1.  Basis of Preparation of Financial Statements:
 
 The Company has applied provisions of the Companies Act, 1956 for
 preparation of its financial statements.  The Financial statements are
 prepared and presented under the historical cost convention on accrual
 basis of accounting, in accordance with the accounting principles
 generally accepted in India and comply with the mandatory Accounting
 Standards issued by the Institute of Chartered Accountants of India.
 Accounting policies have been followed consistently except as stated
 specifically.
 
 2.  Use of Estimates:
 
 The presentation 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.
 
 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.
 
 4.  Revenue Recognition:
 
 (i) Revenue (income) is recognized when no significant uncertainty as
 to the measurability or collectability exists.
 
 (ii) Dividend is accounted when the right to receive payment is
 established.
 
 (iii) 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.
 
 (iv) All expenses are accounted on accrual basis except leave travel
 concession, educational allowance and medical reimbursement to
 employees which are accounted on payment basis.
 
 (v) Allocation of indirect expenses to capital / revenue account is
 done on the basis of technical evaluation by the Management.
 
 (vi) Material items of prior period expenses, non-recurring and
 extra-ordinary expenses are disclosed separately.
 
 5.  Inventories:
 
 (i) Inventories are valued at weighted average cost or net realizable
 value whichever is lower.
 
 (ii) Work-in-Progress in respect of Services Division is valued at cost
 or net realizable value whichever is lower.
 
 6.  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.
 
 7.  Fixed Assets:
 
 Fixed Assets are stated at historical cost less accumulated
 depreciation. Advances given to suppliers for identified capital
 project / expenditure are included in Capital Work-in-Progress.
 
 Certain computer software costs are capitalised and recognised as
 Intangible assets based on materiality, accounting prudence and
 significant benefits expected to flow there from for a period longer
 than one year.
 
 8.  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.
 
 9.  Expenditure during Construction Period:
 
 Expenditure incurred during construction / pre-operative period
 including interest and finance charges on specific loans, prior to
 commencement of commercial operation is capitalised and interest on
 temporary investments of the specific loan funds earned during the
 construction period is deducted from the total of the capital
 expenditure.
 
 10.  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
 capitalised up to the date of completion and ready for their intended
 use. Other borrowing costs are charged to the profit and loss account
 in the period of their accrual.
 
 11.  Depreciation and Amortisation:
 
 The 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.
 
 The 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.
 
 In respect of assets pertaining to Agra, Bhiwandi and Kanpur
 Distribution Circles, depreciation is provided on SLM at the rates
 mentioned below, as provided in the Distribution Franchise Agreement
 which are higher than the rates prescribed under Schedule XIV to the
 Companies Act, 1956.
 
 In respect of assets pertaining to Sugen, Ahmedabad Generation and
 Distribution and Surat Distribution, depreciation is provided on SLM
 considering the rates as provided in Appendix III of the Regulation
 issued by the Central Electricity Regulatory Commission (CERC) dated
 19th January, 2009 or rates prescribed under Schedule XIV to the
 Companies Act, 1956, whichever are higher. The following categories of
 the assets have higher rates as per aforesaid CERC regulation as
 compared to the rates mentioned in Schedule XIV to the Companies Act,
 1956.
 
 Leasehold land is amortized over the lease period.
 
 Computer Software costs are amortised over its useful life which is
 estimated at 3 years.
 
 12.  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 is recognized in the profit and loss
 account.
 
 13.  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 profit and loss account 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 profit and loss account. The adequacy of balances available is
 compared with actuarial valuation obtained at the period-end and
 shortfall, if any, is provided for in the profit and loss account.
 
 Provision for leave encashment is determined and accrued on the basis
 of actuarial valuation.
 
 Actuarial gains and losses are immediately recognized in the profit and
 loss account and are not deferred.
 
 14.  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.
 
 15.  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 on Accounts.
 Contingent assets are neither recognized nor disclosed in financial
 statements.