a) Accounting Concept:
The Financial Statements are prepared under the historical cost
convention. Accounting Policies not referred to otherwise are
consistent with Generally Accepted Accounting Principles and comply
with the applicable Accounting Standards.
b) Recognition of Income & Expenditure:
The Company follows Mercantile System of Accounting and recognizes
Income and Expenditure on accrual basis. However, since it is not
possible to ascertain with reasonable accuracy, the quantum to be
provided in respect of Warranty and Liquidated Damages, Works Contract
Tax, Marketing Commission, Bill Discounting Charges, Insurance Claims,
Export Benefits, the same are accounted for on cash basis.
The Company recognizes revenue for supply contracts on the basis of
bills raised against supplies and for erection & construction contracts
on reaching reasonable stage of completion of respective contracts.
However, certain escalation and other claims, which are not
ascertainable/acknowledged by the customers are not taken into account.
Revenue from sale of Energy (Power) is recognized on the basis of
electrical units generated, net of wheeling and transmission loss as
applicable, as stated in the Power Purchase Agreement entered into
between the Company and the respective State Utilities .
d) Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition,
construction or production of qualifying assets are capitalized as part
of the cost of such assets. A qualifying asset is one that necessarily
takes substantial period of time to get ready for intended use. All
other borrowing costs are charged to revenue.
e) Earnings Per Share:
Basic earnings per share is calculated by dividing the net profit/(loss)
for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
f) Fixed Assets:
Fixed Assets are stated at their original cost, less accumulated
depreciation. Cost includes all expenditure necessary to bring the
asset to its working condition for its intended use.
Capital work-in-progress comprises of cost of fixed assets that are not
yet ready for their intended use as at the Balance Sheet date.
Depreciation is calculated at the rates specified in Schedule XIV to
the Companies Act, 1956 and is provided for on Straight Line Method on
all assets except Office Equipments, Furniture & Fixtures which is
provided for on Written Down Value Method.
Leasehold Land is amortized over the period of lease and the
amortization amount included under Depreciation.
g) Impairment of Assets:
Impairment loss is recognized, where applicable, when the carrying
value of the Fixed Assets of a cash generating unit exceeds its market
value or value in use, whichever is higher.
Long term investments are carried at cost less provision for diminution
other than temporary, in value of such investments determined
individually. Current investments are carried at lower of cost or fair
value determined individually.
Contract work-in-progress is stated at cost or market value whichever
is lower. However, materials purchased are charged to Statement of
Profit and Loss as and when purchased. Process Stock is valued at cost
or net realizable value, whichever is lower.
j) Foreign Currency Transactions:
Foreign currency transactions are accounted at the exchange rates
prevailing on the date of the transactions. Exchange differences,
arising on reporting of short term foreign currency monetary items at
rates different from those at which they were initially recorded , are
recognized in the Statement of Profit and Loss.
In respect of long term foreign currency monetary items, the Company
has availed the option to adjust the cost of the asset towards the
exchange differences arising on reporting of long term foreign currency
monetary items at rates different from those at which they were
initially recorded, in so far as they relate to depreciable capital
asset and depreciating the same over the balance life of asset.
k) Employee Benefits:
Contributions to defined contribution scheme in the form of provident
and other funds are charged to the Statement of Profit and Loss. In
respect of certain employees, provident fund contributions are made to
a Trust, administered by the trustees. The interest rate payable to the
members of the Trust shall not be lower than the statutory rate of
interest declared by the Central Government under the Employees
Provident Fund and Miscellaneous Provisions Act, 1952 and short fall,
if any, shall be made good by the Company. The remaining contributions
are made to a Government-administered Provident Fund towards which the
Company has no further obligations beyond its monthly contribution.
The Company has defined benefit plan for post-employment benefit in the
form of gratuity for all employees, which are controlled by a Trust,
administered by the Trustees. Liability for above defined benefit plan
is provided on the basis of actuarial valuation as at the Balance Sheet
date, carried out by an independent actuary. The actuarial method used
for measuring the liability is the projected unit credit method.
In respect of compensated absences benefits to employees, liability is
provided for on the basis of actuarial valuation as at the the Balance
Sheet date, carried out by an independent actuary. The actuarial method
used for measuring the liability is the projected unit credit method.
Current tax is determined on the basis of the amount payable for the
year under Income Tax Act. Deferred tax is calculated at current /
substantively enacted income tax rate and is recognized on timing
differences between taxable income and accounting income. Deferred tax
assets, subject to consideration of prudence, are recognized and
carried forward 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.
The Company''s business units, engaged in generation of electricity from
Wind Mills at various locations, are eligible for 100% tax holiday for
a period of 10 consecutive years out of 15 years, from the year in
which the generation of power is started. Timing difference between
the tax basis and the carrying values of assets and liabilities of the
Units, which originate during the year but reverse during the tax
holiday period are not recognized in the year in accordance with the
requirements of Accounting Standard - 22: Accounting for Taxes of
m) Segment Reporting
The Accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue and expenses
are directly attributable to the segment. Revenue and expenses like
dividend, interest, profit/loss on sale of assets and investments etc.,
which relate to the enterprise as a whole and are not allocable to
segment on a reasonable basis, have not been included therein.
All segment assets and liabilities are directly attributable to the
segment. Segment assets include all operating assets used by the
segment and consist principally of fixed assets, inventories, sundry
debtors, loans and advances and operating cash and bank balances.
Segment assets and liabilities do not include investments,
miscellaneous expenditure not written off, share capital, reserves and
surplus, unpaid dividend, deferred tax liability, provision for tax and
n) Provisions, Contingent Liabilities and Contingent Assets:
A provision is recognized when the company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to their
present value and are determined based on best estimate required to
settle the obligation at the Balance Sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. Contingent liabilities are disclosed by way of notes to the
Contingent assets are not recognized.