1.  Basis of preparation of financial statements
 
 The financial statements have been prepared and presented under the
 historical cost convention on the accrual basis of accounting in
 accordance with the Generally Accepted Accounting Principles (GAAP) in
 India. GAAP comprises accounting standards notified by the Central
 Government of India under Section 211 (3C) of the Companies Act, 1956,
 other pronouncements of Institute of Chartered Accountants of India
 (ICAI) and the provisions of Companies Act, 1956. The financial
 statements are presented in Indian rupees.
 
 2.  Use of estimates
 
 The preparation of financial statements in conformity with Indian GAAP
 requires management to make estimates and assumptions that affect the
 reported amounts of assets and liabilities and the disclosure of
 contingent liabilities on the date of the financial statements. Actual
 results could differ from those estimates. Any revision to accounting
 estimates is recognised prospectively in current and future periods.
 
 3.  Revenue recognition
 
 a) The Company''s revenue from sale of electricity is based on the Power
 Purchase Agreement (PPA) entered into with Andaman and Nicobar (A & N)
 Administration. The PPA is for a period of 15 years and contains a set
 of pre-defined formulae for calculation of revenue to be billed on a
 monthly basis. Such billings as per the terms of the PPA include a
 fixed charge payment, a variable charge payment, incentive payment,
 foreign exchange adjustment and charge in law adjustment. The revenue
 from sale of power is recognised on the basis of billing to A&N
 Administration as per the terms and conditions contained in the PPA.
 
 b) Revenue from sale of traded goods is recognised on dispatch of
 products (which coincides with the transfer of risks and rewards) to
 the customers of the Company. Revenue from sale of goods is stated
 exclusive of returns, sales tax and applicable trade discounts and
 allowances and volume rebates.
 
 c) Income from interest on deposits is recognised on the time
 proportionate method using the underlying interest rates.
 
 4.  Fixed assets and depreciation:
 
 Fixed assets
 
 Fixed assets are carried at the cost of acquisition or construction
 less accumulated depreciation. The cost of fixed assets includes taxes,
 duties, freight and other incidental expenses related to the
 acquisition and installation of the respective assets. Borrowing costs
 directly attributable to acquisition or construction of those fixed
 assets which necessarily take a substantial period of time to get ready
 for their intended use are capitalized. The cost of fixed assets also
 includes exchange differences arising in respect of foreign currency
 loans taken or other liabilities incurred before 1 April 2004 for the
 purpose of their acquisition and constitution.
 
 Advances paid towards the acquisition of fixed assets outstanding at
 each balance sheet date and the cost of fixed assets not ready for
 their intended use before such date are disclosed under Capital
 work-in-progress.
 
 Depreciation
 
 Depreciation on fixed assets used in generation of electricity is
 provided using the straight-line method at the rates prescribed by
 Central Government vide Notification Nos. S.O. 265 (E) and 266 (E)
 dated 27 March 1994 and 29 March 1994, respectively, issued under the
 Electricity Supply Act, 1948. Depreciation on fixed assets used in coal
 trading business is provided using the straight-line method at the
 rates prescribed in Schedule XIV to the Companies Act, 1956 as in the
 opinion of the management these rates reflect the estimated useful life
 of their assets. Depreciation is calculated on a pro-rata basis from
 the date of installation till the date the assets are sold or disposed.
 Individual assets costing less than Rs. 5,000 are depreciated in full
 in the year of acquisition.
 
 5.  Investments:
 
 Long term investments are carried at cost less any other-than temporary
 diminution in value, determined separately for each individual
 investment.
 
 6.  Inventories
 
 Inventories are valued at the lower of cost and net realisable value.
 Cost of inventories comprises cost of purchase and other costs incurred
 in bringing the inventories to their present location and condition.
 The methods of determining cost of various categories of inventories
 are as follows: Raw materials First-in-first-out (FIFO)
 
 Stores, spare parts and consumables First-in-first-out (FIFO)
 
 7.  Earnings per share
 
 The basic earnings per share (EPS) is computed by dividing the net
 profit after tax attributable to equity shareholders, for the year by
 the weighted average number of equity shares outstanding during the
 year.
 
 For the purpose of calculating diluted earnings per share, the net
 profit for the period attributable to equity shareholders and the
 weighted average number of shares outstanding during the period are
 adjusted for the effects of all dilutive potential equity shares. The
 dilutive potential equity shares are deemed to be converted as of the
 beginning of the year, unless they have been issued at a later date.
 
 8.  Employee benefits
 
 Contribution payable to an approved gratuity fund (a defined benefit
 plan), determined by an independent actuary at the balance sheet date
 are charged to profit and loss account. Provision for compensated
 absences is made on the basis of actuarial valuation as at the balance
 sheet date, carried out by an independent actuary. All actuarial gain
 and losses arising during the year are recognised in the profit and
 loss account of the year.
 
 Contributions payable to the recognised provident fund, which is a
 defined contribution scheme, are charged to the profit and loss
 account.
 
 9.  Foreign exchange transactions
 
 Foreign currency transactions are recorded using the exchange rates
 prevailing on the dates of the respective transactions. Exchange
 difference arising on foreign currency transactions settled during the
 year are recognised in the Profit and Loss Account except that exchange
 differences arising in respect of any loan taken or other liabilities
 incurred before 1 April 2004 for the purpose of acquisition or
 construction of fixed assets are adjusted to the carrying amount of
 fixed assets.
 
 Monetary assets and liabilities denominated in foreign currencies as at
 the balance sheet date are translated at the closing exchange rate on
 that date. Non monetary assets are recorded at the rates prevailing on
 the date of transaction.
 
 10.  Provisions and contingent liabilities
 
 The Company recognises a provision when there is a present obligation
 as a result of an obligating event that probably requires an outflow of
 resources and a reliable estimate can be made of the amount of 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. Where there is a possible
 obligation or a present obligation that the likelihood of outflow of
 resources is remote, no provision or disclosure is made.
 
 Provisions for onerous contracts, i.e. contracts where the expected
 unavoidable costs of meeting the obligations under the contract exceed
 the economic benefits expected to be received under it, are recognised
 when it is probable that an outflow of resources embodying economic
 benefits will be required to settle a present obligation as a result of
 an obligating event, based on a reliable estimate of such obligation.
 
 11.  Impairment of assets
 
 The Company assesses at each balance sheet date whether there is any
 indication that any assets forming part of its cash generating units
 may be impaired. If any such indication exists, the Company estimates
 the recoverable amount of the asset. If such recoverable amount of the
 asset or the recoverable amount of the cash generating unit to which
 the asset belongs to is less than its carrying amount, the carrying
 amount is reduced to its recoverable amount. The reduction is treated
 as an impairment loss and is recognised in the profit and loss account.
 If at the balance sheet date, there is an indication that a previously
 assessed impairment loss no longer exists, the recoverable amount is
 reassessed and the asset is reflected at the reassessed recoverable
 amount subject to a maximum of depreciated historical cost.
 
 12.  Leases
 
 Leases under which the Company assumes substantially all the risks and
 rewards of ownership are classified as finance leases. Such assets are
 capitalized at fair value of the asset taken on lease or present value
 of the minimum lease payments at the inception of the lease, whichever
 is lower. Leases that do not transfer substantially the risks and
 rewards of ownership are classified as operating leases and recorded as
 expenses in the statement of profit and loss account on a straight line
 basis over the lease term.
 
 13.  Income tax
 
 Income tax expense comprises current tax and deferred tax.
 
 Current tax
 
 The current charge for income taxes is calculated in accordance with
 the provisions of the Income Tax Act, 1961.
 
 Deferred tax
 
 Deferred tax charge or benefit reflects the tax effects of timing
 differences between accounting income and taxable income. 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
 substantially 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 future; however, where there is
 unabsorbed depreciation or carry forward of losses, deferred tax assets
 are recognised only if there is a virtual certainty of realisation of
 such assets. Deferred tax consequences of timing differences which
 originates during the year and reverse after the tax holiday period are
 recognised in the year in which the timing differences originates.
 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 to be realised.
 
 The break-up of the deferred tax assets and liabilities as at the
 balance sheet date has been arrived at after setting-off deferred tax
 assets and liabilities where the Company has a legally enforceable
 right and an intention to set-off assets against liabilities and where
 such assets and liabilities relate to taxes on income levied by the
 same governing taxation laws.
 
 Minimum Alternate Tax (MAT) credit entitlement represents amounts paid
 in a year under Section 115 JAA of the Income Tax Act 1961 (‘IT Act''),
 in excess of the tax payable, computed on the basis of normal
 provisions of the IT Act. Such excess amount can be carried forward for
 set off against future tax payments for ten succeeding years in
 accordance with the relevant provisions of the IT Act. Since such
 credit represents a resource controlled by the Company as a result of
 past events and there is evidence as at the reporting date that the
 Company will pay normal income tax during the specified period, when
 such credit would be adjusted, the same has been disclosed as MAT
 Credit entitlement, under Loans and Advances in balance sheet with a
 corresponding credit to the profit and loss account, as a separate line
 item. Such assets are reviewed as at each balance sheet date and
 written down to reflect the amount that will not be available as a
 credit to be set off in future, based on the applicable taxation law
 then in force.