liquidated damage/penalty, if any, on capital contracts are generally determined on completion of contract and liquidated damages/penalty on revenue contracts are determined at the end of one year from the date of award of contract. c) Income of lease management fees is sbrad over the primary period of lease. d) In case of renewable energy, Unscheduled Interchange (UI) Charges and Generation Based Incentives (GBI) are recognized as and when the same are received / incurred by the corporation. e) Dividend income is recognized on receipt basis. 16. EXCISE DUTY : Excise duty is accounted on the basis of payments made in respect of goods cleared. 17. TAXATION : a) Provision of income-tax for the current year is based on the estimated taxable income for the period in accordance with the provisions of the Income Tax Act, 1961. b) Deferred tax is calculated at current statutory income-tax rate and is recognized on timing difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. c) Deferred tax assets subject to consideration of prudence are recognized and carried forward only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. d) 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 Alternate 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 Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period. 18. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS : Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but disclosed in the Notes. Contingent Assets are neither recognized nor disclosed in the financial statements. 19. br-OPERATIVE EXPENSES ON MINING PROJECTS : Pre-operative Expenses of Mines/Mining Projects under implementation incurred up to the date of commencement of the production on commercial basis are written off in the year in which they are incurred. 20. IMPAIRMENT OF ASSETS : An asset is treated as impaired when carrying cost of asset exceeds its recoverable value. An impairment loss is charged to Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed, if there has been a change in estimate of recoverable amount. In case of intangible assets, the same will be tested on periodical basis for impairment. 21. REHABILITATION AND RESETTLEMENT EXPENSES : Rehabilitation and Resettlement Expenses are charged as revenue in the year in which they are incurred. 22. AFFORESTATION EXPENSES : Afforestation Expenses are charged as revenue to the extent they are incurred by the respective departments. 23. MINE CLOSURE EXPENSES FOR LIGNITE MINES : a) Progressive mine closure expenses are accounted for as and when incurred. b) As per the mine closure guidelines issued by the Ministry of Coal, in August 2009 and further updated in January 2013, the annual mine closure cost need to be provided @ T 6 Lakhs per hectare. Such annual cost is required to be modified with reference to WPI as mentioned and considered in the mine closure plan submitted / approved for the respective mines. The mine closure provisions are required to be provided in line with the approved / submitted / brpared mine closure plans. In case the mine closure plan has not been submitted / approved / brpared, the annual cost should be estimated based on the above referred guidelines. 24. EVENTS OCCURING AFTER THE BALANCE SHEET DATE : Material adjusting events (that provide evidence of conditions that existed at the balance sheet date) occurring after the balance sheet date are recognized in the financial statements. Non adjusting events (that are indicative of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that rebrsent material change and commitment affecting the financial position are disclosed in the reports of the Board of Directors. 25. PROPOSED DIVIDEND : Provision is made in accounts for proposed dividend, subject to approval of shareholders in annual general meeting. NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2015 2.1 In the opinion of Management, any of the Assets other than Fixed Assets and Non-Current Investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated, unless otherwise stated. 2.2 Balances of trade payables, trade receivables, loans & advances, advances from customers, other long term/current libilities, etc. are subjectto confirmation, if any, in the accounts. 2.3 On periodical basis and as and when required, Corporation reviewes the carrying amounts of its assets. In the Financial Year 201213, Corporation had reviewed the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss has been provided. 2.4 Corresponding figures of the brvious year have been re-grouped / re-arranged and re-classified, wherever necessary, to make them comparable with the figures of the current year. Pawan Bhootra General Manager (Accounts) Joel Evans Company Secretary As per our report of even date attached For H.K.Shah & Co. Chartered Accountants FRN-109583A/V CA. H. K. Shah Partner Membership No. 042758 L. Kulshrestha General Manager (Finance) & Chief Financial Officer Bhadresh Mehta Director DIN-02625115 Manoj Aggarwal, IAS Managing Director DIN-07189255 S. B. Dangayach Director DIN-01572754 Arvind Agarwal, IAS Chairman DIN-00122921 Place : Ahmedabad Date: 28th May, 2015 |