1.1 Basis of preparation of financial statements
 
 The accounts have been prepared under the historical cost convention
 and in accordance with the provisions of the Companies Act, 1956 and
 accounting standards notified vide Companies (Accounting Standards)
 Rules, 2006.  Accounting policies unless specifically stated to be
 otherwise, are consistent and are in consonance with generally accepted
 accounting principles.
 
 1.2 Use of Estimates
 
 The preparation of financial Statements require management to make
 estimates and assumptions that affect the reported amount of assets and
 liabilities and disclosures relating to contingent liabilities as at
 the Balance Sheet date and the reported amounts of income and expenses
 during the year. Difference between the actual results and the
 estimates are recognised in the year in which the results become known/
 materialise.
 
 1.3 Fixed Assets
 
 Fixed assets are stated at cost of acquisition/construction. Cost
 includes interest and pre-operative expenses as allocated to the fixed
 assets.
 
 1.4 Expenditure during Construction Period
 
 Expenditure related to and incurred during implementation of capital
 project is included under Capital Work-in- progress and the same is
 allocated to the respective Fixed Assets on completion of its
 construction / erection.  Interest on borrowing costs related to
 qualifying asset is worked out on the basis of actual utilization of
 funds out of project specific loans and / or other borrowings to the
 extent identifiable with the qualifying asset and are capitalized with
 the cost of qualifying assets.
 
 1.5 Depreciation
 
 Depreciation on all assets, other than the plant and machinery has been
 provided on written down value method at the rates and in the manner
 specified in Schedule XIV to the Companies Act, 1956.
 
 In respect of assets of plant and machinery, depreciation has been
 provided on Straight Line Method at the rates prescribed under schedule
 XIV of The Companies Act, 1956.
 
 Assets having value of Rs.5,000/- or less have been written off in the
 year of acquisition irrespective, of the period of use.
 
 1.6 Investments
 
 Long-term investments are valued at cost. Current investments are
 valued at lower of cost and fair value as on the date of the Balance
 Sheet. The Company provides for diminution in the value of investments,
 other than temporary in nature.
 
 1.7 Revenue Recognition
 
 a) Sales of electricity generated are accounted for on delivery to the
 grid.
 
 b) Revenue in respect of Contract Division from sale of goods is
 recognized on delivery of the goods and from consultancy and other
 services are recognized on Proportionate Completion method with
 reference to the performance of the activities.
 
 1.8 Inventories
 
 Inventories are valued at cost or estimated net realisable value
 whichever is lower. Cost of inventory comprising Stores, spares and
 consumables are determined, applying weighted average method. Values of
 spares relatable to the machinery are charged out as consumption, over
 the effective life of the plant and machinery to which they relate.
 Erection and maintenance tools are charged out over a period of five
 years.
 
 Expenses incurred in respect of civil contract ,to the extent not
 billed on customers, is included as work in process.
 
 1.9 Impairment
 
 Fixed Assets are reviewed at each Balance Sheet date for impairment. In
 case events and circumstances indicate any impairment, recoverable
 amount of fixed assets is determined. An impairment loss is recognised,
 whenever the carrying amounts of assets exceeds recoverable amount. The
 recoverable amount is the greater of assets net selling price or its
 value in use. [n assessing the value in use, the estimated future cash
 flows from the use of assets are discounted to their present value at
 appropriate rate. An impairment loss is reversed if there has been
 change in the recoverable amount and such loss either no longer exists
 or has decreased. Impairment loss/reversal thereof is adjusted to the
 carrying value of the respective assets.
 
 1.10 Employees benefits
 
 Employees benefits are accrued in the year services are rendered by the
 employees.
 
 Contribution to defined contribution schemes such as Provident Fund
 etc. are recognized as and when incurred.
 
 Long term employee benefits under defined benefit scheme such as
 contribution to gratuity, leave etc. are determined at close of the
 year at present value of the amount payable using actuarial valuation
 techniques.
 
 Actuarial gains and losses are recognised in the year when they arise.
 
 1.11 Taxation
 
 Provision for tax is made for current and deferred taxes. Current tax
 is provided on the taxable income using the applicable tax rates and
 tax laws. Deferred tax assets and liabilities arising on account of
 timing differences, which are capable of reversal in subsequent years
 are recognised using tax rates and tax laws, which have been enacted or
 substantively enacted. Deferred tax assets other than in respect of
 carried forward losses or unabsorbed depreciation are recognised only
 to the extent that there is a reasonable certainty that sufficient
 future taxable income will be available against which such deferred tax
 assets will be realized.
 
 In pursuance of Section 80-IA of the Income Tax Act, 1961 the profits
 earned by various Generation Divisions is not taxable for a period of
 ten consecutive financial years out of fifteen years from commencement
 of operations, since those divisions are engaged in generation of
 electricity. Accordingly, based on the Accounting Standards
 interpretation on Accounting for Taxes on Income AS 22, deferred tax
 accounting in respect of the timing differences arising and/or
 reversing during the tax holiday period has not been considered.
 
 1.12 Borrowing Cost
 
 Borrowing costs that are attributable to the acquisition / construction
 of fixed assets are capitalized as part of the assets. Other borrowing
 costs are recognised as expenses in the year in which they are
 incurred.
 
 1.13 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 provided for and are disclosed by way of
 notes. Contingent Assets are neither recognized nor disclosed in the
 financial statements.