Suzlon Energy
BSE: 532667 | NSE: SUZLON | ISIN: INE040H01021 | Engineering - Heavy
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Notes to Accounts | Year End : Mar '09 |
1. Change in accounting policy
In line with notification of the Companies (Accounting Standards)
Amendment Rules 2009 issued by Ministry of Corporate Affairs on March
31, 2009 amending Accounting Standard - 11 (AS - 11) The Effects of
Changes in Foreign Exchange Rates (revised 2003), the Company has
chosen to exercise the option under para 46 inserted in the standard by
the notification. Accordingly, exchange differences on all long term
monetary items, with retrospective effect from April 01, 2007, are:
(a) To the extent such items are used for the acquisition of a
depreciable capital asset are added to / deducted from the cost of the
asset and depreciated over the balance life of the asset. As a result
of which an amount of Rs 2.43 crore [net of depreciation of Rs 0.12
crore and tax of Rs. Nil] have been added to fixed assets, being the
exchange difference on long term monetary items related to the
acquisition of a depreciable capital asset.
(b) In other cases accumulated in the “Foreign Currency Monetary
Translation Difference Account” and amortised to the profit and loss
account over the balance life of the long term monetary item but not
beyond March31, 2011.
(c) As a resultof point (a) and (b) above, Rs 0.84 crore [net of tax
Rs. Nil] was charged to general reserve which was recognised in the
profit and loss account till the previous financial year ended March
31, 2008.
(d) Rs 132.02 crore amortisation cost charged to the profit and loss
account during the year.
(e) Rs. 399.26 crore accumulated in the “Foreign Currency Monetary
Translation Difference Account”, being the amount remaining to be
amortised as at March 31, 2009.
As a result of the above change in the accounting policy, the net loss
before tax for the year is lower by Rs402.52 crore.
2. Exceptional items
The details of exceptional items aggregating to Rs873.16 crore (Rs
285.21 crore) are as below:
a) Foreign exchange losses of Rs 131.35 crore (foreign exchange gain of
Rs 4.40 crore) arising due to restatement of zero coupon convertible
bonds of USD 500millionatyear end exchange rates.
b) Provision for blade retrofit/replacement cost aggregating Rs 221.59
crore (Rs 121.71 crore) and consequential generation/availability costs
of Rs 189.51 crore (Rs 20.37 crore).
c) Cost of site restoration aggregating Rs Nil (Rs 65.46 crore) and
cost of consequential generation losses aggregating Rs Nil (Rs 59.07
crore) relating to disruption of operation of WTGsin Dhule and Sangli
by local residents.
d) Mark-to-market losses of Rs 330.71 crore (Rs 23.00 crore)in respect
of foreign exchange forward/option contracts, taken for hedging
purposes.
Exceptional items for the prior year comparatives include amounts in
respect of items which have been classified as exceptional in current
year.
3. Zero coupon convertible bonds
On June 11, 2007 the Company made an issue of zero coupon convertible
bonds aggregating USD 300 million (Rs 1,223.70 crore)
comprisingof300,000 Zero Coupon Convertible Bonds due
2012ofUSD1,000each (PhaseI Bonds), which were:
a) convertible by the holders at any time on or after July 22, 2007 but
prior to close of business on June 5, 2012, each bond to be converted
into 113.50 fully paid up equity shares of face value of Rs 2 per share
at an initial conversion priceofRs359.68per equity
shareofRs2eachatafixedexchange rateofRs40.83=USD 1.
b) convertible in whole but not in part at the option of the Company at
any time on or after June 11, 2009 subject to satisfaction of certain
conditions.
c) redeemable in whole but not in part at the option of the Company at
any time if less than10percentofthe aggregate principal amount of the
Phase I Bonds originally issued is outstanding, subject to satisfaction
of certain conditions.
d) redeemable on maturity date at145.23% of its principal amount if not
redeemed or converted earlier. Further,onOctober 10, 2007 the Company
made an additional issue of zero coupon convertible bonds aggregating
USD 200 Million (Rs 786.20 crore) comprising of 200,000 zero coupon
convertible bonds due 2012 of USD 1,000 each (Phase II Bonds), which
were:
a) convertible by the holders at any time on or after November 20, 2007
but prior to close of business on October 4, 2012, each bond to be
converted into 107.30 fully paid up equity shares with face value of Rs
2 per share at an initial conversion priceofRs371.55perequity
shareofRs2eachatafixedexchange rateofRs39.87=USD 1.
b) convertible in whole but not in part at the option of the Company at
any time on or after October 10, 2009 subject to satisfaction of
certain conditions.
c) redeemable in whole but not in part at the option of the Company if
less than 10 percent of the aggregate principal amount of the Phase II
Bonds originally issued is outstanding, subject to satisfaction of
certain conditions.
d) redeemable on maturity date at 144.88%of its principal amount,if not
redeemed or converted earlier. Subsequent to the year-end, the Company
proposed a restructuring of its Zero Coupon Convertible Bonds, with an
approval of the Reserve Bank of India (RBI) and the bondholders were
offered the following options as part of the restructuring:
- Cash buy back of bonds @54.55% of the face value of US00 per bond
- Issue of new bonds in place of old bonds at a fixed ratio of 3:5 (60
cents to dollar) bearing a coupon of 7.5 per cent per
annum,payablesemi-annually. Unless previously redeemed, converted or
purchased and cancelled, the Company will redeem eachJune2012 New
Bondat150.24 percent of its principal amount and each October2012 New
Bond at 157.72 per cent of its principal amount onthe relevant Maturity
Date. The conversion price is set at Rs 76.68 per share. These bonds
do not have any financial covenants and are of the same maturity as the
old bonds.
WTGs
The Company has taken WTGs on non-cancellable operating lease,
chargeable on per unit basis of net electricity generated and
delivered. The lease amount would be determined in the future on the
number of units generated. Lease rental expense for the period is
Rs2.38 crore (Rs 2.53 crore).
Sublease rental income recognised in the statement of profit and loss
account for the period is Rs 2.38 crore (Rs 2.53 crore).
4. Other notes
a) Expenditure amounting to Rs 3.61 crore (Rs 4.86 crore) and Rs 6.22
crore (Rs 6.94 crore) pertaining to employee remuneration and benefits;
and operating and other expenditure respectively, being expenditure
incurred in connection with the construction of certain self
manufactured assets have been deducted from the respective expenditure
heads and have been capitalised under appropriate asset heads.
b) Borrowing costs amounting to Rs 14.39 crore (Rs Nil) have been
capitalised to qualifying assets.
c) The Company incurs expenditure on development of infrastructure
facilities for power evacuation arrangements as per authorization of
the state electricity boards (SEB) / nodal agencies. In certain cases
the expenditure is reimbursed, on agreed terms, by the SEB/nodal
agencies and in certain cases the Company recovers it from the
customers. Where the expenditure is reimbursed by the SEB / nodal
agency, the cost incurred is reduced by the reimbursements received and
the net amount is charged to the profit and loss account. Where an
arrangement is entered into with customers for power evacuation
charges, the proportionate direct cost computed on per mega watt basis
is netted off from the amount charged to customers and the net
deficit/(surplus) is charged / credited to profit and loss account. The
deficit/surplus from infrastructure development across all SEBs / nodal
agencies is shown under infrastructure development expenses or other
income as the case may be. Indirect expenses not directly relatable to
power evacuation are charged to the respective account heads in the
profit and loss account.
d) In case of an overseas subsidiary, the Company has investments in
equity shares of Rs 133.06 crore (Rs 133.06 crore). Considering the
future potential and recoverability, the Company has estimated and
provided for Rs 99.76 crore as diminution other than temporary in the
value of the investments. In the opinion of the management, the balance
amount is recoverable.
e) During the current year, the Company has issued 12.50% secured
redeemable Non-Convertible Debentures (NCDs) aggregating Rs 300.00
crore to Life Insurance Corporation of India (LIC). The Company has
incurred expenses amounting to Rs 5.06 crore towards issue of NCDs.
These NCDs are secured by pledge of shares of the Company held by
promoters to the extent of 1.5 times the NCD amount and subservient
charge on the Pondichery factory. The company is required to maintain
minimum security cover of 1.5 times at all times during the tenor of
the debenture. The tenor of the debentures is seven years and they
shall be redeemed in three equal annual instalments commencing from
theendofthe5th year from the date of allotment.
f) During the current year, the board of directors of the company had
approved a rights issue of equity shares of the company to a maximum
extent of Rs 1,800 crore. In anticipation of the right issue, the
company had received Rs 200 crore from a promoter group company as an
advance towards the share application money. The rights issue was
suspended due to market conditions prevailing at that time; and Rs105
crore outofRs200 crore was refunded to the promoter group company.
Subsequently on March 27, 2009, the Company, considering the market
conditions and in turn its inability to come out with a right issue,
has decided refund the remaining advance amount outstanding towards
share application money. Accordingly, the amounth as been refunded post
balance sheet date.
g) Tax on dividend of Rs 1.05 crore pertains to dividend distribution
tax credit claimed by the company on dividends distributed by subsidia
ries in the previous year.
h) Creditors include acceptances of Rs406.37 crore (Rs 614.66 crore).
5. a. Contingent liabilities
Particulars As at March 31,
2009 2008
Guarantees given on behalf of
subsidiaries in respect of loans granted
to them by banks / financial
institutions 7,117.45 7,451.10
Premium on redemption of zero
coupon convertible bonds 226.11 101.08
Claims against the Company not
acknowledged as debts 27.26 0.25
Income tax matters pending in appeal 15.23 19.23
b. Capital commitments
Particulars As at March 31,
2009 2008
Estimated amount of contracts
remaining to be executed on
capital account
and not provided for net of advances 59.36 50.96
Commitments for investments in
Subsidiary - 82.34
B. Other related parties with whom transactions have taken place
during the year
a) Entities where key management personnel (KMP)/relatives of key
management personnel (RKMP) have significant influence -
Sarjan Realities Limited, Suzlon Infrastructure Limited, Senergy Global
Limited, Shubh Realty (South) Private Limited, Tanti Holdings Limited,
Suzlon Foundation, GirishR. Tanti (HUF),SESteel Limited
b) Key management personnel of Suzlon Energy Limited Tulsi R. Tanti,
Girish R. Tanti
c) Relatives of key management personnel of Suzlon Energy Limited
VinodR. Tanti, Jitendra R.Tanti
d) Employee funds
Suzlon Energy Limited-Superannuation Fund.
Suzlon Energy Limited-Employees Group Gratuity Scheme.
6. Segment reporting
As permitted by paragraph4 ofAccounting Standard-17 (AS - 17), Segment
Reporting, if a single financial report contains both consolidated
financial statements and the separate financial statements of the
parent, segment information need be presented only on the basis of the
consolidated financial statements. Thus, disclosures required by AS 17
are given in consolidated financial statements.
7. Prior year amounts have been reclassified wherever necessary to
conform with current year presentation. Figures in the brackets are in
respect of the previous year. |
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| Source : Religare Technova | |
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