a. Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under historical cost
convention and going concern basis. The accounting policies adopted in
the preparation of the financial statements are consistent with those
followed in the previous year except for change in the accounting
policy for depreciation as described in Note 35.
b. Use of Estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation
of the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
c. Tangible Assets
Fixed assets are stated at cost of acquisition including any
attributable cost for bringing the assets to its working condition for
its intended use, less accumulated depreciation and impairment losses,
if any. Borrowing costs directly attributable to qualifying assets /
capital projects are capitalized and included in the cost of fixed
d. Project Development Expenditure
Expenditure related to and incurred during implementation of capital
projects is included under Capital Work in Progress or Project
Development Expenditure as the case may be. The same is allocated to
the respective fixed assets on completion of construction/ erection of
the capital project/ fixed assets.
e. Intangible assets
Computer Software cost is capitalized and recognized as Intangible
Assets in terms of Accounting Standard-26 Intangible Assets based on
materiality, accounting prudence and significant economic benefits
expected to flow there from for a period longer than one year.
i) Depreciation is provided on additions / deductions of the assets
during the period from / upto the month in which the asset is added /
In respect of tangible assets, depreciation is provided on Straight
Line Method considering the rates provided in Appendix III of CERC
(Terms and conditions of Tariff) Regulations, 2009.
ii) Depreciation on assets acquired / disposed off during the year is
provided on pro-rata basis with reference to the date of addition/
iii) Assets costing less than Rs 5,000 are written off in the year of
iv) Cost of Leasehold land is amortized over a period of lease.
v) Cost of intangible assets are amortised over a period of five years.
Assets acquired on leases where a significant portion of risks and
rewards incidental to ownership is retained by the lessor are
classified as operating lease.
Long term investments are stated at cost. Provision for diminution in
the value of long-term investments is made only if, such a decline is
permanent in the opinion of the management. Current Investments are
carried at lower of cost or fair value.
i. Revenue recognition
i) Revenue (income) is recognized when no significant uncertainty as to
the measurability or collectability exists.
ii) Interest income is accounted for on an accrual basis. Dividend
income is accounted for when the right to receive income is
iii) Delayed payment charges and interest on delayed payment for power
supply are recognized, on grounds of prudence, as and when recovered.
Inventories are valued at weighted average cost or net realizable
value, whichever is lower.
k. Borrowing costs
Borrowing costs includes interest on borrowings and amortisation of
ancillary costs incurred for borrowings. Such costs to the extent not
directly related to the acquisition of qualifying assets are charged to
the Statement of Profit and Loss over the tenure of the borrowings.
l. Impairment of Assets
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Statement of Profit and Loss in the period in which an asset is
identified as impaired. The impairment loss, if any, recognized in
prior accounting periods is reversed if there has been a change in the
estimate of recoverable amount.
m. Foreign exchange transactions
i) Transactions denominated in foreign currencies are normally recorded
at the exchange rates prevailing at the time of the transaction.
ii) Monetary items denominated in foreign currencies at the balance
sheet date are restated at the rates prevailing on that date. In case
of monetary items which are covered by forward exchange contracts, the
difference between the rate prevailing on the balance sheet date and
rate on the date of the contract is recognized as exchange difference
and the premium paid on forward contracts is recognized over the life
of the contract.
iii) Non monetary foreign currency items are carried at cost.
iv) Any income or expense arising on restatement / settlement, other
than that arising on long-term foreign currency monetary items, are
recognised in the Statement of Profit and Loss for the period in which
the difference takes place.
v) The exchange differences arising on restatement / settlement of
long-term foreign currency monetary items are regarded entirely as
exchange differences and capitalized as part of the depreciable fixed
assets to which the monetary item relates and depreciated over
remaining useful life of such assets.
n. Derivative transactions
Pursuant to the announcement on accounting for derivatives issued by
the Institute of Chartered Accountants of India, the Company, in
accordance with the principle of prudence as enunciated in AS - 1,
Disclosure of Accounting Policies, provides for losses in respect of
all outstanding derivative contracts at the Balance Sheet date by
marking them to market. Any net unrealized gains arising on such mark
to market are not recognized as income.
o. Employee Benefits
The Company has an obligation towards gratuity, a defined benefit
retirement plan covering eligible employees through Group Gratuity
Scheme of Life Insurance Corporation of India. The Company accounts for
the liability for the gratuity benefits payable in future based on an
independent actuarial valuation carried out using Projected Unit Credit
Method considering discounting rate relevant to Government Securities
at the Balance Sheet Date.
ii) Provident fund
Retirement Benefits in the form of Provident Fund and Family Pension
Fund, which are defined benefit contribution schemes, are charged to
the Project Development Expenditure Account till the commencement of
commercial production otherwise, the same is charged to the Statement
of Profit and Loss for the period, in which the contributions to the
respective funds accrue.
iii) Leave Encashment
Provision for Leave Encashment is determined and accrued on the basis
of actuarial valuation.
p. Taxes on Income
Provision for income tax is made on the basis of estimated taxable
income for the year at current rates.
Current Tax represents the amount of Income Tax Payable in respect of
the taxable income for the reporting period as determined in accordance
with the provisions of the Income Tax Act, 1961.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date. Deferred
tax is recognised on timing differences, being the differences between
the taxable income and the accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set off. Deferred tax assets and
deferred tax liabilities relate to the taxes on income levied by the
same governing taxation laws. Deferred tax assets are recognized only
to the extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. If the Company has carry forward unabsorbed
depreciation or carry forward tax losses, deferred tax assets are
recognized only if there is a virtual certainty supported by convincing
evidences that they can be realized against future taxable profits.
Unrecognized deferred tax assets of earlier years are re- assessed and
recognized to the extent that it has become reasonably certain that
future taxable income will be available against which such deferred tax
assets can be realized.
q. Provisions, contingent liabilities and contingent assets
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the