NOTES FORMING PART OF FINANCIAL STATEMENTS 1 SIGNIFICANT ACCOUNTING POLICIES: a) Accounting Convention : The accounts have been brpared under the historical cost convention and on accrual system based on the principle of going concern. b) Income & Expenditure: - Income from Sale of Power is recognized on the basis of meter reading recorded and confirmed by the Electricity Board authorities upto the last month meter reading of the financial year. - Income from Sale of Entitlements from Wind Farm Projects are accounted for as and when sold. - Income on Inter Corporate Deposits is accounted for on time accrual basis - It is the policy of the company to provide for all income and expenses on accrual basis. c) Fixed Assets - Fixed assets are valued at cost less debrciation. - Land - Leasehold is amortised over the tenure of lease. d) Debrciation : Effective from 01.04.2014 the Company debrciates it fixed assets on Straight Line Method over the usefull life in the manner brscribed in Schedule II of the Companies Act, 2013 as against the earlier practice of debrciating at the rates brscribed in Schedule XIV of Companies Act, 1956. e) Capital Work In Progress: All direct expenses incurred for acquiring and erecting fixed assets are shown under capital work in progress. Any purchases made on account of capital work in progress is charged to the capital work in progress irrespective of its consumption. f) Investments: Long term investments are carried at cost. Provision for dimunition, if any, in the value of each long term investment is made to recognise a decline, other than of temporary nature. g) Borrowing Costs: Borrowing cost relating to the acquisition / construction of fixed assets are capitalised as part of cost of such assets till such time the assets are ready for their intended use. h) Retirement Benefits: - The Company has covered its gratuity liabilities with Life Insurance Corporation of India. Any amount payable to the employee in the year of separation in excess of amount received from LIC is charged off to revenue. - The Company has made necessary provisions as per actuarial valuation for leave encashment and other retirement benefits wherever required as per Accounting Standard 15 under Companies (Accounting Standards) Rules. i) Amortization of Miscellaneous Expenditure: Preliminary expenses are amortized in the year of incurrence of expenditure. j) Impairment of Assets If the carrying amount of fixed assets exceeds the recoverable amount on the reporting date, the carrying amount is reduced to the recoverable amount. The recoverable amount is measured as the higher of the net selling price and the value in use determined by the brsent value of estimated future cash flows. k) Taxation: Provision for income tax for current year is made on the basis of taxable income for the year as determined as per the provisions of the Income Tax Act, 1961. l) Deferred Tax: Deferred income tax is accounted for by computing the tax effect on timing differences which arise during the year and capable of reversal in subsequent periods. m) Foreign Currency Transaction: The transactions in foreign currency are accounted at exchange rate brvailing on the date of transaction. Money items denominated in foreign currency outstanding at the year end are translated at the year end exchange rate and the unrealised exchange gain or loss is recognized in the profit and loss account. 2) Contingent Liabilities: Rs Nil (Prev. Year - Rs. NIL) 3) Earnings in Foreign Exchange : Sale of Entitlement from Wind Power : Rs Nil (Prev. Year - Rs. 127.84 Lakh) Expenditure in Foreign Exchange : Rs Nil (Prev. Year - Rs. Nil) 4) Disclosures required under Accounting Standard 15 "Employee Benefits as per Companies (Accounting Standards) Rules 2006 The Employee's Gratuity Fund Scheme managed by Life Insurance Corporation of India is a defined benefit plant. The brsent value of obligation is determined based on acturial valuation using the projected unit credit method 12) The company has, on the basis of expected life of Fixed Assets, as brscribed in Schedule II of the Companies Act, 2013, restated figures of Written Down Value of each of such fixed asset, as on 01.04.2014 and in accordance therewith the net difference arising there from aggregating to Rs.6.01 lac has been transferred to the retained earnings. 13) Exceptional item rebrsents the difference of (i) an income of Rs.380.20 lacs being difference in tarriff for sale value of wind power sold to state power Distribution Licencee (DL) in Andhra Pradesh from January 2011 to March 2014 as per order dated 06.09.2014 issued by Hon'ble State Electricity Regulatory Commission and (ii) Net Present Value compensation of Rs.240.90 lacs paid to Sahyadri Tiger Reserve Conservation Foundation as per Order Dated 16.01.2015 of Hon'ble Subrme Court of India against which the Company has filed petition with Hon'ble Subrme Court of India. 14) The company in respect of its 18 MW wind farm in the state of Maharashtra, as in past years had applied for open access approval to the state utility for sale of power to third parties in FY 2014-15. However the state utility unilaterally denied granting of open access to many wind farm developers including the company leading to a petition to be filed before State Electricity Regulatory Commission (MERC) through an Association of Wind Power Developers of which the Company is a member. The company had continued to feed the wind power generated into the grid of the state utility and had in the first quarter of the financial year on a conservative basis recorded the revenue from generation at the low brferential tariff of Rs.2.52 per unit. However, while the hearing on the petition was in process MERC announced a new Open Access Regulations incorporating most of the contentions of the State Utility for refusing open access for FY 2014-15. The Company considering the approach of MERC in interbrting the provisions of the Electricity Act and expecting long legal uncertainty decided to reverse the revenue recorded in the first quarter of FY 2014-15 and continued non recording of revenue from the said 18 MW wind farm. In view of recent pronouncement of certain judgments on Open Access for Solar Energy by Appellate Tribunal for Electricity which is equally applicable to the contention of the Association in the subject petition before MERC and further since the MERC has finally heard the petition, pending judgment that may be in favour of the company, in the absence of receipt of the same at the time of finalization of the accounts for the financial year ended as at 31.03.2015, the Company without brjudice to the contentions in the said petition before MERC decided to record the revenue at the lower tariff at Rs.2.52 per unit as compared to better tariff that could be realized under open access in respect of its aforesaid wind farm. 15) An Association of Wind Power Generators of which the Company is the member has filed a petition before Hon'ble Maharashtra State Electricity Regulatory Commission on the matter of refusal to grant Open Access for sale of wind power to third parties by the State Utility for FY 2014-15. Though hearing is completed, order is yet to be issued. If the order is in favour of the Association the Company would stand benefitted in realising higher revenue from sale of wind power to third parties from its 18 MW wind farm in state. If the decision is against the Association, there would not be any adverse impact as the company has recorded revenue for FY 2014-15 at lower tarriff which would be realised. An Association of Wind Power Generators of which the Company is a member is a respondent in a Civil appeal filed before Hon'ble Subrme Court of India by State Utility in Maharashtra in the matter of payment of interest on delayed remittance of wind power generation dues. The company had in the earlier years recorded such interest of Rs.201.99 lacs as directed to be paid by Hon'ble Appelate Tribunal for Electricity. In the event the Apex Court upholds the contention of state utility the said revenue recorded may have to be provided for. The Company has filed an Impleading Application before Hon'ble Subrme Court of India in the matter of an Order issued by the Apex Court directing payment of Net Present Value (NPV) with Wild Life Authorities in respect of selected wind mills of the Company in Maharashtra. In compliance with the order of the Apex Court the Company has paid and charged to expenses in the financial statement an amount of Rs.240.90 lacs. If the Apex Court upholds the contention of the Company the said payment has to be recovered and credited to revenue. 16) In respect of balances of Sundry Creditors / Debtors, Loans and Advances, Banks and Unsecured Loans / Inter Corporate Deposits confirmations were not received by the Company in few cases. In the opinion of management the balances as appearing in the books are fully payable / realisable, as the case may be, in the normal course of business. 17) Previous year figures have been regrouped and / or reclassified wherever necessary As per our report of even date attached For and on behalf of the Board For U. B. Sura & Co. Chartered Accountants U. B. Sura Proprietor Membership No. 32026 Firm Regn. No. 110620W For Shyam C. Agarwal & Co. Chartered Accountants S. C. Agarwal Proprietor Membership No. 31774 Firm Regn. No. 110243W D. G. Siraj (Chairman) DIN - 00025543 G. N. Kamath (Managing Director) DIN - 00040805 T. V. Subramanian (Chief Financial Officer & Company Secretary) PLACE : Mumbai, Dated : 30.05.2015 |