| Disclosure of accounting policies, change in accounting policies and changes in estimates explanatory 1 Background Indian Energy Exchange Limited (‘the Company’) was incorporated on 26 March 2007. The Company is a registered national level power exchange. The Company enables price discovery and price risk management for participants of the electricity market, including industries eligible for open access. 2 Significant accounting policies (i) Basis of brparation of financial statements These financial statements have been brpared and brsented on the accrual basis of accounting and comply with the Accounting Standards referred to in section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, the relevant provisions of the Companies Act, 2013, pronouncements of the Institute of Chartered Accountants of India and other accounting principles generally accepted in India, to the extent applicable. The financial statements are brsented in Indian rupees. (ii) Use of estimates The brparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods. (iii) Current - non current classification All assets and liabilities are classified into current and non-current. Assets An asset is classified as current when it satisfies any of the following criteria: a. it is expected to be realised in, or is intended for sale or consumption in, the company’s normal operating cycle; b. it is held primarily for the purpose of being traded; c. it is expected to be realised within 12 months after the reporting date; or d. it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date. Current assets include the current portion of non-current financial assets. All other assets are classified as non-current. Liabilities A liability is classified as current when it satisfies any of the following criteria: a. it is expected to be settled in the company’s normal operating cycle; b. it is held primarily for the purpose of being traded; c. it is due to be settled within 12 months after the reporting date; or d. the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current. Operating cycle Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents (iv) Fixed assets and debrciation Tangible fixed assets are carried at cost of acquisition or construction less accumulated debrciation and/or accumulated impairment loss, if any. The cost of an item of tangible fixed asset comprises its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price. Subsequent expenditures related to an item of tangible fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its brviously assessed standard of performance. A fixed asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Losses arising from retirement or gains or losses arising from disposal of fixed assets which are carried at cost are recognised in the Statement of Profit and Loss. Debrciation on assets, other than leasehold improvements, is provided for on a straight line method at the rates brscribed in Schedule – II of the Companies Act, 2013. Leasehold improvements are debrciated on a straight line method over a period of lease. Debrciation on assets sold, discarded or demolished during the period, if any, is being provided pro-rata up to the date on which such assets are sold, discarded or demolished. (v) Intangible fixed assets and amortisation Intangible fixed assets are stated at cost of acquisition and are carried at cost less accumulated amortization and impairment loss, if any. Intangible fixed assets are recognised only if it is probable that the economic benefits that are attributable to the assets will flow to the enterprises and the cost of assets can be measured reliably. Expenditure on an intangible item is expensed when incurred unless it forms part of the cost of intangible assets that meet the recognition criteria. Computer software is amortised over six years considering their related useful lives. (vi) Revenue recognition Service income Transaction fee is charged based on the volume of transactions entered into by the respective member or client of trader/ professional member through the exchange. Fee charged in relation to transactions under the Day Ahead Market and the Renewal Energy Certificate segment, is accrued when the orders placed on the network are matched and confirmed by National Load Dispatch Centre. Fee charged in relation to transactions under the Term Ahead Market segment is accrued when orders placed on the network are matched, confirmed by Regional Load Dispatch Centre and delivered. Revenue from services is recognised when the same have been rendered and no significant uncertainty exists regarding the collection of the consideration. Admission fees and Processing fees charged from a prospective member of the exchange at the time of his joining, is recognised when the membership has been approved by the membership committee. Annual subscription fee, in the year when the member/ client is registered for the first time, is recognised on commencement of trading that coincides with the registration of trader member/ client of trader/professional member on a pro-rata basis. Annual subscription fee, in any year subsequent to the year of registration, is recognised on an accrual basis on a pro-rata basis. Dividend Dividend income is recognized when the Company’s right to receive dividend is established. Interest income Interest income is recognised on time proportion basis taking into account the amount outstanding and the interest rate applicable. Sale of mutual fund In case of mutual fund, the profit/ loss from the transaction is determined on the first in first out basis of carrying amount of investments disposed of/ redemption of mutual fund units. (vii) Investments Investments that are readily realisable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long term investments which is expected to be realised within 12 months after the reporting date is also brsented under ‘current assets’ as “current portion of long term investments” in consonance with the current/non-current classification scheme of revised Schedule III. Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments in mutual funds. (viii) Foreign currency transactions Transactions in foreign currency are recorded at the exchange rate brvailing at the date of the transaction. Exchange differences arising on foreign currency transactions settled during the period are recognised in the Statement of Profit and Loss. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at year end rates. The resultant exchange differences are recognised in the Statement of Profit and Loss. (ix) Employee benefits The Company’s obligations towards various employee benefits have been recognised as follows: Short- term employee benefits: All employee benefits payable wholly within twelve months of rendering service are classified as short-term employee benefits. Benefits such as salaries, allowances, short-term compensated absences and the expected cost of other benefits is recognised in the period in which the employee renders the related service. Post employment benefits: Defined contribution plan A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards employee provident fund to Government administered provident fund scheme which is a defined contribution plan. The Company’s contribution is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. Defined benefit plans The Company’s gratuity scheme is a defined benefit plan. The brsent value of obligation under such defined benefit plan is determined based on actuarial valuation carried at the year end using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the brsent value of the estimated future cash flows. The discount rate used for determining the brsent value of the obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date. Other long-term benefits Cost of long-term benefit by way of accumulating compensated absences arising during the tenure of the service is calculated taking into account the pattern of availment of leave. In respect of encashment of leave, the defined benefit is calculated taking into account all types of decrements and qualifying salary projected up to the assumed date of encashment. The brsent value of obligations under such long-term benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method as at period end. Treatment of actuarial gains and losses Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. (x) Earnings per share Basic earnings/ (loss) per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period/ year. For the purpose of calculating diluted earnings/ (loss) per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a later date. (xi) Taxation Income taxes are accrued in the same period in which the related revenue and expense arise. Income tax expenses comprise current tax (i.e. the amount of tax for the period determined in accordance with the Income tax Act, 1961) and deferred tax charge or credit (reflecting the tax effects of the timing differences between the accounting income and taxable income for the period). 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 the future, however, where there is unabsorbed debrciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is 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. In accordance with the provisions of Section 115JAA of the Income-tax Act, 1961, the Company is allowed to avail credit equal to the excess of Minimum Alternate Tax (MAT) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for set-off for ten succeeding assessment years from the year in which such credit becomes allowable. MAT credit can be set-off only in the year in which the Company is liable to pay tax as per the normal provisions of the Income-tax Act, 1961 and such tax is in excess of MAT for that year. Accordingly, MAT credit entitlement is recognised only to the extent there is convincing evidence that the Company will pay normal tax during the specified period. (xii) Operating lease Lease arrangements where the risk and rewards incidental to ownership of an asset substantially vest with lessor are classified as operating lease. Lease rental in respect of assets taken on operating lease are charged to the Statement of Profit and Loss on a straight-line basis over the lease term. (xiii) Provisions, contingent liabilities and contingent assets A provision is created when there is a brsent obligation as a result of a past event and it is more likely than not that there will be an outflow of resources embodying economic benefits to settle such obligation and the amount of such obligation can be reliably estimated. Provisions are not discounted to its brsent value, and are determined based on the management's best estimate of the amount of obligation required at the year end. These are reviewed at each Balance Sheet date and adjusted to reflect current management estimates. Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events not wholly within the control of the Company. When there is a possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. The Company does not recognise assets which are of contingent nature until there is virtual certainty of realisability of such assets. However, subsequently, if it becomes virtually certain that an inflow of economic benefits will arise, asset and related income is recognized in the financial statements of the period in which the change occurs. (xiv) Impairment Fixed assets (tangible and intangible) are reviewed at each reporting date to determine if there is any indication of impairment. For assets in respect of which any such indication exist and for intangible assets mandatorily tested annually for impairment, the assets recoverable amount is estimated. An impairment loss is recognised if the carrying amount of the asset exceeds its recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss. If at balance sheet date there is an indication that a brviously assessed impairment loss no longer exist or has decreased, the assets recoverable amount is estimated. The impairment loss is reversed to the extent that the assets carrying amount does not exceed the carrying value that would have been determined, net of debrciation or amortisation, if no impairment loss had been recognised. Such a reversal is recognised in the Statement of Profit and Loss. (xv) Employee Stock Options Plan (ESOP) The compensation cost of stock options granted to employees is measured by the intrinsic value method, i.e. difference between the market price of the Company’s shares on the date of grant of options and the exercise price to be paid by the option holders. (xvi) Cash and cash equivalents Cash and cash equivalents comprise cash balances on hand, balance with bank, and highly liquid investments with maturity period of three months or less from the date of investment. Note Number 25 to 38 of Financial Statements 25. As at 1 April 2015, Financial Technologies India Ltd ('FTIL') held 28.486% (7,775,515 shares) of the equity capital of the Company. The Central Electricity Regulatory Commission ('CERC') vide its order dated 13 May 2014 had inter-alia directed the Company: a) to ensure that FTIL divests its entire shareholding in the Company; b) pending divestment of the shares, the voting rights of FTIL shall stand extinguished and any corporate benefit in lieu of such shareholding shall be kept in abeyance or withheld by the Company. Thus, effectively, FTIL did not have any voting rights in the Company throughout the year under consideration. Further, CERC directed the Company to ensure divestment of FTIL’s shares by 1 June 2015, in case FTIL failed to divest its shares. It was also stated that if the Company did not comply with the aforesaid directions, CERC shall proceed to initiate action for withdrawal of permission to IEX to maintain and operate the power exchange. The Company had taken various actions to comply with the CERC order including extinguishment of voting rights w.e.f. 22 May 2014, and subsequently the FTIL divested its 100% stake in the Company vide sale of its shares in various tranches by 20 November 2015 in compliance with the CERC’s orders. 26. Contingent liabilities and Commitments (net of advances) During the current year, the Company has made appropriate provisions (at the beginning of the year Rs.1,573,450, made during the year Rs.4,850,580) as a result of pending litigations with the Income Tax Authorities pertaining to various assessment years Estimated amount of contracts remaining to be executed on capital account and not provided for
Rs.1,080,062,500(brvious year Rs. 250,000). The Company has vide agreement dated 31 August 2015 with FTIL, agreed to obtain a perpetual software license subject to various terms and conditions at a consideration of Rs. 1,080,000,000 (Excluding taxes) execution of which has been challenged by one of the shareholders of the Company and matter is subjudice. 27. As per the Consolidated FDI Policy on Power Exchanges, a non-resident investor/ entity cannot hold more than 5% in a power exchange. On 29 May 2015, the Company had received a letter from the Department of Economic Affairs (“DEA”) (FIPB Unit) stating rejection of application for extension of time as requested by the two non-resident shareholders, who were required to bring down their shareholding in the Company to align with the current FDI Policy by 30 April 2015. As per aforesaid letter, DEA had advised the Company to divest the FDI stake immediately and apply to the Reserve Bank of India (“RBI”) for compounding. The said investment by the aforesaid non-resident shareholders was done in FY- 2010-11, whereas the Press Note, including the shareholding limits brscribed therein, was introduced and defined post these investments. The Press Note also does not exbrssly extends its conditionalities on a retrospective basis. Both the said shareholders have brought down their shareholding in the Company to align it with the FDI policy and accordingly the Company has informed the FIPB about the said compliance and has also sought dispensation from the Compounding directions issued by them. Further, based upon the understanding obtained by the management, the Company does not foresee any material liability, if any, based on actions taken by them coupled with the fact that no undue benefit has been derived by Company from such holdings. 28. Expenditure in foreign currency (on accrual basis) Particulars | For the Year Ended 31 March 2016 | For the Year Ended 31 March 2015 | Travelling Expenses | 98,830 | 315,053 | Membership & Subscription | 61,332 | 59,838 | Business promotion/development | 91,106 | 114,722 | Training expenses* | 4,784,818 | 2,742,944 | Legal And Professional | 3,436,643 | - | Total | 8,472,729 | 3,232,557 |
*Training expenses have been netted off with training income in note 19. 29. Dividend remittances in foreign currency Particulars | For the Year Ended 31 March 2016 | | For the Year Ended 31 March 2015 | | Year to which the dividend relates | 2015-16 | 2014-15 | 2014-15 | 2013-14 | Equity shares | | | | | Amount remitted during the year | 46,069,891 | 73,230,948 | 83,403,700 | 13,344,592 | Number of non-resident shareholders | 8 | 5 | 4 | 4 | Number of non-resident shareholders to whom dividend paid in foreign currency | 6 | 4 | 2 | 2 | Number of shares on which dividend was due | 6,581,413 | 6,102,579 | 3,336,148 | 3,336,148 | | | | | | | | | | | Compulsorily convertible brference shares | | | | | Amount remitted during the year | 10,615,017 | 18,197,172 | 37,910,775 | 60,65,724 | Number of non-resident shareholders | 2 | 2 | 2 | 2 | Number of non-resident shareholders to whom dividend paid in foreign currency | 1 | 1 | 1 | 1 | Number of shares on which dividend was due | 1,516,431 | 1,516,431 | 1,516,431 | 1,516,431 |
30. Segment reporting The Company is a power exchange. The entire operations are governed by the similar set of risk and returns and, hence, the same has been considered as rebrsenting a single primary segment. The Company operates within India and does not have operations in economic environments with different risks and returns; hence, it is considered operating in single geographical segment. Since the Company’s business activity falls within a single business and geographical segment, there are no additional disclosures to be provided under Accounting Standard-17 ‘Segment Reporting’. 31. Earnings per share Particulars | | For the Year Ended 31 March 2016 | For the Year Ended 31 March 2015 | A | Profit after tax Less: Dividend on compulsory convertible brference shares Less: Dividend distribution tax on compulsory convertible brference shares | 1,00,13,07,697 4,53,01,382 92,22,295 | 90,42,01,079 11,22,15,894 2,02,94,905 | B | Net profit attributable to equity shareholders for calculation of basic earnings per share | 946,784,020 | 771,690,280 | C | Number of equity shares outstanding at the end of the year Less- Equity shares of Rs. 10 each fully paid allotted to the IEX ESOP Trust but not allotted to employees. | 28,812,193 2,01,132 | 27,295,762 2,41,442 | D | Number of equity shares outstanding at the end of the year (net) | 28,611,061 | 27,054,320 | E | Weighted average number of equity shares outstanding at the end of year for calculation of Basic earnings per share | 27,685,303 | 27,054,320 | F | Number of potential equity shares in respect of Compulsory Convertible Preference shares and stock option | 26,43,321 | 3,274,304 | G | Weighted average number of equity shares for calculation of diluted earnings per share (E+F) | 30,328,624 | 30,328,624 | | Basic earnings per equity share (Rs.) (B/E) | 34.20 | 28.52 | | Diluted earnings per equity share (Rs.) | 33.02 | 28.52* |
* As at 31 March 2015, the outstanding potential equity shares have an anti-dilutive effect on earnings per share. Hence there is no dilution of earnings per share for the year. 32. Operating Lease The Company has taken office brmises under operating leases. The lease period for office brmises taken under non-cancellable lease agreement is nine years with a lock-in period of three years, there after the same can be cancelled by lessee by giving notice of three months to the lesser. Lease rental expense recognised in the Statement of Profit and Loss for the year ended 31 March 2016 is Rs. 22,539,714 (Previous Year Rs. 21,682,008). Future minimum lease payments (excluding taxes) in respect of such non-cancellable operating lease as on 31 March 2016 and 31 March 2015 are summarised below: Particulars | As at 31 March 2016 | As at 31 March 2015 | Minimum lease payments | | | not later than one year | 18,884,544 | 18,884,544 | later than one year and not later than five years | 86,901,265 | 82,536,118 | later than five years | 63,175,526 | 86,425,217 | Total | 168,961,335 | 187,845,879 |
33. Related party disclosures Names of related parties and related party relationship a) Related parties where transactions have taken place: Entity having significant influence over the company | Financial Technologies (India) Limited# | Key managerial personnel | Mr. S.N. Goel | Controlled Employee Welfare Trust | IEX ESOP Trust |
# As explained in detail in note. 25 to these financial statements, Financial Technologies (India) Limited (FTIL) did not carry any voting rights in the Company by virtue of CERC order dated 13 May 2014. Further, the corporate benefits in lieu of FTIL shareholding were also put on hold pending divestment of FTIL’s stake in the Company, and FTIL had no nominee on the Company’s Board of Directors. In view of this, the Company is of the opinion that FTIL is not a related party as defined under Section 2(76) of the Indian Companies Act, 2013 with effect from 19 May 2014 and has now divested its 100% stake in the Company. Considering that the FTIL was holding more than 20% stake in the Company’s equity share capital (however due to CERC order effectively, FTIL did not have any voting rights in the Company throughout the year under consideration), till 14 October 2015, and that the Company has material transactions with FTIL in terms of software development and maintenance expenses, read with the guidance as per Accounting Standard - 18 “Related Party Disclosures”, the FTIL is shown as a related party for the current year in the above mentioned disclosures as required by Accounting Standard-18, for transactions taken place till 14 October 2015 estimated on the basis of proportionate time period. b) Transactions with related parties Transactions during the year | For the Year Ended 31 March 2016 | For the Year Ended 31 March 2015 | Rendering of services to the company | | | Financial Technologies (India) Limited | 99,599,871* | 186,895,665 | | | | Reimbursement of expenses charged by them | | | Financial Technologies (India) Limited | 219,749* | 1,798,395 | | | | Reimbursement of expenses charged to them | | | IEX ESOP Trust | 80,000 | 180,000 | | | | Salary and Allowances | | | Mr. S.N. Goel # | 16,699,348 | 16,699,348 |
* up to October 2015 # Does not include gratuity and leave liability as they are provided based on Company as whole. a) Outstanding balances at the year end Nature | As at 31 March 2016 | As at 31 March 2015 | Trade payables | | | Financial Technologies (India) Limited* | - | 676,314 | Payable to key managerial personnel | | | Mr. S.N. Goel ## | 4,000,000 | 4,000,000 | Prepaid expenses | | | Financial Technologies (India) Limited* | - | 16,583 |
* FTIL cease to be shareholder of the Company wef November 20, 2015 as mentioned in note 25 & 33 (a) above. ## Provision towards variable pay as per terms of his appointment. 34. Employee benefits Disclosure in respect of employee benefits under Accounting Standard 15 “Employee Benefits” brscribed by the Companies (Accounting Standards) Rules, 2006. a) Defined contribution plans The Company makes contributions, determined as a specified percentage of employee's salaries, in respect of qualifying employees towards provident fund which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognised as expense towards such contribution to provident fund for the year aggregated to Rs. 4,183,781(brvious year Rs. 3,700,878). b) Defined benefit plans The company operates defined benefit plan that provide gratuity. The gratuity plan entitles all eligible employees to receive one half month's salary for each year of completed service at the time of retirement, superannuation, death or permanent disablement, in terms of the provisions of the payment of Gratuity Act or as per company's scheme whichever is more beneficial. The following table summarizes the position of assets and obligations: Particulars | As at 31 March 2016 | As at 31 March 2015 | Changes in brsent value of the obligation during theyear | | | Liability at the beginning of the year | 8,577,848 | 5,726,288 | Current service cost | 2,203,096 | 2,040,091 | Interest cost | 664,783 | 486,734 | Benefits paid | (157,126) | (375,577) | Actuarial loss on obligation | 192,666 | 700,312 | Liability at the end of the year | 11,481,267 | 8,577,848 | | | | Net (liability) recognised in Balance Sheet | | | Present value of the obligation at the end of the year | (11,481,267) | (8,577,848) | Net (liability) recognised in Balance Sheet | (11,481,267) | (8,577,848) |
Expense recognised in the Statement of Profit and Loss | As at 31 March 2016 | As at 31 March 2015 | Current service cost | 22,03,096 | 20,40,091 | Interest cost | 6,64,783 | 4,86,734 | Net actuarial loss recognised during the year | 1,92,666 | 7,00,312 | Net benefit expense | 30,60,545 | 3,227,137 |
c) Experience adjustments Particulars | | Year ended | | | | 31 March 2016 | 31 March 2015 | 31 March 2014 | 31 March 2013 | 31 March 2012 | Present value of defined benefit obligations | 1,14,81,267 | 85,77,848 | 5,726,288 | 3,893,732 | 3,383,493 | (Surplus) / deficit | 1,14,81,267 | 85,77,848 | 5,726,288 | 3,893,732 | 3,383,493 | Experience adjustments (loss) / gain – obligations | (4,20,300) | (3,98,412) | (477,456) | 83,478 | (308,392) |
d) The principal assumption used in determining the gratuity benefit obligation is as given below: Particulars | As at 31 March 2016 | As at 31 March 2015 | Discount rate | 7.90 % | 7.75 % | Salary escalation rate (p.a.) | 8.00% | 8.00% | Demographic assumptions : | | | Retirement age | 60 | 60 | Mortality rate | IALM(2006-08) | IALM(2006-08) |
The discount rate is based on the brvailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations. The salary escalation rate is based on estimates of salary increases, which take into account inflation, promotion and other relevant factors. e) Other long-term benefit (Compensated absences) The Company operates compensated absences plan, where in every employee is entitled to the benefit equivalent to 15 days leave salary for every completed year of service subject to maximum of 42 days accumulation of leaves. The salary for calculation of earned leave is last drawn basic salary. The same is payable during the service, early retirement, withdrawal of scheme, resignation by employee and upon death of employee. An actuarial valuation of compensated absences has been carried out by an independent actuary on the basis of the following assumptions: Assumptions | Year ended | Year ended | 31 March 2016 | 31 March 2015 | Discount rate | 7.90% p.a | 7.75% p.a. | Salary escalation rate | 8.00% p.a | 8.00% p.a. |
35. During the financial year 2010-11, the Company had framed an “Employee Stock Option Scheme - 2010” (“ESOP 2010”), which was duly approved by the Shareholders and Board of Directors of the Company. Accordingly, the Company allotted 606,572 number of equity shares of Rs. 10 each to IEX ESOP Trust who will administer the ESOP Scheme on behalf of the Company. Further, the Shareholders of the Company vide their special resolution passed at the Annual General Meeting held on 27 September 2013 had authorised the Board of Directors/ Compensation Committee of the Company to vary the terms of ESOP's including the vesting period for selective/specific eligible employees in respect of the options which have yet not been granted or granted but which have not been vested yet, subject to a minimum vesting period of one year from the date of grant under the IEX - Employee Stock Option Scheme - 2010. Out of total shares allotted to IEX ESOP Trust, ESOP Trust has granted 585,800 number of options to employees. Details of options granted by the ESOP Trust is as under: Date of grant | Vesting period | No. of options granted | Exercise price (in Rs.) | 8 July 2010 | 33% on completion of first year 33% on completion of second year 34% on completion of third year | 307,100 | 10 | 7 September 2010 | 33% on completion of first year 33% on completion of second year 34% on completion of third year | 17,600 | 10 | 16 December 2011 | 33% on completion of first year 33% on completion of second year 34% on completion of third year | 106,100 | 53 | 16 December 2011 | 55% on completion of first year 45% on completion of second year | 100,000 | 53 | 21 January 2014 | 25% on completion of second year 25% on completion of third year 25% on completion of fourth year 25% on completion of fifth year | 45,000 | 150 | 24 June 2014 | 100% on completion of one year and successful completion of the IPO and listing of the Company's equity shares at Stock Exchange | 10,000 | 535 |
No employee has been issued options entitling such person to subscribe to more than 1% of Equity Share Capital of the Company. The particulars of numbers of options granted/ exercised, lapsed and forfeited under the aforementioned scheme are as below: Particulars | Year ended 31 March 2016 | | Year ended 31 March 2015 | | Numbers | Average price | Numbers | Average price | Options outstanding at the beginning of the year | 45,000 | 150.00 | 77,800 | 109.11 | 10,000 | 535.00 | Nil | Nil | Option exercisable at the beginning of the year | 340 | 53.00 | 990 | 53.00 | Options granted during the year | Nil | Nil | 10,000 | 535.00 | Options forfeited during the year | Nil | Nil | Nil | Nil | Options lapsed during the year | 340 | 53.00 | 4,390 | 53.00 | Option exercised during the year | 11,250 | 150.00 | 29,060# | 53.00 | Option exercisable at the closing of the year | Nil | Nil | 340 | 53.00 | Options outstanding at the closing of the year | 33,750 | 150.00 | 45,000 | 150.00 | 10,000 | 535.00 | 10,000 | 535.00 | Expenses arising from stock option plan during the year | Nil | Nil | Nil | Nil |
# transferred subsequent to year end. Note: Total lapsed option available for reissuance are 136,610 (brvious year 136,270) under ESOP Scheme. All the options granted by the Company are fixed and are granted at or higher than the fair value brvailing at the grant date, the Company has not recognized any compensation expense in the financials of the Company. The intrinsic value per option for ESOP granted by the Company is Rs.Nil. For option granted on 21 January 2014 and 24 June 2014 under “Employee Stock Option Scheme - 2010” (“ESOP 2010”), the intrinsic value of each option is ` Nil. The estimated fair value is Rs. 21.24 for options granted on 21 January 2014. The weighted average fair values have been determined using the Black Schole Formula considering the following parameters: Particulars | 21-Jan-14 | 24-Jun-14 | Fair Value of share at grant date | 148 | 148 | Exercise price | 150 | 535 | Expected volatility | 0% | 0% | Option Life | 3.0 Year | 1.50 Year | Expected Dividends | Based on dividend declared prior to the date of grant | Based on dividend declared prior to the date of grant | Dividend yield | 2.70% | 0.75% | Risk free interest rate | 8.52% | 8.83% |
The profit after tax of the Company for the year would have been lower by Rs 658,855had the Company accounted the employee share-based payment using the Fair Value Method as per the Guidance Note on ‘Accounting for employee share based payments’. The earnings per share as reported would be lower as indicated below: Particulars | | For the year ended 31 March 2016 | | Basic | Diluted | Profit attributable to the equity shareholders | | 946,784,020 | 1,001,307,697 | Less : Total Stock based employee Compensation expense determined under fair value based method | | 658,855 | 658,855 | Adjusted net profit available to shareholders | | 946,125,165 | 1,000,648,842 | Weighted average number of equity shares (nos.) | | 27,685,303 | 30,328,624 | Earnings Per share | | | | As reported | | 34.20 | 33.02 | Adjusted | | 34.18 | 33.00 |
36. The Company had constituted a separate 'Settlement Guarantee Fund' ('SGF') in respect of the activities carried out in various contracts being traded at the exchange platform. The members are required to contribute to the fund in the form of interest free margin money, which forms part of the SGF. The margin money is refundable, subject to adjustments, if any. Such fund is also termed as Settlement Guarantee Fund. The Cash Margin Money forming part of SGF was Rs.551,899,480(brvious year Rs. 710,085,270) disclosed under note 9 - Other current liabilities Rs. 368,399,480 (brvious year Rs. 525,085,270)under Security Deposits towards Settlement Guarantee Fund and note 6 – Other long -term liabilities – Deposits towards Settlement Guarantee Fund Rs. 183,500,000(brvious year Rs. 185,000,000). The Company had also collected non cash portion of the Settlement Fund comprising collateral such as bank guarantees, received from the members amounting to Rs. 66,000,000(brvious year Rs. 35,500,000) which does not form part of the Balance Sheet. 37. Pursuant to Companies Act, 2013 ('the Act') being effective from 1 April 2014, the Company has revised debrciation rates on certain fixed assets as per the useful life specified in Part 'C' of Schedule II to the Act. As a result of this change, the debrciation charge for the year ended 31 March 2015 is higher by Rs. 2,172,659 and an amount of Rs. 529,538 (net of deferred tax of Rs. 280,253) in respect of assets whose useful life is already exhausted as on 1 April 2014 has been adjusted from retained earnings in brvious year. 38. In terms of Section 135 of the Companies Act 2013 and Rules made thereunder the Company was to spend Rs. 23,908,733on Corporate Social Responsibility (CSR) expenses. The actual spending by the Company on CSR was Rs 1,700,397 during the year. The Company has set up a CSR committee of Board of Directors, and has already defined and adopted aCSR Policy for taking necessary action for complying with the CSR requirement as defined in its policy. For B S R &Associates LLP | For and on behalf of the Board of Directors of | | | | Chartered Accountants | Indian Energy Exchange Limited | | | | ICAI Firm Registration Number:116231W/W-100024 Sd/- | Sd/- | Sd/- | | | Manish Gupta | D K Mehrotra | S N Goel | | | Partner | Chairman | Managing Director& CEO | | | Membership No.: 095037 | DIN- 00142711 | DIN: 02695123 | | | | | | | | Place : New Delhi | Place : New Delhi | | | | Date :4 May 2016 | Date : 4 May 2016 | | | | | | | | |
Sd/- Vineet Harlalka CFO and Company Secretary M.No. 16264 Place : New Delhi | Date :4 May 2016 | | | |
Disclosure of general information about company1 Background Indian Energy Exchange Limited (‘the Company’) was incorporated on 26 March 2007. The Company is a registered national level power exchange. The Company enables price discovery and price risk management for participants of the electricity market, including industries eligible for open access. 2 Significant accounting policies (i) Basis of brparation of financial statements These financial statements have been brpared and brsented on the accrual basis of accounting and comply with the Accounting Standards referred to in section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, the relevant provisions of the Companies Act, 2013, pronouncements of the Institute of Chartered Accountants of India and other accounting principles generally accepted in India, to the extent applicable. The financial statements are brsented in Indian rupees. (ii) Use of estimates The brparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods. (iii) Current - non current classification All assets and liabilities are classified into current and non-current. Assets An asset is classified as current when it satisfies any of the following criteria: a. it is expected to be realised in, or is intended for sale or consumption in, the company’s normal operating cycle; b. it is held primarily for the purpose of being traded; c. it is expected to be realised within 12 months after the reporting date; or d. it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date. Current assets include the current portion of non-current financial assets. All other assets are classified as non-current. Liabilities A liability is classified as current when it satisfies any of the following criteria: a. it is expected to be settled in the company’s normal operating cycle; b. it is held primarily for the purpose of being traded; c. it is due to be settled within 12 months after the reporting date; or d. the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current. Operating cycle Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents (iv) Fixed assets and debrciation Tangible fixed assets are carried at cost of acquisition or construction less accumulated debrciation and/or accumulated impairment loss, if any. The cost of an item of tangible fixed asset comprises its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price. Subsequent expenditures related to an item of tangible fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its brviously assessed standard of performance. A fixed asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Losses arising from retirement or gains or losses arising from disposal of fixed assets which are carried at cost are recognised in the Statement of Profit and Loss. Debrciation on assets, other than leasehold improvements, is provided for on a straight line method at the rates brscribed in Schedule – II of the Companies Act, 2013. Leasehold improvements are debrciated on a straight line method over a period of lease. Debrciation on assets sold, discarded or demolished during the period, if any, is being provided pro-rata up to the date on which such assets are sold, discarded or demolished. (v) Intangible fixed assets and amortisation Intangible fixed assets are stated at cost of acquisition and are carried at cost less accumulated amortization and impairment loss, if any. Intangible fixed assets are recognised only if it is probable that the economic benefits that are attributable to the assets will flow to the enterprises and the cost of assets can be measured reliably. Expenditure on an intangible item is expensed when incurred unless it forms part of the cost of intangible assets that meet the recognition criteria. Computer software is amortised over six years considering their related useful lives. (vi) Revenue recognition Service income Transaction fee is charged based on the volume of transactions entered into by the respective member or client of trader/ professional member through the exchange. Fee charged in relation to transactions under the Day Ahead Market and the Renewal Energy Certificate segment, is accrued when the orders placed on the network are matched and confirmed by National Load Dispatch Centre. Fee charged in relation to transactions under the Term Ahead Market segment is accrued when orders placed on the network are matched, confirmed by Regional Load Dispatch Centre and delivered. Revenue from services is recognised when the same have been rendered and no significant uncertainty exists regarding the collection of the consideration. Admission fees and Processing fees charged from a prospective member of the exchange at the time of his joining, is recognised when the membership has been approved by the membership committee. Annual subscription fee, in the year when the member/ client is registered for the first time, is recognised on commencement of trading that coincides with the registration of trader member/ client of trader/professional member on a pro-rata basis. Annual subscription fee, in any year subsequent to the year of registration, is recognised on an accrual basis on a pro-rata basis. Dividend Dividend income is recognized when the Company’s right to receive dividend is established. Interest income Interest income is recognised on time proportion basis taking into account the amount outstanding and the interest rate applicable. Sale of mutual fund In case of mutual fund, the profit/ loss from the transaction is determined on the first in first out basis of carrying amount of investments disposed of/ redemption of mutual fund units. (vii) Investments Investments that are readily realisable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long term investments which is expected to be realised within 12 months after the reporting date is also brsented under ‘current assets’ as “current portion of long term investments” in consonance with the current/non-current classification scheme of revised Schedule III. Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments in mutual funds. (viii) Foreign currency transactions Transactions in foreign currency are recorded at the exchange rate brvailing at the date of the transaction. Exchange differences arising on foreign currency transactions settled during the period are recognised in the Statement of Profit and Loss. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at year end rates. The resultant exchange differences are recognised in the Statement of Profit and Loss. (ix) Employee benefits The Company’s obligations towards various employee benefits have been recognised as follows: Short- term employee benefits: All employee benefits payable wholly within twelve months of rendering service are classified as short-term employee benefits. Benefits such as salaries, allowances, short-term compensated absences and the expected cost of other benefits is recognised in the period in which the employee renders the related service. Post employment benefits: Defined contribution plan A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards employee provident fund to Government administered provident fund scheme which is a defined contribution plan. The Company’s contribution is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. Defined benefit plans The Company’s gratuity scheme is a defined benefit plan. The brsent value of obligation under such defined benefit plan is determined based on actuarial valuation carried at the year end using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the brsent value of the estimated future cash flows. The discount rate used for determining the brsent value of the obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date. Other long-term benefits Cost of long-term benefit by way of accumulating compensated absences arising during the tenure of the service is calculated taking into account the pattern of availment of leave. In respect of encashment of leave, the defined benefit is calculated taking into account all types of decrements and qualifying salary projected up to the assumed date of encashment. The brsent value of obligations under such long-term benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method as at period end. Treatment of actuarial gains and losses Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. (x) Earnings per share Basic earnings/ (loss) per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period/ year. For the purpose of calculating diluted earnings/ (loss) per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a later date. (xi) Taxation Income taxes are accrued in the same period in which the related revenue and expense arise. Income tax expenses comprise current tax (i.e. the amount of tax for the period determined in accordance with the Income tax Act, 1961) and deferred tax charge or credit (reflecting the tax effects of the timing differences between the accounting income and taxable income for the period). 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 the future, however, where there is unabsorbed debrciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is 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. In accordance with the provisions of Section 115JAA of the Income-tax Act, 1961, the Company is allowed to avail credit equal to the excess of Minimum Alternate Tax (MAT) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for set-off for ten succeeding assessment years from the year in which such credit becomes allowable. MAT credit can be set-off only in the year in which the Company is liable to pay tax as per the normal provisions of the Income-tax Act, 1961 and such tax is in excess of MAT for that year. Accordingly, MAT credit entitlement is recognised only to the extent there is convincing evidence that the Company will pay normal tax during the specified period. (xii) Operating lease Lease arrangements where the risk and rewards incidental to ownership of an asset substantially vest with lessor are classified as operating lease. Lease rental in respect of assets taken on operating lease are charged to the Statement of Profit and Loss on a straight-line basis over the lease term. (xiii) Provisions, contingent liabilities and contingent assets A provision is created when there is a brsent obligation as a result of a past event and it is more likely than not that there will be an outflow of resources embodying economic benefits to settle such obligation and the amount of such obligation can be reliably estimated. Provisions are not discounted to its brsent value, and are determined based on the management's best estimate of the amount of obligation required at the year end. These are reviewed at each Balance Sheet date and adjusted to reflect current management estimates. Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events not wholly within the control of the Company. When there is a possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. The Company does not recognise assets which are of contingent nature until there is virtual certainty of realisability of such assets. However, subsequently, if it becomes virtually certain that an inflow of economic benefits will arise, asset and related income is recognized in the financial statements of the period in which the change occurs. (xiv) Impairment Fixed assets (tangible and intangible) are reviewed at each reporting date to determine if there is any indication of impairment. For assets in respect of which any such indication exist and for intangible assets mandatorily tested annually for impairment, the assets recoverable amount is estimated. An impairment loss is recognised if the carrying amount of the asset exceeds its recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss. If at balance sheet date there is an indication that a brviously assessed impairment loss no longer exist or has decreased, the assets recoverable amount is estimated. The impairment loss is reversed to the extent that the assets carrying amount does not exceed the carrying value that would have been determined, net of debrciation or amortisation, if no impairment loss had been recognised. Such a reversal is recognised in the Statement of Profit and Loss. (xv) Employee Stock Options Plan (ESOP) The compensation cost of stock options granted to employees is measured by the intrinsic value method, i.e. difference between the market price of the Company’s shares on the date of grant of options and the exercise price to be paid by the option holders. (xvi) Cash and cash equivalents Cash and cash equivalents comprise cash balances on hand, balance with bank, and highly liquid investments with maturity period of three months or less from the date of investment. Disclosure of accounting policies explanatory2 Significant accounting policies (i) Basis of brparation of financial statements These financial statements have been brpared and brsented on the accrual basis of accounting and comply with the Accounting Standards referred to in section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, the relevant provisions of the Companies Act, 2013, pronouncements of the Institute of Chartered Accountants of India and other accounting principles generally accepted in India, to the extent applicable. The financial statements are brsented in Indian rupees. (ii) Use of estimates The brparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods. (iii) Current - non current classification All assets and liabilities are classified into current and non-current. Assets An asset is classified as current when it satisfies any of the following criteria: a. it is expected to be realised in, or is intended for sale or consumption in, the company’s normal operating cycle; b. it is held primarily for the purpose of being traded; c. it is expected to be realised within 12 months after the reporting date; or d. it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date. Current assets include the current portion of non-current financial assets. All other assets are classified as non-current. Liabilities A liability is classified as current when it satisfies any of the following criteria: a. it is expected to be settled in the company’s normal operating cycle; b. it is held primarily for the purpose of being traded; c. it is due to be settled within 12 months after the reporting date; or d. the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current. Operating cycle Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents (iv) Fixed assets and debrciation Tangible fixed assets are carried at cost of acquisition or construction less accumulated debrciation and/or accumulated impairment loss, if any. The cost of an item of tangible fixed asset comprises its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price. Subsequent expenditures related to an item of tangible fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its brviously assessed standard of performance. A fixed asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Losses arising from retirement or gains or losses arising from disposal of fixed assets which are carried at cost are recognised in the Statement of Profit and Loss. Debrciation on assets, other than leasehold improvements, is provided for on a straight line method at the rates brscribed in Schedule – II of the Companies Act, 2013. Leasehold improvements are debrciated on a straight line method over a period of lease. Debrciation on assets sold, discarded or demolished during the period, if any, is being provided pro-rata up to the date on which such assets are sold, discarded or demolished. (v) Intangible fixed assets and amortisation Intangible fixed assets are stated at cost of acquisition and are carried at cost less accumulated amortization and impairment loss, if any. Intangible fixed assets are recognised only if it is probable that the economic benefits that are attributable to the assets will flow to the enterprises and the cost of assets can be measured reliably. Expenditure on an intangible item is expensed when incurred unless it forms part of the cost of intangible assets that meet the recognition criteria. Computer software is amortised over six years considering their related useful lives. (vi) Revenue recognition Service income Transaction fee is charged based on the volume of transactions entered into by the respective member or client of trader/ professional member through the exchange. Fee charged in relation to transactions under the Day Ahead Market and the Renewal Energy Certificate segment, is accrued when the orders placed on the network are matched and confirmed by National Load Dispatch Centre. Fee charged in relation to transactions under the Term Ahead Market segment is accrued when orders placed on the network are matched, confirmed by Regional Load Dispatch Centre and delivered. Revenue from services is recognised when the same have been rendered and no significant uncertainty exists regarding the collection of the consideration. Admission fees and Processing fees charged from a prospective member of the exchange at the time of his joining, is recognised when the membership has been approved by the membership committee. Annual subscription fee, in the year when the member/ client is registered for the first time, is recognised on commencement of trading that coincides with the registration of trader member/ client of trader/professional member on a pro-rata basis. Annual subscription fee, in any year subsequent to the year of registration, is recognised on an accrual basis on a pro-rata basis. Dividend Dividend income is recognized when the Company’s right to receive dividend is established. Interest income Interest income is recognised on time proportion basis taking into account the amount outstanding and the interest rate applicable. Sale of mutual fund In case of mutual fund, the profit/ loss from the transaction is determined on the first in first out basis of carrying amount of investments disposed of/ redemption of mutual fund units. (vii) Investments Investments that are readily realisable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long term investments which is expected to be realised within 12 months after the reporting date is also brsented under ‘current assets’ as “current portion of long term investments” in consonance with the current/non-current classification scheme of revised Schedule III. Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments in mutual funds. (viii) Foreign currency transactions Transactions in foreign currency are recorded at the exchange rate brvailing at the date of the transaction. Exchange differences arising on foreign currency transactions settled during the period are recognised in the Statement of Profit and Loss. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at year end rates. The resultant exchange differences are recognised in the Statement of Profit and Loss. (ix) Employee benefits The Company’s obligations towards various employee benefits have been recognised as follows: Short- term employee benefits: All employee benefits payable wholly within twelve months of rendering service are classified as short-term employee benefits. Benefits such as salaries, allowances, short-term compensated absences and the expected cost of other benefits is recognised in the period in which the employee renders the related service. Post employment benefits: Defined contribution plan A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards employee provident fund to Government administered provident fund scheme which is a defined contribution plan. The Company’s contribution is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. Defined benefit plans The Company’s gratuity scheme is a defined benefit plan. The brsent value of obligation under such defined benefit plan is determined based on actuarial valuation carried at the year end using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the brsent value of the estimated future cash flows. The discount rate used for determining the brsent value of the obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date. Other long-term benefits Cost of long-term benefit by way of accumulating compensated absences arising during the tenure of the service is calculated taking into account the pattern of availment of leave. In respect of encashment of leave, the defined benefit is calculated taking into account all types of decrements and qualifying salary projected up to the assumed date of encashment. The brsent value of obligations under such long-term benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method as at period end. Treatment of actuarial gains and losses Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. (x) Earnings per share Basic earnings/ (loss) per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period/ year. For the purpose of calculating diluted earnings/ (loss) per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a later date. (xi) Taxation Income taxes are accrued in the same period in which the related revenue and expense arise. Income tax expenses comprise current tax (i.e. the amount of tax for the period determined in accordance with the Income tax Act, 1961) and deferred tax charge or credit (reflecting the tax effects of the timing differences between the accounting income and taxable income for the period). 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 the future, however, where there is unabsorbed debrciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is 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. In accordance with the provisions of Section 115JAA of the Income-tax Act, 1961, the Company is allowed to avail credit equal to the excess of Minimum Alternate Tax (MAT) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for set-off for ten succeeding assessment years from the year in which such credit becomes allowable. MAT credit can be set-off only in the year in which the Company is liable to pay tax as per the normal provisions of the Income-tax Act, 1961 and such tax is in excess of MAT for that year. Accordingly, MAT credit entitlement is recognised only to the extent there is convincing evidence that the Company will pay normal tax during the specified period. (xii) Operating lease Lease arrangements where the risk and rewards incidental to ownership of an asset substantially vest with lessor are classified as operating lease. Lease rental in respect of assets taken on operating lease are charged to the Statement of Profit and Loss on a straight-line basis over the lease term. (xiii) Provisions, contingent liabilities and contingent assets A provision is created when there is a brsent obligation as a result of a past event and it is more likely than not that there will be an outflow of resources embodying economic benefits to settle such obligation and the amount of such obligation can be reliably estimated. Provisions are not discounted to its brsent value, and are determined based on the management's best estimate of the amount of obligation required at the year end. These are reviewed at each Balance Sheet date and adjusted to reflect current management estimates. Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events not wholly within the control of the Company. When there is a possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. The Company does not recognise assets which are of contingent nature until there is virtual certainty of realisability of such assets. However, subsequently, if it becomes virtually certain that an inflow of economic benefits will arise, asset and related income is recognized in the financial statements of the period in which the change occurs. (xiv) Impairment Fixed assets (tangible and intangible) are reviewed at each reporting date to determine if there is any indication of impairment. For assets in respect of which any such indication exist and for intangible assets mandatorily tested annually for impairment, the assets recoverable amount is estimated. An impairment loss is recognised if the carrying amount of the asset exceeds its recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss. If at balance sheet date there is an indication that a brviously assessed impairment loss no longer exist or has decreased, the assets recoverable amount is estimated. The impairment loss is reversed to the extent that the assets carrying amount does not exceed the carrying value that would have been determined, net of debrciation or amortisation, if no impairment loss had been recognised. Such a reversal is recognised in the Statement of Profit and Loss. (xv) Employee Stock Options Plan (ESOP) The compensation cost of stock options granted to employees is measured by the intrinsic value method, i.e. difference between the market price of the Company’s shares on the date of grant of options and the exercise price to be paid by the option holders. (xvi) Cash and cash equivalents Cash and cash equivalents comprise cash balances on hand, balance with bank, and highly liquid investments with maturity period of three months or less from the date of investment. Disclosure of employee benefits explanatory Employee benefits Disclosure in respect of employee benefits under Accounting Standard 15 “Employee Benefits” brscribed by the Companies (Accounting Standards) Rules, 2006. a) Defined contribution plans The Company makes contributions, determined as a specified percentage of employee's salaries, in respect of qualifying employees towards provident fund which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognised as expense towards such contribution to provident fund for the year aggregated to Rs. 4,183,781(brvious year Rs. 3,700,878). b) Defined benefit plans The company operates defined benefit plan that provide gratuity. The gratuity plan entitles all eligible employees to receive one half month's salary for each year of completed service at the time of retirement, superannuation, death or permanent disablement, in terms of the provisions of the payment of Gratuity Act or as per company's scheme whichever is more beneficial. The following table summarizes the position of assets and obligations: Particulars | As at 31 March 2016 | As at 31 March 2015 | Changes in brsent value of the obligation during theyear | | | Liability at the beginning of the year | 8,577,848 | 5,726,288 | Current service cost | 2,203,096 | 2,040,091 | Interest cost | 664,783 | 486,734 | Benefits paid | (157,126) | (375,577) | Actuarial loss on obligation | 192,666 | 700,312 | Liability at the end of the year | 11,481,267 | 8,577,848 | | | | Net (liability) recognised in Balance Sheet | | | Present value of the obligation at the end of the year | (11,481,267) | (8,577,848) | Net (liability) recognised in Balance Sheet | (11,481,267) | (8,577,848) |
Expense recognised in the Statement of Profit and Loss | As at 31 March 2016 | As at 31 March 2015 | Current service cost | 22,03,096 | 20,40,091 | Interest cost | 6,64,783 | 4,86,734 | Net actuarial loss recognised during the year | 1,92,666 | 7,00,312 | Net benefit expense | 30,60,545 | 3,227,137 |
c) Experience adjustments Particulars | | Year ended | | | | 31 March 2016 | 31 March 2015 | 31 March 2014 | 31 March 2013 | 31 March 2012 | Present value of defined benefit obligations | 1,14,81,267 | 85,77,848 | 5,726,288 | 3,893,732 | 3,383,493 | (Surplus) / deficit | 1,14,81,267 | 85,77,848 | 5,726,288 | 3,893,732 | 3,383,493 | Experience adjustments (loss) / gain – obligations | (4,20,300) | (3,98,412) | (477,456) | 83,478 | (308,392) |
d) The principal assumption used in determining the gratuity benefit obligation is as given below: Particulars | As at 31 March 2016 | As at 31 March 2015 | Discount rate | 7.90 % | 7.75 % | Salary escalation rate (p.a.) | 8.00% | 8.00% | Demographic assumptions : | | | Retirement age | 60 | 60 | Mortality rate | IALM(2006-08) | IALM(2006-08) |
The discount rate is based on the brvailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations. The salary escalation rate is based on estimates of salary increases, which take into account inflation, promotion and other relevant factors. e) Other long-term benefit (Compensated absences) The Company operates compensated absences plan, where in every employee is entitled to the benefit equivalent to 15 days leave salary for every completed year of service subject to maximum of 42 days accumulation of leaves. The salary for calculation of earned leave is last drawn basic salary. The same is payable during the service, early retirement, withdrawal of scheme, resignation by employee and upon death of employee.
An actuarial valuation of compensated absences has been carried out by an independent actuary on the basis of the following assumptions: Assumptions | Year ended | Year ended | 31 March 2016 | 31 March 2015 | Discount rate | 7.90% p.a | 7.75% p.a. | Salary escalation rate | 8.00% p.a | 8.00% p.a. |
Disclosure of enterprise's reportable segments explanatoryThe Company is a power exchange. The entire operations are governed by the similar set of risk and returns and, hence, the same has been considered as rebrsenting a single primary segment. The Company operates within India and does not have operations in economic environments with different risks and returns; hence, it is considered operating in single geographical segment. Since the Company’s business activity falls within a single business and geographical segment, there are no additional disclosures to be provided under Accounting Standard-17 ‘Segment Reporting’. |