NOTE- 1 SIGNIFICANT ACCOUNTING POLICIES: (a) General i) The financial statements are brpared under the historical cost convention, on the accounting principles of a going concern. ii) Accounting Policies not specifically referred to otherwise are consistent and in consonance with the applicable accounting standards brscribed by under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI) to the extent applicable. iii) All expenses and income to the extent ascertainable with reasonable certainty are accounted for on accrual basis. iv) The brparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses for that year. Actual result could differ from these estimates. Any revision to accounting estimates is recognised prospectively. v) All assets and liabilities have been classified as current and non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. (b) Revenue Recognition Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection. i) Revenue from sale of power is recognised when substantial risks and rewards of ownership is transferred to the buyer under the terms of the contract. Power supplied under banking arrangements is accounted as per terms of agreements. Quantity of power banked is recorded as a loan transaction valued at cost or net realizable value whichever is lower and recognised as revenue when the same is returned and sold to an ultimate customer. ii) Revenue from construction / project related activity: Revenue from construction contract is recognised by reference to the overall estimated profitability of the contract under the percentage of completion method. Foreseeable losses in any contract are provided irrespective of the stage of completion of the contract activity. The stage of completion of the contract is determined considering the nature of the contract, technical evaluation of work completed / measurement of physical progress and proportion of the cost incurred to the estimated total cost. Contract cost comprises of all costs that relate directly to the specified contract, incidental costs attributable to the contract including allocated overheads and warranty costs. iii) Operator fees and other income are accounted on accrual basis as and when the right to receive arises. (c) Fixed Assets i) Tangible Assets Fixed assets are stated at cost which includes all direct and indirect expenses up to the date of acquisition, installation and / or commencement of commercial generation of power. Expenditure incurred during construction period: Apart from costs related directly to the construction of an asset, expenses incurred up to the date of commencement of commercial production which are incidental and related to construction are capitalized as part of construction cost. Income, if any, earned during the construction period is deducted from the indirect costs. ii) Intangible Assets An item is recognized as an intangible asset if it meets the definition of an intangible asset, it is probable that future economic benefits will flow to the Company and the cost of the assets can be reliably measured. (d) Capital Work-in-Progress (CWIP) Capital work-in-progress comprises of the cost of fixed assets that are not yet ready for their intended use at the reporting date. Cost of material consumed, erection charges thereon along with other related expenses incurred for the projects are shown as CWIP for capitalization. Expenditure attributable to construction of fixed assets are identified and allocated on a systematic basis to the cost of the related asset Interest during construction and expenditure (net) allocated to construction are apportioned to CWIP on the basis of the closing balance of specific asset or part of asset being capitalized. The balance, if any, left after such capitalization is kept as a separate item under CWIP. Claims for price variation / exchange rate variation in case of contracts are accounted for on acceptance / receipt of claims. Any other expenditure which is not directly or indirectly attributable to the construction of the Project / construction of the fixed asset is charged off to Statement of Profit and Loss in the period in which they are incurred. (e) Debrciation / Amortisation Debrciation on tangible assets is provided as per the provisions of Part B of Schedule II of the Companies Act, 2013 based on useful life and residual value notified for accounting purposes by Central Electricity Regulatory Authority (CERC) Tariff Regulations. Leasehold Land acquired by the Company, with an option in the lease deed entitling the Company to purchase on outright basis after a certain period at no additional cost, is not amortized. Specialized Software is amortized over an estimated useful life of 3 years. (f) Impairment of assets In accordance with Accounting Standard 28 'Impairment of assets', where there is an indication of impairment of the Company's assets related to cash generating units, the carrying amounts of such assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognized in the Statement of Profit and Loss whenever the carrying amounts of such assets exceed its recoverable amount. Debrciation on impaired assets related to a cash generating unit is provided by adjusting the debrciation charge in the remaining periods so as to allocate the revised carrying amount of the asset over its remaining useful life. (g) Borrowing Costs i) Borrowing Costs directly attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets up to the date when the asset is ready for its intended use. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. The borrowing cost eligible for capitalization is netted off against any income arising on temporary investment of those borrowings. The capitalization of the borrowing costs ceases when substantially all activities necessary to brpare the qualifying asset for its intended use are complete. ii) Expenses incurred in connection with the arrangement of borrowings are written off over the period of the borrowing. iii) Other borrowing costs are charged to revenue. (h) Investments Long term Investments are stated at cost. In case, there is a decline other than temporary in the value of any Investments, a provision for the same is made. Current Investments are valued at lower of cost and fair value. (i) Inventories Inventories are valued at lower of cost and net realizable value. Cost of inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their brsent location and condition. Cost is determined on the weighted average basis for valuation. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Obsolete, defective and unserviceable stocks are duly provided for. (j) Foreign Exchange Transactions Foreign Currency transactions are initially recorded at the exchange rates brvailing on the date of the transaction. Foreign Currency assets and liabilities (monetary items) are reported at the exchange rate brvailing on the balance sheet date. All exchange differences arising on reporting of short term foreign currency monetary items at rates different from those at which they were initially recorded are recognized in the Statement of Profit and Loss. In respect of foreign exchange differences arising on revaluation or settlement of long term foreign currency monetary items, the Company has availed the option available in the Companies (Accounting Standard) (Second Amendment) Rules 2011, wherein: i. Foreign exchange differences on account of debrciable asset, is adjusted in the cost of debrciable asset and the charge of debrciation is accordingly increased / reduced. ii. In other cases, foreign exchange differences are accumulated in "Foreign Currency Monetary Item Translation difference account" and amortized over the balance period of such long term assets / liabilities. Non-monetary items such as investments are carried at historical cost using the exchange rates on the date of the transaction. Forward contracts other than those entered into to hedge foreign currency risk on unexecuted firm commitments or of highly probable forecast transactions are treated as foreign currency transactions and accounted accordingly. Exchange differences arising on such contracts are recognized in the period in which they arise and the brmium paid is accounted as expense over the period of the contract. All other exchange differences are dealt with in the Statement of Profit and Loss. (k) Employee benefits Retirement benefits in the form of Provident Fund and Family Pension Scheme are defined contribution schemes and the contributions are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective trusts. Stock Based Compensation - The compensation cost of stock options granted to employees is calculated using the intrinsic value method of the stock options. The compensation expense is amortized uniformly over the vesting period of the option in accordance with the Guidance note on Share based payments issued by the Institute of Chartered Accountants of India. Employee benefits under defined benefit plans, such as Gratuity and Compensated absences are provided for on the basis of the actuarial valuation made at the end of each financial year. Actuarial gains / losses are immediately taken to Statement of Profit and Loss and are not deferred. (l) Taxation Income tax expenses comprise current tax (i.e. amount of tax for the period determined in accordance with the income tax law) and deferred tax charges or credit (reflecting the tax effects of timing differences between accounting income and taxable income of the year). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however where there is unabsorbed debrciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain as the case may be to be realised. Tax credit is recognised in respect of Minimum Alternate Tax (MAT) paid in terms of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within the statutory time frame and the same is reviewed at each balance sheet date. (m) Provisions and Contingent Liabilities Provisions are recognised based on the best estimate of the expenditure required to settle the brsent obligation at the balance sheet date when, a) the Company has a brsent obligation as a result of a past event b) a probable outflow of resources is expected to settle the obligation and c) the amount of the obligation can be reliably estimated Where some or all the expenditure required to settle a provision is expected to be reimbursed by another party, such reimbursement is recognised to the extent of provision or contingent liability as the case may be, only when it is virtually certain that the reimbursement will be received. Contingent liability is disclosed in the case of: a) a brsent obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of obligation cannot be made. b) a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not within the control of the enterprise (xv) Previous year's figures have been re-grouped / re-arranged wherever necessary to conform to current year's classification. For and on behalf of the Board of Directors Sanjay Sagar Jt. Managing Director & CEO [DIN: 00019489] Sajjan Jindal Chairman & Managing Director [DIN: 00017762] Sampath Madhavan Company Secretary Pramod Menon Director - Finance [DIN: 01443287 Date: 27th April 2016 Place: Mumbai |