NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2015 

1. 1.1 Significant Accounting Policies d)

System of Accounting

The financial statements are brpared according to the historical cost convention on accrual basis in line with the e) generally accepted accounting principles in India and the provisions of the Companies Act, 2013, including accounting standards notified thereunder as amended from time to time.

Fixed Assets

Fixed Assets are stated at historical cost less accumulated debrciation and any impairment in value. Where finalsettlement of bills with contractors is pending/under dispute,capitalization is done on estimated/provisional basis subject to necessary adjustment in the year of final settlement.

b) Fixed Assets created on land not belonging to the company where the company is having control over the use and access of such assets are included under Fixed Assets.

c) Capital expenditure on assets not owned by the Company isreflected as a distinct item in Capital Work-in-progress / Fixed Assets.

d) Payments made provisionally towards compensation and other expenses relatable to land in possession are treated as cost of land.

e) Expenditure incurred for compensatory afforestation, soil conservation and re-forestation towards forest land is shown as "Intangible Assets-Expenditure on compensatory afforestation" and is amortized pro-rata through debrciation over the period of likely use.

f) Assets and systems common to more than one generating unit are capitalized on the basis of engineering estimates/assessments.

g) Assets/Equipments declared surplus are shown at lower of book value and net realisable value.

1.3 Machinery Spares

Machinery spares procured along with the Plant & Machinery or subsequently and whose use is expected to be irregular are capitalized and debrciated fully over the residual useful life of the related plant and machinery except as stated in para 1.3(b). 

b) Cost / WDV of Machinery Spares is fully charged to revenue in the year in which such spares are replaced except in cases where retrieved spares have useful life after repairs.

c) Other spares forming part of inventory are expensed when consumed.

1.4 Capital Work-in-progress

a) In respect of supply-cum-erection contracts, the value ofsupplies received at site/construction store and accepted is treated as Capital Work-in-progress.

b) Administration and Other General Overhead expenses at the Corporate Office and Projects under Construction / Survey &Investigation attributable to construction of fixed assets are identified and allocated on systematic basis on major immovable assets other than land, infrastructure facilities and bought out items on commissioning of Projects. However, no allocation of such expenses pertaining to Corporate Office is made on projects taken on BOOT (Build, Own, Operate & Transfer) basis till the date of grant of generation license.

c) Expenditure on Survey and Investigation of the Projects is carried as capital work in progress and capitalized as cost of Project on completion of construction of the Project or the same is expensed in the year in which it is decided to abandon such project.

d) Expenditure against "Deposit Works" is accounted for on the basis of statement of account received from the concerned agency and acceptance by the Company. However, provision is made wherever considered necessary.

e) Claims for price variation /exchange rate variation in case of contracts are accounted for on acceptance.

1.5 Debrciation and Amortisation

a) Debrciation is charged on straight-line method following the rates & methodology notified by the Central Electricity Regulatory Commission (CERC) for the purpose of fixation of tariff as amended from time to time, except as referred in Policy No. 1.5(g) and in case of computers & peripherals, and mobile phones which are debrciated @ 25% p.a.

b) Debrciation is provided on pro rata basis from the month in which the asset becomes available for use.

c) Debrciation on assets declared surplus/obsolete is provided till the end of the month in which such declaration is made.

d) Assets costing Rs.5,000/- or less are debrciated fully in the year of procurement.

e) Expenditure on software is recognized as 'Intangible Asset' and amortized fully over four years on Straight Line Method or over a period of its legal rights to use whichever is less.

f) Where the cost of debrciable assets has undergone a change during the year due to increase/decrease in long term liability on account of exchange fluctuation, change in duties or similar factors, the revised unamortized balance of such assets is debrciated prospectively over the residual life. Debrciation on increase/decrease in the value of existing assets on account of settlement of disputes is charged retrospectively.

g) Capital Expenditure referred to in Policy No. 1.2(c) is fully debrciated and charged to Profit & Loss A/c in the year in which such Asset is capitalized and ready for use.

h) Leasehold land is amortized pro-rata through debrciation over the period of lease or 35 years, whichever is lower, following the rates & methodology notified by CERC for the purpose of fixation of Tariff as amended from time to time. I) Expenditure on Catchment Area Treatment (CAT) Plan during construction is capitalized along with dam/civil works. Such expenditure during O&M stage is charged to revenue in the year of incurrence of such expenditure.

1.6 Investments

a) Non Current Investments are valued at cost less provision for permanent diminution in value.

b) Current Investments are valued at lower of cost and fair value.

1.7 Inventories

a) Inventories and Carbon Credit are valued at the lower of cost arrived at on weighted average basis and net realizable value.

b) Loose tools issued during the year are charged to consumption.

c) Stores issued for operation and maintenance but lying unused at site are treated as part of inventory.

d) The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and provided for.

e) Scrap is accounted for as and when sold.

1.8 Foreign Currency Transactions

a) Foreign currency transactions are initially recorded at the rates of exchange ruling at the date of transaction.

b) Monetary items denominated in foreign currency are restated at exchange rates brvailing on the Balance Sheet date. Non- Monetary items denominated in foreign currency are reported at the exchange rate ruling at the date of transaction.

c) Exchange differences, except to the extent considered as adjustment to borrowing cost as per AS-16 read with ASI-10, are recognized as income or expense in the period in which they arise in case of operating projects and to EDC in case of projects under construction. However, the differences relating to Fixed Assets/Capital Work-in-progress arising out of transactions entered into prior to 01.04.2004 over & above those considered as borrowing cost are adjusted to the carrying cost of Fixed Assets/Capital Work-in-progress.

1.9 Borrowing Costs

Borrowing costs attributable to fixed assets during construction /renovation and modernization are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.

1.10 Provision, Contingent Liabilities & 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 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.

1.11 Impairment of Assets

The carrying amount of cash generating unit is reviewed at each Balance Sheet date where there is any indication of impairment based on internal / external indicators. An impairment loss is recognized in the Statement of Profit & Loss  where the carrying amount exceeds the recoverable amount of the cash generating units. An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

1.12 Income

a) Sale of energy is accounted for based on tariff approved by the Central Electricity Regulatory Commission (CERC) except for sale of wind power energy which is accounted for on the basis of tariff rates notified by Electricity Regulatory Authorities of respective states as amended from time to time.

Recovery/refund towards foreign currency variation in respect of foreign currency loans as per CERC  notification is accounted for on year to year basis.

b) The incentives /disincentives are accounted for based on the norms notified/approved by the Central Electricity Regulatory Commission.

c) Advance against debrciation, forming part of tariff upto 31.03.2009 to facilitate repayment of loans, is reduced from sales and considered as deferred revenue to be included in the sales in subsequent years.

d) The Interest/surcharge on late payment/overdue sundry debtors for sale of energy is accounted for on receipt basis or when there is reasonable certainty of realisation.

e) Interest recoverable on advances to contractors/suppliers and other claims from contractors/suppliers under dispute are accounted for on receipt/acceptance.

f) Income from consultancy services is accounted for on the basis of actual progress / technical assessment of work executed or costs reimbursable, in line with the terms of respective consultancy contracts.

g) Income arising from carbon credit is recognized on transfer/sale of carbon credits i.e. when there is certainty regarding ultimate collection.

1.13 Employee Benefits

a) Provision for gratuity, leave encashment and other post retirement benefits as defined in Accounting Standard (AS) - 15 is made on the basis of actuarial valuation at the end of financial year.

b) Provident fund liability is accounted for on accrual basis.

c) Company's contribution towards defined contribution pension scheme for employees is accounted for on accrual basis.

1.14 Miscellaneous

a) Insurance claims are accounted for in the year of receipt/ acceptance by the insurer / certainty of realisation.

b) Prepaid and prior period expenses/income of items of Rs.50,000/- and below are charged to natural heads of accounts in the year of payment/receipt.

c) Liability for claims against the Company is recognized on acceptance by the Company / receipt of award by the Arbitrator and the balance claim, if disputed /contested by the contractor is shown as contingent liability. The claims prior to Arbitration award stage are disclosed as contingent liability.

d) Minimum two percent of average Profit before Tax of three immediately brceding financial years is transferred to CSR Trust for incurring expenditure towards Corporate Social Responsibility (CSR) and Sustainable Development (SD).

1.15 Taxes on Income

a) Taxes on income are determined on the basis of taxable income under the Income Tax Act, 1961.

b) Deferred tax is recognized on timing differences between the accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognized and carried forward to the extent there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

1.16 Cash Flow Statement

Cash Flow Statement is brpared in accordance with the indirect method brscribed in Accounting Standard (AS) - 3 'Cash Flow Statements'. 

2. Notes on Accounts

The amounts in Financial Statements are brsented in Indian Rupees and all figures have been rounded off to the nearest rupees lakh except when otherwise stated. The brvious year figures have also been reclassified/regrouped/rearranged wherever necessary to conform to this year's classification. 

2. 1 Other Commitments:

The amount of commitments on account of plant repair and supply of related spares/ components (net of advances! and other commitments not provided for is Rs.2188 lakh (Previous Year: Rs. 2364 Lakh!.

2.2 Consequent to CWC letter No. 22/1/2014/ HCD(NW&S!-1314 -1319 dated 11th March, 2015 and Principal Secretary (MPP & Power! to the Govt. of Himachal Pradesh letter No. MPP-(F!2-22/2009-I dated 12th March, 2015 regarding exploring the possibility of executing the Luhri Project as multi stage project instead of single stage project, company has decided to review the entire layout planning of the Luhri Hydroelectric Project (LHEP! from a single stage project to multi stage project. It is decided to review the expenditure incurred on LHEP and charge the same to revenue after detailed examination. Accordingly, an amount of Rs. 13228 lakh considered redundant and not likely to be used for LHEP Stage-1 has been charged to Statement of Profit and Loss.

2.3 412 MW Rampur hydro power station (RHPS! was fully commissioned during the year and started commercial generation. Accordingly, post commissioning employees and other administrative expenditure of RHPS along with corporate allocation have been charged to Statement of Profit and Loss.

2.4 Balances of trade receivables, advances, deposits, trade payables, material in transit/material lying with third parties are reconciled periodically. However, as on 31.03.2015, out of Rs. 178120 lakh trade receivables, deposits, material in transit, material lying with third parties etc., an amount of Rs.168601 lakh has been confirmed and balance amount of Rs.9519 lakh are subject to confirmation and consequential adjustments.

Further, trade payable amounting to Rs. 1464 lakh, which includes provisions/estimated liabilities are yet to be confirmed, which in the opinion of the management will not have any material impact.

2.5 In the opinion of the management, the value of all the assets other than Fixed Assets and Non-current Investments, have a realizable value in the ordinary course of business which is not less than the value at which these are stated in the Balance Sheet.

2.6 Disclosure as per Accounting Standard-16 on Borrowing Costs:

Borrowing Costs capitalized during the year are Rs.1149 lakh (P.Y Rs.2427 lakh)

2.7 Segment reporting:

As the company is primarily engaged in only one segment viz. ‘Generation and sale of power’, there are no reportable segments as per Accounting Standard – 17

2.8 The Company's significant leasing arrangements are in respect of operating leases of brmises for residential use of employees, offices, guest houses & transit camps. These leasing arrangements, which are not non-cancellable, are usually renewable by mutual consent on mutually agreeable terms. The Schedule of Employee Benefits Expense include Rs.647 lakh (Previous Year: Rs.611 lakh) towards lease payments, net of recoveries, in respect of brmises for residential use of employees. Lease payments in respect of brmises for offices, guest houses & transit camps are shown as Rent under other expenses / Expenditure during Construction (EDC).

2.9 Impairment of Assets – Accounting Standard – 28 In the opinion of the management, there is no indication of any significant impairment of assets during the year.

2.10  As per the Companies Act, 2013, the company is required to spend at least two per cent of the average net profits of the company made during the three immediately brceding financial years, in pursuance of its Corporate Social Responsibility Policy. During the year an amount of Rs.2579 lakh [(2% of Average Profit Before Tax of three immediately brvious three years (P.Y. Rs.1368 lakh, 1.3% of PAT of brvious year)] to be spent on CSR during the year and the same has been booked to CSR expenses as per Accounting Policy 1.14(d). The Company has transferred an amount of Rs.2579 lakh (P.Y Rs.1368 lakh) to the CSR trust formed to manage the CSR activities.

These are the notes referred to in Balance Sheet and Statement of Profit and Loss.

For Soni Gulati & Co.

Chartered Accountants

(Suresh Chand Soni)

Partner

M.No.083106

For and on behalf of the Board of Directors

 (Amarjit Singh Bindra)

Director (Finance)

DIN: 03358160

(Soumendra Das)

Company Secretary

FCS-4833

(Ramesh Narain Misra)

Chairman & Managing Director

DIN: 03109225

Place : New Delhi

Date : May 27, 2015