1. Background information
Entegra Limited (Entegra or the Company) was incorporated in 1995
as a private limited company. In 2000, the Company was converted into a
public limited company. The Company is listed on Bombay Stock Exchange
Limited and National Stock Exchange of India Limited. Entegra is
engaged in the development of integrated global renewable energy
2. Basis of presentation
The financial statements are prepared and presented under the
historical cost convention on the accrual basis of accounting and in
accordance with the Accounting Standards notified in the Companies
(Accounting Standard) Rules, 2006 and the relevant provisions of the
Companies Act, 1956, to the extent applicable.
3. Use of estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities on the date of the
financial statements. Management believes that the estimates made in
the preparation of financial statements are prudent and reasonable.
Actual future period''s results could differ from those estimates. Any
revisions to accounting estimates are recognised in the period in which
such revisions are made.
4.1. Revenue recognition
i. Revenues from sales of goods are recognized on shipment or dispatch
to customers and are recorded exclusive of Value Added Taxes but are
net of any sales returns,
ii. Revenues from services rendered are recognized on completion of the service and are recorded exclusive
of Service Tax.
iii. Interest income on deposits with banks and investments is recognized
on a time proportion basis,
iv Dividend incomes on investments are accounted for when the right to
receive the payment is established.
Purchases are shown exclusive of Value Added Tax.
4.3. Fixed assets and depreciation
Fixed assets are stated at cost of acquisition/construction including
any cost attributable to bringing the assets to their working
condition, less accumulated depreciation and impairment loss, if any.
Intangible assets are recorded at the consideration paid for
acquisition of such assets and are carried at cost less accumulated
amortization and impairment.
Depreciation on fixed assets is provided on straight line method at
the rates and in the manner prescribed in Schedule XIV of the Companies
Act, 1956 and on pro-rata basis with reference to the month of
additions / deductions. Fixed assets having value lower than Rs.5,000
are depreciated fully in the year of acquisition / installation.
Intangible assets are amortised over the irrespective individual
estimated useful lives on a straight-line basis, commencing from the
date the asset is available to the Company for its use.
4.4. Expenditure during construction period
Expenditure during construction period reflects an element of capital
work in progress and includes directly attributable costs that relate
to the project and general and administration overheads as are specifi
cally attributable to the construction of the project. Such expenditure
is included under ''Pre operative expenses (pending allocation) and will
be capitalized under relevant fixed asset accounts upon commencement
of commercial generation of power.
Inventories of components used for renewable energy projects have been
valued at lower of cost or net realizable value. Civil construction
materials are valued at cost.
Long term investments are stated at cost and provision is made to
recognise any decline, other than temporary, in the value of such
4.7. Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing on the date of the transactions. Gains or
losses resulting from the settlement of such transactions and from
translation of monetary assets and liabilities denominated in foreign
currency are recognised in the statement of Profit and Loss.
4.8. Employee benefits
Employees in India are entitled to benefits under the Payment of
Gratuity Act, 1972, a defined benefit retirement plan covering
eligible employees of the Company. The Plan provides a lump-sum payment
to eligible employees at retirement or on termination of employment.
The gratuity benefit conferred by the Company on its employees is
equal to or greater than the statutory minimum.
The Company provides for liability towards gratuity plan on the basis
of actuarial valuation. The entire amount of gratuity is unfunded.
The Company''s liability towards compensated absences (leave encashment)
is determined on an actuarial basis for the entire unavailed vacation
balance standing to the credit of each employee as at period-end.
4.9. Borrowing costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are charged to the income statement.
4.10. Impairment of assets
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of
assets exceeds its recoverable value. An impairment loss, if any, is
charged to statement of Profit and Loss in the year in which an asset
is identified as impaired. Reversal of impairment losses recognised in
prior years is recorded when there is an indication that the impairment
losses recognised for the assets no longer exist or have decreased.
After impairment depreciation is provided on the revised carrying
amount of the asset over its remaining useful life. However, the
carrying value after reversal is not increased beyond the carrying
value that would have prevailed by charging usual depreciation if there
was no impairment.
4.11. Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a
result of a past event and it is probable that an outfl ow of resources
embodying economic benefits will be required, and a reliable estimate
can be made of the amount required to settle the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation
or a present obligation in respect of which the likelihood of outfl ow
of resources is remote, no provision or disclosure is made.
4.12. Income taxes
Income tax expense comprises current income tax, deferred tax and
fringe benefit tax.
Provision for current income-tax is recognised in accordance with the
provisions of Indian Income Tax Act, 1961, and is made annually based
on the tax liability after taking credit for tax allowances and
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
Profits offered for income taxes and the Profits as per the fi
nancial statements. Deferred tax assets and liabilities are measured
using the tax rates and the tax laws that have been enacted or
substantively enacted at the balance sheet date. The effect of a change
in tax rates on deferred tax assets and liabilities is recognised in
the year that includes the enactment 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 depreciation or carried forward loss
under taxation laws, deferred tax assets are recognised only if there
is virtual certainty, supported by convincing evidence of recognition
of such assets. Deferred tax assets are reassessed for the
appropriateness of their respective carrying values at each balance
For operating leases, lease payments (excluding costs for services such
as insurance and maintenance) are recognised as an expense in the
statement of Profit and loss on a straight line basis unless another
systematic basis is more representative of the time pattern of the
user''s benefit, except where the rental is for pre operative
activities in which case it is charged to ''Pre operative expenses