1.1 Basis for preparation of financial statements:
 
 The Financial statements have been prepared and presented to comply in
 all material respects with relevant provisions of the Companies Act,
 1956 and notified accounting standards by Companies Accounting
 Standards Rules, 2006 (as amended). The financial statements have been
 prepared under the historical cost convention on an accrual basis in
 accordance with the generally accepted accounting principles in India.
 Accounting policies have been followed consistently except as stated
 specifically.
 
 1.2 Use of estimates:
 
 The preparation of financial statements requires certain estimates and
 assumptions. These estimates and assumptions affect the reported amount
 of assets and liabilities on the date of the financial statements and
 the reported amount of revenues and expenses during the reporting
 period. Difference between the actual result and estimates are
 recognized in the period in which the results are known / materialized.
 
 1.3 Capital receipts:
 
 (i) Grant received under the Accelerated Power Development and Reforms
 Programme (APDRP) of the Ministry of Power, Government of India, is
 treated as capital receipt and accounted as capital reserve.
 
 (ii) Service line contributions received from consumers are treated as
 capital receipt and accounted as capital reserve.
 
 1.4 Fixed assets:
 
 Fixed assets are stated at cost of acquisition or construction less
 accumulated depreciation. Cost includes purchase price, taxes and
 duties, labour cost and other direct costs incurred up to the date the
 asset is ready for its intended use. Allocation of indirect expenses to
 capital account is done on the basis of technical evaluation by the
 Management.
 
 Certain computer software costs are capitalized and recognized as
 Intangible assets based on materiality, accounting prudence and
 significant benefits expected to flow there from for a period longer
 than one year.
 
 1.5 Impairment of fixed assets:
 
 Fixed assets are reviewed for impairment losses whenever events or
 changes in circumstances indicate that the carrying amount may not be
 recoverable. An impairment loss is recognized for the amount by which
 the carrying amount of the assets exceeds its recoverable amount, which
 is the higher of an assets'' net selling price and value in use.
 
 1.6 Borrowing costs:
 
 Borrowing costs comprising interest, finance charges etc. to the extent
 related / attributed to the qualifying assets, such as new projects and
 / or specific assets created in the existing business, are capitalized
 up to the date of completion and ready for their intended use. Other
 borrowing costs are charged to the statement of profit and loss in the
 period of their accrual.
 
 1.7 Depreciation and amortisation:
 
 (i) Depreciation for the year is provided on additions / deductions of
 the assets during the period from / up to the month in which the asset
 is added / deducted.
 
 (ii) Depreciation for the year has been shown after reducing the
 proportion of the amount of depreciation provided on assets created
 against the service line contribution & APDRP grant received.
 
 (iii) In respect of fixed assets pertaining to Ahmedabad Generation,
 Ahmedabad Distribution and Surat Distribution, depreciation is provided
 on straight line method at the rates as per CERC regulations as
 applicable in the year of addition.
 
 (v) In respect of assets pertaining to SUGEN, depreciation is provided
 on straight line method considering the rates as provided in Appendix
 III of the CERC (Terms and Conditions of Tariff) Regulation 2009.
 
 (vi) In respect of assets pertaining to Windmill (Jamnagar),
 depreciation is provided on straight line method at the rates mentioned
 in CERC order issued on ‘Determination of the tariff for procurement of
 power by distribution licensees from Wind Energy Generators and other
 commercial issues''.
 
 (vii) Leasehold land is amortized over the lease period.
 
 (viii) Computer software costs are amortised over its useful life which
 is estimated at 3 years.
 
 1.8 Investments:
 
 Investments are classified into current and long term investments.
 Current investments are stated at the lower of cost and fair value.
 Long term investments are stated at cost less provision for diminution
 other than temporary, if any, in the value of such investments.
 
 1.9 Inventories:
 
 Inventories of stores, spare parts, coal, fuel and loose tools are
 valued at weighted average cost and net realizable value whichever is
 lower.
 
 1.10 Revenue recognition:
 
 (i) Revenue (income) is recognized when no significant uncertainty as
 to the measurability or collectability exists. Revenue recognized in
 excess of billing has been reflected under Other Current Assets as
 unbilled revenue.
 
 (ii) Gross proceeds from CER is recognized when all the significant
 risks and rewards of ownership of CER have been passed to the buyer,
 usually on delivery of the CER.
 
 (iii) Dividend is accounted when the right to receive payment is
 established.
 
 (iv) Interest on overdue receivables of energy bills, insurance, coal
 and other claims, casual income etc. are accounted on grounds of
 prudence, as and when recovered.
 
 1.11 Transactions in foreign currency:
 
 (i) Transactions denominated in foreign currencies are normally
 recorded at the exchange rate prevailing at the time of the
 transaction.
 
 (ii) Monetary items denominated in foreign currencies at the period end
 are restated at period end rates.
 
 (iii) Non-monetary foreign currency items are carried at cost.
 
 (iv) Any income or expense on account of exchange difference either on
 settlement or on transaction of revenue in nature, is recognized in the
 statement of profit and loss.
 
 1.12 Retirement and other employee benefits:
 
 Retirement benefits in the form of provident fund, family pension fund
 and superannuation schemes, which are defined contribution schemes, are
 charged to the statement of profit and loss of the period in which the
 contributions to the respective funds accrue.
 
 The Company has created employees group gratuity fund which has taken a
 group gratuity insurance policy from Life Insurance Corporation of
 India (LIC). Premium on the above policy as intimated by LIC is charged
 to the statement of profit and loss. The adequacy of balances available
 is compared with actuarial valuation obtained at the period-end and
 shortfall, if any, is provided for in the statement of profit and loss.
 
 Provision for leave encashment is determined and accrued on the basis
 of actuarial valuation.
 
 Actuarial gains and losses are immediately recognized in the statement
 of profit and loss and are not deferred.
 
 1.13 Taxation:
 
 Provision for current tax is made on the basis of estimated taxable
 income for the current accounting period and in accordance with the
 provisions of the Income Tax Act, 1961. Deferred tax resulting from
 timing differences between accounting and taxable profit for the
 period is accounted for using the tax rates and laws that have been
 enacted or substantively enacted as at the balance sheet date. Deferred
 tax asset is recognized and carried forward only to the extent that
 there is a reasonable certainty that sufficient future taxable income
 will be available against which such assets can be realized.
 
 1.14 Provisions, contingent liabilities and contingent assets:
 
 Provisions involving substantial degree of estimation in measurement
 are recognized when there is a probable present obligation and outflow
 of resources as a result of past events.
 
 Liabilities which are of contingent nature are not provided but are
 disclosed at their estimated amount in the notes. Contingent assets are
 neither recognized nor disclosed in financial statements.